Should Pennsylvania freeze rent and mortgages during the coronavirus crisis? | Pro/Con
A political organizer debates the head of a property owners' association as May 1 rent nears.
As May 1 rent payment approaches, Philadelphia is poised for a potential tenant strike. Rent in the city is still due even though evictions are on hold at least through May 31. The Philadelphia Tenants Union is considering a strike “to pressure local, state, and federal officials to cancel rent and mortgage payments for six months, with no debt accrued or back pay required,” Anna Orso and Michaelle Bond reported for The Inquirer.
Those calling to freeze rent and mortgages argue it’s a necessary step to protect a huge population of housing-insecure people. But opponents argue a freeze will further strain the housing market and shift, rather than erase, costs. A political organizer and the head of a property owners’ association debate: Should Pennsylvania freeze rent and mortgage payments?
YES: Housing was already a crisis that the coronavirus exploded.
By Steve Paul
Because of COVID-19 and the economic emergency we’re now living in, millions of unemployed people cannot cover rent, make mortgage payments, or even handle most bills. That is why Pennsylvania needs rent and mortgage payment cancellations for the duration of the pandemic and economic crisis.
This emergency is more than a public health crisis. It is also an economic crisis threatening housing security for tens of millions of Americans, including tens of thousands of Philadelphians. If we do not act now, millions of working-class people will lose their homes due to unemployment and illness, neither of which they caused nor control. Black and brown people, working people, and immigrants will bear the worst health effects of COVID-19 even as they take the worst of the economic fallout. When it comes to housing, 55% of black people are cost-burdened — paying more than 30% of income toward rent or a mortgage — as are 54% of Latinx people, higher than cost-burdened rates for Asian and other minority groups at nearly 46% and white people at close to 43%, per a 2019 report from Harvard University.
The nation’s housing crisis is not new. Before COVID-19, 40% of Americans were one missed paycheck away from having no money, leaving tens of millions on the edge of homelessness. The situation in Philadelphia was especially acute. Over 400,000 Philadelphians live in poverty and, according to city figures, more than half of Philadelphians are cost-burdened. That’s why One Pennsylvania launched the Freedom to Stay campaign, aimed at universal rent control and property tax relief for working families, in particular for low-income renters and homeowners.
COVID-19 has made a bad situation worse. Unemployment claims are at record-breaking levels. More than 26 million people have filed for unemployment in response to the pandemic. And that’s just the beginning. No doubt, millions more will lose their jobs in the coming weeks and months.
Some officials have stepped up to help homeowners and tenants by winning eviction and foreclosure moratoriums as well as some mortgage delays. Those solutions, while important stopgaps, are insufficient. Without swift and universal action to cancel rent and mortgage payments, tenants and homeowners will be crushed by mounting bills once COVID-19 recedes. The virus may disappear, but the bills will not — unless we take action.
We cannot just postpone evictions and mortgage payments and think people will be in their homes a year from now.
Thankfully, we have smart legislators in D.C. and in Harrisburg putting forward strong legislation that would protect renters and homeowners in these times of upheaval. U.S. Rep. Ilhan Omar (D., Minn.) recently introduced federal legislation that would cancel all rent and mortgage payments and create a fund for landlords and banks to cover losses from the canceled payments. At the state level, champions for working people — including our own State Rep. Elizabeth Fiedler (D., Phila.), as well as State Reps. Sara Innamorato (D., Allegheny), Summer Lee (D., Allegheny), and Danielle Friel Otten (D., Chester) — are developing legislation to cancel rent and mortgage payments across the commonwealth. These are the kinds of commonsense solutions we need now.
We cannot just postpone evictions and mortgage payments and think people will be in their homes a year from now. Our government has mastered the art of bailing out big business. In 2008, we bailed out Wall Street and the banks after the housing bubble they created burst. This time, we need a people’s bailout. There is no economic recovery if millions are sentenced to eviction, foreclosure, and homelessness. Only complete cancelation and forgiveness will work; no evictions, no mortgage payments, no utility shutoff, and no foreclosures.
Steve Paul is a lead political organizer for One Pennsylvania in Southeastern Pennsylvania.
NO: Freezing housing payments will just worsen our economic crisis in the long term.
By Harvey Spear
Landlords and tenants need each other more than ever in a pandemic. With May 1 rent due, COVID-19 is cutting off many tenants’ jobs and income. Rent still must eventually be paid, and so must a landlord’s mortgage, insurance, and utilities.
That’s why HAPCO Philadelphia, the city’s largest rental property owners’ association, has been working with tenants, urging them to speak directly with their landlords if they face financial hardships.
Eighty-five percent of a HAPCO landlord’s rent pays mortgage, utilities, repairs, and maintenance. If tenants can’t pay rent, their landlords can’t pay their bills. It is a domino effect that could mean foreclosures on low- to moderate-income rental properties and less affordable housing in Philadelphia. That is not to mention the tax-hit the city will take if landlords go bankrupt while rent and mortgages go unpaid. That’s a scary scenario, considering almost half of all Philadelphians live in rental properties.
Some banks are working with HAPCO Philadelphia landlords to apply for different forms of government financial help, such as the Small Business Administration Economic Disaster Loans, so long as landlords provide proof of hardship. Many tenants are seeking to arrange payment plans and waive late fees. Tenants also need to provide proof of job loss and be proactive in seeking interim financial assistance. The city’s United Way “211” system, which connects people with financial services, is but one of many resources. Tenants should also make sure their employers apply for the COVID-19 Paycheck Protection Program (PPP) and other relief aid if they qualify.
» READ MORE: Lawmakers should anticipate avalanche of evictions after coronavirus | Editorial
The CARES Act, PPP, and stimulus monies are benefitting some tenants. However, many landlords are not eligible for PPP funds because of a loophole in the language. Most are “Schedule E” tax filers and are excluded. HAPCO Philadelphia is asking Congress to expand the CARES Act language to allow landlords to fairly qualify for COVID-19 relief aid.
Some state and local legislators have proposed a state mortgage and rent freeze until COVID-19 subsides. While that may sound like an equitable step, it isn’t. There is a big difference between a lender’s willingness to forgive a mortgagor, and a landlord forced to not collect rent. Banks have the Federal Deposit Insurance Corp. to cover a default if they cannot make their payments. Landlords, on the other hand, have just themselves. Banks don’t actually “forgive” mortgage payments — they only agree to “forbearance” in lieu of foreclosure, which only postpones or reduces payments temporarily. Freezing mortgages for landlords will force them to pay more in the long term due to accumulated interest. Denying them rent in that same period will simply make it harder for them to cover the costs that ultimately make affordable housing possible for their tenants.
The economic and social damage a freeze will cause would be severe and, potentially, irreparable.
With the promise of continuing federal aid dollars, as well as state and local loans and grants in the works, a mortgage and rent freeze is simply unwarranted. The economic and social damage they’ll cause would be severe and, potentially, irreparable.
Tenants need their landlords, and landlords need their tenants. As they face financial strain, they both should make use of temporary aid resources, to hold on until our city and state start transitioning back to our regular economy.
Working together through communication, education, and mediation, Philadelphia landlords and their tenants will make it through this.
Harvey Spear is the president of HAPCO Philadelphia, which represents nearly 2,000 rental and investment property owners in the city. www.hapcoassoc.com