None of these homes were offered to small mom and pop landlords or to people who hoped to buy them to live in. Only to Obama and Hillary’s private equity pals.
4
Communities of homeowners and prospective homeowners everywhere should fight the concept of single-family rentals tooth and nail. We have been and should continue to strive to be a nation of home OWNERS, not home renters. The more of the population that is forced to switche over to the life-long serfdom of renting, the more impoverished generations hence will become, as this model only enriches companies like Strategic. You can not accumulate wealth renting from companies like this.
7
Wait a minute $15000 down on a million dollar house?
4
Could this be the reason that renters have little or no help in the recently passed coronavirus relief bill? "Steven Mnuchin, now the Treasury secretary, bought the toxic debt of the failed California bank IndyMac with several other investors and, as chief executive and chairman, renamed the bank OneWest and then foreclosed on more than 35,000 Californians, reaping government subsidies on nearly every one."
9
I'm 3/4 into this and I'm feeling sick. .
"Trump-loving conservative Christian " doesn't she get it??? Trump is part of her problems!! besides his being as un-Christian as you can be. Then... "Mnuchin, now the Treasury secretary, bought the toxic debt of the failed California bank IndyMac with several other investors and, as chief executive and chairman, renamed the bank OneWest and then foreclosed on more than 35,000 Californians, reaping government subsidies on nearly every one."
And still we are not ready for a "revolution"!!! Where is Robin Hood when you need him(or was it her?)
7
It shows the sheer STUPIDITY of people that the woman in the article (from the Facebook Group) claimed to be a die hard forever Trump fan, despite the fact that Trump is at the center of allowing this madness to happen. The villains who have been given properties for pennies on the dollar are Trump's cronies. Trump and Mnuchin are all in with this fraud.
9
Chad had a cool skateboard on his wall, some kind of Powell Peralta thing. And he was wearing Converse.
The beginning of the article tells you all you have to know. He put $15K down on an $840K house and then put the rest of his savings into a $250K addition. What do you think the mortgage on house with such little down would cost? In 2006 no one told Mr. Ellingwood this was not good financial sense. Here lies the basic problem with many Americans. We think we can afford more than we can.
9
The first thing that went wrong was when Mr. Ellingwood got a mortgage for an $840,000 house with a $15,000 down payment. If he couldn't afford a 20% down payment of $168,000, he shouldn't have bought the house. But...he did have an additional $250,000 in savings, which he used to remodel the kitchen and to add a bedroom. If he had put down a 20% down payment, made minimum kitchen improvements, and lived without another bedroom, he might have been able to sell the house when his marriage ended without this horrible disaster. These companies take advantage of people who are vulnerable due to a lack of basic economic knowledge.
6
Great investigative article. That's what journalism is all about.
9
I wonder how many of the people struggling to pay rents under these usurious contracts have sufficient renter's insurance. If they don't, wait until these homes get destroyed by wildfires, floods, or other climate change-related disasters, because the REITs will get yet another bailout and just walk away to invest somewhere else.
1
Liberals sneer at Trump supporters for "voting against their own interests," and then insist upon voting for Joe Biden, who was VP during the time no bankers were punished for 2008 and rejecting Bernie Sanders, who has been staunchly fighting for non-wealthy Americans for decades. smh.
8
A house is a symbol of the self. What happens when you can't comfortably live in one? How do your support the self?
Profound mental health and social problems in addition to homelessness.
3
How else anyone would make money if they were not to wring the neck of those who are powerless or take money out of pocket of those who belong to the low rung of the ladder. Capitalism survives and thrives only through vulture investment and vision (metaphorically speaking).
7
There is a bizarre contradiction in this issue of the magazine. Along with the story about companies fleecing renters there are multiple pages of advertisements for multi-million dollar condominiums. A perfect demonstration of the gap between rich and poor and how many of the rich got that way.
5
This has been going on, on a smaller scale, since the 1970s. My experience: Buying two houses in succession, each costing about 3X a young professional's annual income. Starting in the early 1970s housing prices started increasing at a rate far above that of inflation. And: Signs advertising homes for sale started to be from investment houses, not realtors.
