California’s Rental Housing Providers May Now Receive Their Lost Rent…But, Not For More Than 10-Years and All Interest Free
Mortgage Relief Also Proposed by California’s Lawmakers
As missed rent payments and delinquent mortgages have been piling-up across California, the State’s lawmakers have introduced a series of proposals aimed at shielding homeowners from foreclosure, protecting renters from eviction, and finally, some relief perhaps for rental housing providers, all of whom have been impacted by the economic fallout of the COVID-19 pandemic. However, the relief being offered to the State’s rental housing providers may not be appreciated by many now struggling to survive under eviction moratoriums, rent increase freezes, and the weight of other overzealous and unfair regulatory burdens.
A plan being put forth by State lawmakers would allow tenants 10 years to make-up missed rental payments starting in 2024. The plan put forward by Senate leader, Toni Atkins (D-San Diego), would allow qualifying renters 10-years to repay missed rent payments, which would be repaid directly to the State. These payments would in turn compensate rental housing providers for uncollected rent by providing them with tax credits that could be used to offset State income tax obligations over 10-years starting in 2024, or could be sold (likely at a discount) to other parties that could make use of the tax credit in order to allow housing providers to pay mortgages and other financial obligations. Renters would be required to provide documentation that they experienced financial hardship due to COVID-19, and higher-income renters would likely be excluded from the program.
Under separate proposed State bill, homeowners would be to postpone mortgage and auto loan payments for nearly a year. Under a separate proposal from Assembly Member Monique Limon (D-Santa Barbara), California homeowners would be allowed to request a forbearance on their mortgages for nearly a year while requiring mortgage servicers in most circumstances to add-on any missed payments in monthly installments at the end of the loan. The proposed legislation would also allow borrowers of auto loans, payday loans and other debts to postpone payments without fear of immediate repossession or other penalties. Rental housing providers with mortgage debt would be given similar forbearance options so long as they deliver some form of yet-to-be-determined “rent relief” to their renters and agree to halt evictions.
Both proposals are an unprecedented intervention from State government into California’s housing and consumer debt markets and are sure to draw intense scrutiny.