The CARES Act 2020 was viewed as a momentous move by the US government to support Americans during the coronavirus pandemic. However, the pandemic and city lockdowns continue. Unemployment claims continue to flood in every week by the millions and the fear of missed rent and mortgage payments lingers. Although the coronavirus stimulus package was accompanied by many financial relief provisions, critics initially stated that it would not be enough if the coronavirus crisis carried on for much longer.
Now, with no real end in sight to the spread of COVID-19 or economy lockdowns, the one-time stimulus checks (over 80 million have received their checks, but many taxpayers have not as of yet) and other provisions have been deemed as “not enough” by many across the country. As a result, members of the US Congress have introduced two proposals to offer further financial assistance to US citizens, one of which, if passed, could mean a complete cancelation of rent and mortgage payments during the coronavirus crisis.
#1. The Emergency Money for the People Act
The Emergency Money for the People Act was introduced by Democratic Representatives Tim Ryan (of Ohio) and Ro Khanna (of California). Under this act, Americans over the age of 16 would be eligible to receive a $2,000 monthly payment for up to 12 months. This would include those who are claimed as dependents as these individuals were not eligible to receive the stimulus checks under the CARES Act.
Another key measure of the Emergency Money for the People Act is more payment options which would include:
- Direct deposit
- Prepaid debit card
This would help to ensure that the money reaches all who qualify quickly and easily.
Who Would Be Eligible for the $2,000 Monthly Payments?
- Americans who are 16 and older and make less than $130,000 a year would receive a minimum of $2,000 a month.
- Married couples who earn less than $260,000 a year would receive a minimum of $4,000 a month.
- Families with children who qualify for financial assistance under the Act would receive an additional $500 for every child, for up to 3 children.
- Americans who have no earnings, were unemployed, or are unemployed now would be eligible to receive the payments even if they didn’t file a tax return.
- Those who are now eligible in 2020, but were not in 2019 or 2018, can provide proof of income to qualify.
This is just a brief overview. To learn more, read the bill here.
#2. Rent and Mortgage Cancelation Act
A large concern with the stimulus checks of the CARES act was that the amount was too low and would not cover basic necessities along with rent and mortgage payments. This was especially a concern in locations where residents are subject to higher housing costs. As such, Democratic Representative Ilhan Omar (of Minnesota) introduced the Rent and Mortgage Cancelation Act. This act would result in the complete cancelation of rent and mortgage payments during the coronavirus pandemic or for up to 1 year.
Here is a brief breakdown of what the Rent and Mortgage Cancelation Act entails:
- Rent for primary residences would be forgiven in full.
- Mortgage payments for primary residences would be forgiven in full.
- No debt will be accumulated for tenants or homeowners as a result.
- There will be no negative effect on credit ratings or rental histories as a result.
- A relief fund would be put in place for landlords and mortgage companies to cover losses.
- Another fund will be put in place to help finance investments in private rental properties to increase affordable housing inventory.
If passed, the Act would be retroactive to March 13, 2020. Anyone who made their rent and mortgage payments in April of 2020 would be reimbursed.
Note that mortgage forgiveness would only be extended to primary residences and not second homes or vacation homes. And if you live in a rental property and also have a mortgage for another investment property, you’d have to choose one to receive financial assistance for.
Real estate investors do have other options for mortgage relief. Learn more: COVID-19: Mortgage Relief Programs for Real Estate Investors.
As mentioned, rental property owners and mortgage holders could receive support as well through a relief fund that would be managed by the Department of Housing and Urban Development. To be eligible for this assistance, landlords and mortgage lenders would have to follow federal guidelines for fair lending and renting practices for five years.
To learn more, click here.