This is - of course - inhuman, and inhumane. It isn't criminal, apparently, but it should be.
What American Dream? That of multibillionaires, at the expense of all the rest of us?
5
As a responsible landlord who makes sure residents are safe and comfortable, I question the writer's hasty generalization that "Landlords can be rapacious creatures." Hyperbole much?
3
Not hyperbole. My friends and I have had rapacious landlords who showed behavior exactly like the ones described in this article. Not all landlords are bad. I had a lovely guy for my last landlord before I was (thank god) able to buy. But the stories here are real and bad landlords like this are a plague on New York City.
5
I’m 72 years old and I have had a plethora of jobs throughout my life. By far, and without question, the one field I hated the absolute most was banking. It was a sexist, classist sham in 1970 and it is worse today.
7
This has nothing to do with 'greedy capitalism'-- it has to do with 'crony capitalism': quasi-government involvement, through such entities as Fannie Mae, and foreclosures that were often fraudulent and/or illegal to begin with. If the government is ever forced out-- highly unlikely, I know-- the market would eventually fix most, if not all, of the problems. But keep blaming it on 'evil capitalism'-- that's such a convenient scapegoat.
3
These companies are leaving themselves extremely exposed to the next real estate downturn--but I suppose they are 'too big to fail', so they don't have to worry like the rest of us.
4
I have over 50% of my mortgage paid off, and my house has increased in value. Plus, I have savings. I feel very lucky (timing of when purchased matters).
So, I feel like this article doesn't really apply to me. That said, I still found it incredibly sad and stressful. But for a few unlucky turns in life, the most stable of us all could get caught in this nightmare.
It also makes me fearful for the next generation. Such predatory landlord tactics need to be legislated by local communities to diminish their impact.
5
If you don't buy low and sell high, for whatever reason, don't be surprised when a professional investor does.
1
Wall street capitalism at its worst (or best the way it looks at it). Squeeze the middle to lower classes for every dime it can get.
Many of these entities are house flippers where they do only cosmetic repairs, misrepresent the overall condition of the house and let the poor suspecting buyer suffer the consequences. I am told that this practice is rather widespread in many areas.
3
This is why Warren "I wish i could pay more taxes" Buffet opened his own reality corp - to cut out the middle man. He reaps phony stock market windfalls then parks the cash in homes (as many do). Blackstone group has been scooping up tens of thousands of marginally affordable fixer uppers as well - I imagine they make excellent landlords lol.
Corporations are lousy at governing since their only interest is profit at any cost. And yet, here we are.
4
I am surprised that the 'centrist' Democrats haven't migrated over to this article to inform this man about how foolish he was to invest in a home in the first place. The message of Bernie Sanders and Elizabeth Warren is that the moneyed interests have too much power. If they own the regulators, then there is no way to stop this.
2
Never "fall in love" with a piece of property.
3
A thoroughly American heartbreak. A story of how we can never convince the greedy and rapacious to end their evil ways. Absolutely nothing could stop them except governmental regulation and they control that too, especially now.
2
This article has a compelling story of an individual crushed by an impersonal series of corporations, but does the article give us a nuanced understanding of the rental market? I think not. Here are some reasons.
The title of the article is the “A $60 billon Housing Grab By Wall Street.” The word “grab” sounds ominous and “$60 billion” sound large. What about a more neutral sentence such as the following? When housing prices crashed during the great recessions, a number of Wall-Street firms purchased housing stock, stopping the free-fall of housing prices; these firms have done very well in the last several years when the value of these houses increased. $60 billion sounds large, but how large is that number in the context of the overall value of housing in general or the rental market in particular (even some numbers concerning the San Fernando Valley in Los Angeles would have been useful).
In the article, corporations are accused of converting previously owner-occupied housing into rentals (and reducing neighborhood housing prices). Recently in the New York Times there have been articles about the conversion of rental units into owner-occupied condominiums. This has also been viewed as bad. How can movements in both directions be viewed negatively?
