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A rent and mortgage moratorium can stop the next Great Depression

San Francisco Chronicle logo San Francisco Chronicle 3/26/2020 By Hillary Ronen and Matt Haney
a close up of a piece of paper: The form for unemployment benefits in the state of California. © Getty Images

The form for unemployment benefits in the state of California.

If you’re one of the hundreds of thousands of San Franciscans who work in the service industry, right now you’re isolated in your apartment, running out of money for food and knowing that on April 1 that you won’t be able to pay rent.

You know the city has put a pause on evictions, but it hasn’t put a pause on debt.

If the pandemic continues for at least three more months — which most scientists say it will — on average, if you live alone, you will be $11,000 in debt to your landlord. If you’re one of the lucky workers who is eligible for unemployment, the baseline benefit is up to $450 a week (with another $600 in the federal stimulus deal), and if most of your income was in tips, then you’re getting nowhere close to that amount. Do you just stay in your apartment facing insurmountable debt, or do you break the shelter-in-place order to find work?

Meanwhile, the restaurants, salons, nightlife venues and clothing stores that used to employ you also have been closed down. And if that continues for even a few months, most of these small businesses, already under enormous financial stress from a decade of rent hikes, won’t reopen at all. There’s a strong likelihood that entire sectors of the service industry — one of the biggest economic drivers in San Francisco — will be decimated by the pandemic.

And what about the families who invested their savings in the property who are paying some of the highest mortgage rates of anywhere in the country? What will they do if they can’t go to work for months, or if their unemployment isn’t enough to pay the mortgage? What do small property owners do as their residents stop paying rent and their small businesses tenants permanently shut down? How long before mortgages are underwater, and these families are losing their life savings to the bank?

San Franciscans are facing down what can only be described as mass destitution. Representatives of the Federal Reserve are predicting that the unemployment rate could reach 30% because of the pandemic. The highest unemployment rate during the Great Depression was 25%.

In these unprecedented times, landlords, renters, tenants and homeowners are all on the same team. We need to collectively call for a simultaneous rent and mortgage moratorium. It’s common sense: The government was right to call for a shelter-in-place for communities being affected by coronavirus. But you can’t shut down the free market, close businesses and mandate that your citizens stay home without providing a remedy to the devastating harm those orders cause. A rent and mortgage moratorium would allow all workers and businesses to obey these life-saving orders without having to choose between financial ruin or the health of their community.

The Federal Reserve under President Trump has already given the banks $1.5 trillion in stabilization funds. Banks can simply pause the loan, eliminate interest and fees accrued during this period and extend the length of the loan if necessary. While the effect on the banks will be minimal, it could mean life and death to many San Franciscans. If property owners are safe, they can afford to forgo rent during the time period when shelter-in-place orders are in effect.

Earlier this week we put forward a resolution calling on Gov. Gavin Newsom, House Speaker Nancy Pelosi and President Trump to take immediate action to use their power to call for or legislate a rent and mortgage moratorium in counties that have been forced to shelter in place.

In normal times, the federal government has legislative authority over banking and the state has jurisdiction over landlord-tenant law. Right now, both the governor and president have emergency powers that can be exercised for the safety and protection of the people. In order to prevent mass eviction, poverty and prolonged unemployment when the shelter-in-place orders are lifted, both executives could eliminate the rent and mortgage debt burden during this period so when it is over, we can all return to normal as soon as possible.

As San Franciscans, we aren’t afraid to stand up and tell the truth. Despite naysayers and conservative media claiming the pandemic was mass hysteria, most San Franciscans called for immediate social distancing. We need that same courage now. If San Franciscans don’t start loudly calling for a rent and mortgage moratorium, then the effects of a second great depression could be more devastating than the pandemic itself.

Post about it, talk about it, call your elected officials and demand it. We need a rent and mortgage moratorium, and we need it starting now.

Hillary Ronen and Matt Haney serve on the San Francisco Board of Supervisors.

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