What rent and mortgage relief could look like during coronavirus
Apr 1, 2020, 12:37 PM
(Unsplash/Brandon Griggs)
(Unsplash/Brandon Griggs)
The Seattle City Council thinks all rent and mortgage payments should be delayed during the pandemic. Councilmember Tammy Morales proposed a resolution voicing that support, which passed this week with unanimous support.
“This is really calling on the governor to use his emergency power to freeze rents, and calling on our federal legislators our congressional delegation to freeze mortgage payments during this health crisis,” she said.
Gregg Colburn is a University of Washington professor of real estate, and he’s also involved with the UW Homeless Research Initiative. He joined KIRO Radio’s COVID-19 Seattle podcast to discuss the possibility of a rent freeze and how the federal and state governments can interact to prevent a recession from becoming a depression.
While the resolution is nonbinding, if it is successful in pressuring the governor and pressuring Congress, what are the most drastic measures they could it take in order to to help renters and to help mortgage owners? Is it saying you don’t have to pay any rent, you don’t have to pay any mortgages, and you also don’t have to incur debts?
“Yeah, from the perspective of the homeowner with a mortgage or the renter who has rent to do that would certainly be the most drastic, and provide the greatest benefits for those individual households,” he said. “The problem with that is we can say, ‘Yeah, you don’t to pay your bills.’ But then the landlord who has bills to pay says, ‘What are you talking about? I need to pay my mortgage that I have on this building.’ So then do we go up the food chain and wave the magic wand for them as well?”
“Which is why this is a very, very complicated situation. And we see this at all levels of the real estate industry.”
Colburn says that this line of thinking creates a cascading effect, even if lawmakers try to make this an issue of equity, arguing that some can take the financial pain more than others.
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“From an equity standpoint, you could certainly have an intellectual debate about who is in a better position to take the pain: A tenant, a landlord, a bank, and there are legitimate debates about that. But even if we argue that the banks are in a better place to take that pain, at some point, the bank’s going to say, ‘No, we’re not a charitable enterprise here. We make loans, we expect to be paid back.”
Does he see widespread evictions happening?
“I certainly hope not. I think what will happen before we get there is what you’ll have is both tenant organizations and real estate organizations lobbying the federal government’s saying, ‘Hey, no one wants to do this.’ I think there would be tremendous pressure on the federal government to step in and provide additional stimulus to households to ensure that people can make their payments,” he said.
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“There was an article in New York Times today saying 40 percent of people are not going to able to make their their rental payments on April 1. And so it’s going to get the attention of the authorities because mass evictions is certainly not good for anyone. It would be a catastrophe.”