Wall Street and corporations are the bad guys in this article. Would the story be any different, if the victim in this story rented from an individual who had purchased several houses and turned them into rental units?
We have an article that highlights a person who made a series of dumb decisions, had some real life problems like we all do, and then whines about the nasty investors that bought his house when he quit making payments...and yet keeps living there and paying those nasty people money. There is a housing problem in many parts of the country. Very little of it is caused by investors buying homes.
2
I know Biden is better than Trump but this all happened under Obama/Biden and Senator Harris was supposed to be fighting for people like Mr. Ellingwood as CA AG.
And by the way, doesn't Blackstone currently "donate" to Biden's campaign and "donated" to Obama's previously?
"Government working for the wealthy and well-connected" as a wise woman once said.
2
Funny how things relate in unexpected ways. See Tom Delavan, Feb. 28, 2020, in NYT Style for a beautiful description of an Andes NY renovation. But for good measure, I googled Andes NY and was amazed to find this: New Deal artwork: a 1940 mural by artist Mary Earley titled “Down-Rent War, Around 1845. "The Anti-Rent Wars, these farmers protested, staged revolts, and refused to pay their taxes." Evidently the wars between tenants and landlords are cyclical and never-ending. The tenants of Andes NY were given to tarring and feathering the sheriffs who came to serve eviction notices! One can only wonder how this new situation for renters will resolve itself. If a corporation is a person, can it be tarred and feathered?
https://www.nytimes.com/2020/02/27/t-magazine/farmhouse-upstate-new-york.html
and
https://andesnewyork.com/explore/the-history-of-andes-ny/
1
Typical example of wall street crooks. There is nothing wrong with true capitalism. However, the crooks have transformed capitalism to cartels. It is like slavery- because of the money and political power, they get away with everything and the people suffer. Shame on Thomas Barrack (no surprise here- what do you expect from the supporter of the rogue incompetent in the White House) and Blackstone for exploiting people. Democrat legislators wake up and pass laws to put masterminds of the exploitation. rackets behind bar.
2
One cannot help but wonder just how large a position Steven Mnuchin has in this enterprise... .
1
Schwarzman is the epitomy of an indecent human being. That Trump and mnuchin and barrack are his social friends says how low class his social circle is.
2
This story should be on page one instead of buried in the Magazine section.
3
Giant private equity firms are simply put, a malignancy that is threatening the fabric of life in the US. They are very much at the heart of why the fortunes of the top one tenth of one percent of the population have nearly quadrupled in the last 25 years while the bottom 50% have gone virtually nowhere in their incomes, let alone assets bare as they are. I recently read that BlackRock and their ilk have been on a buying spree of doctors offices, offering their MD owners lucrative chunks of cash to sell to them, then taking over the practices, "streamlining them" by reducing numbers of RN's, bringing in less trained and less expensive people, increasing MD loads, adding and tranching services to help jack up the cost of seeing a doctor. These private investors are looking to "optimize" profits upwards to 40%. They are just parasites. Whether Biden or Sanders, the next President and Congress must call a halt to these predators, who are sucking up billions and billions of dollars pushing the cost of housing and medical care so high that the quality of life for millions of people is being pushed back a hundred years.
5
It was so difficult to read this article. It is the kind of greed that will elect Bernie Sanders, who is not the answer with free everything. But, as my Dad said often, walk a mile in another's shoes and you will see that greed must be tempered by responsible government regulation.
The way these huge companies have gamed the system, buying up housing, raising rents while shifting services, costs and repairs typically the responsibility of landlords, all in the name of a big return to investors is nauseating.
I have represented the private sector for many years but think that private equity, whose mission is to maximize returns without regard to consequences, will hurt every responsible business owner and corporation that responsibly produces goods and services.
3
Although, I have made many financial mistakes in my life, I cannot fathom how someone can think spending only $15,000 on a down-payment and $250,000 on kitchen and bedroom upgrades is a good idea. I find it hard to have sympathy.
7
Gee, you couldn't see this coming in 2008, could you? Duh.
Every time there is a glitch in the economy, large financial entities grab a bigger share of the things people need to live. And if the government at any level tries to do anything to make it easier to get housing, they will resist this affront to their bottom line.
Sanders is right about this: it's us vs. them for control of the resources people need to live.
2
I know personally someone who is in this business. He's had no trouble acquiring large sums of investment money to buy up houses mostly in the southern part of the US. I also know that he could give a hoot about the people who have lost their homes nor about the renters. He wants to make as much money as possible. Plain and simple. What have we become as a nation?
3
Legislation, even at the local level, could easily discourage this sort of predatory behavior.
One would think 'pursuit of happiness' would include access to decent and reasonable shelter.
The housing crisis gets worse every year.
1
This story seems to be a coming together of really bad choices on the part of the person featured and the politicization of capitalism. Chad makes his financial decisions impulsively based entirely on emotion. He bought an $840,000 house with a $15,000 downpayment and then spent $250,00 more on it. This is not a poor person. And he is still renting it for more money than most people can afford. We are meant to feel that he is oppressed. I don't feel sorry for him. I think, "Who would do that"?
Of course people with resources bought those houses. Some people bought a few and some bought many. What does the author mean by saying that these companies bought the houses "without stipulations"? Anyone can buy a house at auction if they have the money to do so. And anybody can rent out a house within the laws of the community.
Over the years he kept on making foolish financial decisions, including remaining in the house when the rent was over $5,100 a month. And yes he does have other bills to pay. Yes they are charging him more than he had to pay when he owned it, much more, and yet he stays. His "income was irregular " and yet he is paying more than $60,000 a year to rent this house plus he is using his own money to fix it up as it "falls apart". He is not trapped there paying $60,000 a year rent - OMG - leave!
1
Thank-you for informing US citizens so that they understand why they cannot afford to house themselves.
People who lost their homes in the Great Recession may never be able to own a home again, or afford rent now.
It's as if the US has a greed disease.
Result of the disease, homelessness.
3
I know there are some private equity benefits in the economy and I've read about some decent people in the business but it's difficult not to think of them as rapacious, greedy capitalists who care not a bit about the health of their own country. I assume some of them have off-shore accounts to avoid taxes on their, to my mind, unearned income.
i Receive letters, emails and phone calls asking me to sell my house. I sold my last house for a nice profit in Portland, OR. What saddens me is that the opportunity I had to purchase a house as a single parent coming out of a divorce will not be afforded to my grandchildren. Neither will they be able to go to college of their choice, as I did. My grandchildren are so much more talented, capable and diverse, than I was. Three are gifted athletes, bilingual, ahead of me in math and English, two subjects I Excelled in. They are growing up with the threat of gun violence in their classrooms. Suicide is at an all time high. I am ashamed of the direction my country has taken, driven by greed and the misunderstanding that making money is the primary gauge of one’s success and one’s worth. We have left the youngest generation one big mess of phoniness. Hence they clamor for Bernie. Which I certainly understand. Capitalism unmonitored is a disgraceful way to live.
4
With a home purchase price of $840,000 and another $250,000 for a remodel with the hopes of increasing home value, Mr. Ellingwood created his own financial noose. When his back was against the wall, he suddenly had the check for the missing mortgage payments and attempted to save himself at the auction? Sorry, Mr. Ellingwood doesn't garner my sympathy; he made bad choices and must face their consequences.
2
There is no end to the greed of some people and big business. Oh! The heartlessness! But I am still trying to wrap my head around Chad putting only $15,000 down on a $780,000 home. And, in addition, he spends $250,000 on an addition to the house. Why would he stretch himself so thin? If only he would live within his means.
You have to pay your rent/mortgage. If you don't pay you will lose your house. If another nice family had bought his house at the auction there would be no story. However, the unrealistic predatory loans are the real story here. I once bought a house at 11.5%, madness.
In the world of laissez-faire capitalism, renters are treated as 2nd class citizens and if corporations are people, then they are the new master race.
1
[[Waypoint was granted a summary judgment for eviction. Waypoint sat on that judgment until the next time Ellingwood was late: Then the company didn’t bother to post a three-day eviction notice; Ellingwood said it sent the sheriff. Fortunately, Ellingwood had learned from his high-conflict divorce to document everything, and after the sheriff reviewed his emails with Waypoint, he told Ellingwood to get a lawyer.]]
I'm curious about the wording here. The COMPANY can "send" the sheriff? I've evicted someone for nonpayment of rent and all I got through my lawyer was a date and time window to meet the deputies to make the eviction. I certainly didn't call the sheriff's department and have them send deputies.
Also, the deputy in charge of the eviction gave me boilerplate instructions about how much time the tenant had to remove any remaining belongings. He certainly did NOT offer any legal advice.
Lastly, the American Dream should be reconfigured to include mobility as an alternative to putting down roots with home ownership.
Home owners create stability and exert more control over their community than renters do. Home owning communities have higher voter turnout than communities dense with renters. But some people need the flexibility to chase a job or be near their kids.
1
There are thousands of invitation home customers reading this article wondering what to do. Well, we have a recession coming, so save up you money and buckle down for a relocation where YOU don't lose this time. Check you lease- if it requires two months notice to quit your lease decide when to do it. Invitation Homes quarterly announcement is usually in early May. So put in your notice in January of the year you see a recession coming. You are going to lose your job an get evicted anyway. The looks like these rentals are where "the middle class goes to die, financially" need a message sent. Move somewhere that allows you to have a balance sheet that makes sense. Send the message to cause the most damage possible to such an unethical business model. Destroy their earnings result. The decline in values will cause their loans to be called and you can return after prices collapse- in about 3 years- to the same property- if you want to. They will get foreclosed on after they lay off most of their employees.
So many things about this article don't make sense. I am a mom and pop landlord. I cannot pass on repairs etc to tenants no matter what the lease says. The rent itself is market driven. If I raise it too much, tenants can and do leave. The laws in CA are overtly tenant friendly. Deposits, fees etc are all regulated by law. I have investments held up for years because non paying tenants play the courts and do not vacate. I don't see how PE owned homes operate by such different rules. Something is not adding up here.
1
@Anish
I am not in the landlord business or a lawyer, but I think the 40 page lease has something to do with it: the contract stipulates that the renter can be charged for all these things and they willingly sign it. And many times they don't read it first. Does that contract take precedence over local laws that protect tenants?
Back when I DID rent, a lease was 2 pages, max. The problem in these markets is people will do anything to have a place to live and have no means ususally to take the company to court.
3
While the major character of your magazine story fell into the traditional financial traps (divorce and overextension), I am shocked at the constant fees and landlord actions against the tenant. I had read about Schwartzman of Blackstone becoming the largest landlord in the US after the 2008 financial collapse ( in your paper). It was made to look like a financial salvation-obviously not.
What puzzles me is why would anybody get involved with these companies? The only small reason would be to keep the renter's children in a good school district until they could graduate (or move)
This is a lesson of why someone should live within their means. It's obvious to see why the state of California had to impose rules on these landlords. Greed knows no limits.
3
In this very long article, giving many particulars on how large corporations can effectively move into a prime position as landlords in what were homeowner neighbourhoods in the 1960's to 2000's, I am struck by an early statistic: That a man could buy an $840000 property with only $15000 down . What were all parties to that transaction thinking? At its roots, it is this kind of grossly inappropriate transaction that gave rise to the chronicled usurping of home ownership that followed.
11
Fannie Mae’s mission is to promote home ownership, not to line the pockets of foreign sovereign funded VCs. The government needs to right a wrong by improving rental and mortgage regulations, in order to better protect ordinary citizens from predatory practice.
4
I am watching my neighborhood being dismantled. I live in a Dallas suburb. It is shocking to see the majority of homes sold in my neighborhood going to these corporations. One of the first things to happen is the removal of landscaping. I have seen gardens developed over years ripped out and replaced with colored gravel. Just a few doors down from my home a stately healthy mature tree was removed from a front lawn. It’s canopy shaded both the house and the street. There is now a crater of mud and sawdust instead of dappled shade and a ring of spring daffodils. Oh and a for lease sign. The companies don’t care about the aesthetics of my community....only lowered maintenance costs.
14
This article itself suggests that without the purchase of houses by these funds the recession would have been longer and deeper. That obvious truth is given short shrift, however.
There may be some merit to the view that the corporate ownership of single-family rental houses creates perverse incentives, but I don't think the proper response is to decry the "financialization" of the rental market for single-family houses, which clearly has benefits (it helped end the recession, as even this article cannot but acknowledge).
3
No. There are several way to skin a cat. The way the government chose and the way you support is unjust and reprehensible. A fancy way to follow Swift's advice--which also is an economic solution to poverty--and just eat the poor.
4
So it's not just that the Obama-Biden administration bailed out the big banks and Wall Street "investors" that caused the housing crash with their criminal schemes and forgot to bail out the home owners who lost their homes in the crash. It's that they actually sold out those victimized former homeowners to those same "investors". I'm sure Joe Biden, author of the bank-friendly bankruptcy law he pushed through Congress just before the crash spoke up for all those homeowners and fought the good fight, along with Elizabeth Warren, to defend them, only to be overruled by Obama and Treasury Secretary Timothy Ginther. I'm sure that's what happened.
6
I agree it is appalling and as is often the case the average citizen is left to fend for him- or herself in the absence of any regulation. The same did not happen in other countries’ depressed real estate markets post-2008. Guess why. So yes, by all means blame Obama, who either had a blind spot or was misled by his advisers à la Rubin and Geithner, but a Republican prez would not have done it differently, or would he/she?
2
@Winteca
“...a Republican prez would not have done it differently...?”
For instance a prez who also happens to be a real estate speculator and has a daughter who married into another family of real estate speculators?
3
I can't describe how disgusted and angry I was by these companies' practices. I am further convinced pure capitalism is evil to its core.
13
All you need is a bit of regulation of the rental market, and the business model of these firms will be upended. But the nearly hysterical anti- regulation stance of many Americans results in the average citizen getting shafted almost every time. Suit yourselves.
Invitation Homes, companies like it, and the politicians who shill for them deserve all the calumny heaped upon them in these comments, but I can’t be the only one thinking folks like Chad Ellingwood also deserve plenty of blame for their predicament. What responsible adult puts down a mere $15,000 on an $840,000 house and then spends $250,000 on an addition? Our home was paid off 11 years after we bought it for one third down. We’ve remodeled the kitchen, put on a new roof, and rebuilt the detached garage, and that’s pretty much it in 30 years. It’s now worth eight times what we paid for it. At 1500 square feet it was a bit cramped when our kids were here, and no one would call it posh, but it’s ours. It’s called living within your means.
20
@Richard Amen, but to put things in perspective, Chad was 30 years old, 2006 was the height of the housing bubble. At the time everyone thought that prices would continue to escalate. Blame should largely be put onto the greedy bank that wrote the mortgage. I now blame Chad for staying in a house that's falling apart, where he despises the landlord, and he's paying over $4000 a month to live in.
6
@Richard -- Yes, I'm happy for you, but obviously you didn't have a huge financial set back, lose your job, were transferred to another city, get a divorce, etc. Yes he bought on emotion which 99.9% of buyers do, and thought he could manage the costs. He was wrong and having put $250k into an addition he did what he thought he could to keep that equity. As it turned out, so far, he may have been wrong.
But what the article is trying to highlight is there are 7,204 other houses financed the same way with just one F.Mae loan. Not all of them made the same buyer mistakes. But the same problems exist for a whole segment of the market.
2
This is why I have always thought we need to seek an elegant solution to limits on property ownership across the board(actual Earth surface, land and water, as well as scaled square footage built into multi-story buildings), individual to corporation and even government, and combined with a government that is actually by the people for the people...all of them.
7
The worst of this is that housing is a necessity. Essentially, these companies are speculating in a necessity. We need to change the law to make speculation illegal in all necessities (housing, medicine, food). With laws like these that allow companies to acquire housing and make it prohibitively expensive, no wonder local governments are struggling to provide affordable housing.
12
@Ro Mason To amplify on your point, housing apparently can be hoarded like food and medicine, creating a semi-artificial scarity that makes it more expensive. As the quantity of housing stock is finite, and new sites becoming more scarce by the month, the ability to drive up rents and prices not under government control is almost endless. I knew one fellow who in about 1970 in the GTA bought a half a dozen houses with bare minimum down payments, rented them out, and sat back while the ostensible "value" of his new holdings rose unattended and without physical improvement. A prime question is the difficulty of deciding in a democracy how much the governments at all levels can or should intervene in what has become a housing crisis for occupants of residential housing. Should well-heeled sharpsters prevail?
1
I’m afraid you live in a country that does not consider either healthcare or housing as a human right. If you want that to change, vote radically differently.
2
Shouldn't the New York Public Library take Stephen Schwarzman's name off its building, no matter how much $$$ he gave, in view of his company's immoral, abusive, and often illegal behavior? Just like museums are taking the opioid-producers' names off their halls.
18
Appalling! Angering!
The private equity firms (with 200-500 mil capital) are also doing other neighborhood devastating actions: in Los Angeles they are buying (all for cash- preventing individual families from buying) old homes and demolishing them, using their own drafter, contractor, expeditor- putting one of 4 or 5 already designed largest what can be approved on the site homes, and then selling for most $$$. What happens in the neighborhood is this:
most of the small businesses who normally are involved in construction and design of a single family home in LA are left out. The middle class family who would have bought the original property with 20% down and put modest home or remodel/add- is squeezed out. Most of the people who move to the new houses are non- neighborhood oriented (we know from personal experience), never buy girl scout cookies, no Halloween candy distribution, no walking and neighbor talking, no kids in local/public schools......often a higher then allowed fence/hedge is installed in the front yard- presumably to separate themselves from the rest of us- the "smaller/ remodeled" house crowds... This is how the neighborhood gets blown up.....this is how democracy is starved...
11
Why we need Warren and a return to morals and more laws to limit #GreedOligarchsProfit. unmitigated evil, from the the people who brought you LDO and CDO and all sorts of unintelligible scams.
6
I get that the article is about corporate rental ownership. But, back to the original problem- Ellingwood bought an $840K house with less than 2% down, sank $250K cash into a remodel (rather than paying his mortgage down or banking for the future), failed to file bankruptcy in a timely manner, and on and on.
Where is his responsibility in this mess?
Mr. Ellingwood needs to get a clue and move.
22
Why you should vote for Bernie Sanders.
5
I am surprised that the author dord not mention the excellent 2019 documentary on work of Leilani Farha, the UN Special Rapporteur on Adequate Housing, who investigates the worldwide problem of corporate purchase of housing. http://www.pushthefilm.com/
According to the film, investment in housing stock is one of the most profitable investments in an investment portfolio, and that the companies that make these investments are supported by legitimate investors like pension funds.
Ms Farha points out that the cheapest way to manage these properties is to leave them vacant. Thus, the purchase programs push up the price of housing and then, by leaving housing units vacant, constrains the supply, also increasing the cost of housing.
The film says that some communities are legislating against these practices, for instance by increasing tax on vacant lots and unoccupied housing units. But until legislators understand the problem - that buying and holding property is an excellent and entirely legal investment for corporations - it's impossible to stop the trend.
7
Another sad effect of the lack of affordable rental and starter homes is that our own young adult children cannot afford to live near us.
9
Real estate has funded our society for the last 30 years with an ever increasing rise in the cost of all homes. The "equity" created was more for many homeowners than they made at their jobs. And it bloated along with all manner of swindles from the banks and the mortgage/finance industry, which resulted in 2008. Obama could not discipline this corporate inequity creation scheme and Trump is it. REITs are the most efficient at the game just as factory farming is the most efficient at raisiing and slaughtering chickens and pigs.
6
This article does not really say how the door was opened to wall street money Government needs to take some blame
Small Property owners(backbone of affordable housing) have been used and abused by state and local governments in quest for popular votes and income
1) raising real estate taxes at a unrelenting pace
2) Making crazy tenant friendly rent ordinances ( creating cottage industry of lawyers who sue on contingency )
3) Building inspection that will always "find something" to create income for the government and property owners NEEDS to go to court and take a day off
After a while small investors and owners just say the heck with it , and sell out !!!
5
This sounds very similar to what happened to my brother’s rental complex. It was purchased by an equity group over the summer, and they’ve basically stopped caring for it. Garbage piles up. The swimming pool is now green and unusable. Repairs aren’t being done. Rents are going up. Phone calls to the management company go into a black hole. This is in a small town in Northern California. It’s disgusting and horrifying to find out that this is happening all over the country. At what point does all this greed hit the breaking point? How much longer can people go on like this?
15
Does anyone believe Joe Biden is the solution to problems like this? Of course not.
8
How is it that so many Democrats, establishment figures, are hopping on the Biden for president train?
Examine "Lunch Bucket" Joe's actual record....he has been wanting to cut Social Security for years. He is a Wall Street Big Bank Best Friend. Delaware is a tax haven thanks to him. Why is it that all of these people talk about changing things but clearly don't want to?
Are we to be forever ruled by an increasingly greedy class of billionaires or are we going to have some sort of adjustment and be more like European nations. They share the pie.
8
One thing you can be sure of is that if Joe Biden is the Democratic Party nominee you will see more of the same as described by this article. Biden has been a puppet of the big banks and financial interests for years. For too many people fear of Trump has blinded them and they are now willing to accept the lesser of two evils. Americans could have done so much better with Warren or Sanders but they are choosing Biden. I am starting to think that they deserve what they get.
8
At least part of the reason these crooked companies exist, and get away with destroying entire sectors of the American economy, is the eagerness of Americans to blame the victims and not the perpetrators of these crimes.
Human nature is what it is. In a normal economy with low unemployment, a certain number of people will make poor decisions. After all, most of us might get a mortgage two or three times in our lives— leaving almost all homeowners at an informational disadvantage; amateurs dealing with professionals. But when mortgage writers strategies changed, particularly in 2004-2008, a sharp increase of foreclosures followed.
To blame unusual fluctuations in the market on the individual decisions of hundreds of thousands of individuals misses the truth.
It wasn’t that borrowers suddenly became less responsible. It was the mortgage market changing its strategy from loaning money over long periods of time to just selling loans regardless of the likelihood of the loan working out in the long haul.
Mortgage writers are paid by the loan. When the loan fails, it’s no skin off their backs. By then, someone else owns that loan.
7
Recipe for transforming a successful democracy into a third world society: Monetize the basic human needs:
1. Housing
2. Food
3. Healthcare
4. Education
Mix well and bake at 375 degrees over 50 years. Garnish with ambivalent government oversight. Serves 1 percent of citizens.
18
Ellingwood made one fundemental mistake. He was too emotionally attached to the house he used to own. Once he realized that it would be difficult/impossible to repurchase, he should have moved elsewhere.
15
I was thinking the same thing. He should have left long ago.
4
Let's hope Mr. E reads this and then seeks out someone to explain the concept of "sunk costs" to him in person, face to face, some day soon. Sunk cost is not something that comes easily to our minds, to our egos, to our self-image, to the narratives we tell ourselves. It takes training, time, and thought to internalize the lesson. Start small and learn to appreciate the advantages it confers. Then extrapolate to larger (scarier) unproductive balls-and-chains that have shackled themselves to you.
Nice article for detailing the horrors of falling into the clutches of the contemporary corporate slumlord. Large scale corporate financialization of single family stick-built housing stock will never end but one way in a Universe under the sway of Entropy, never mind the corrosive short-term next-quarter thinking rotting the culture. The entire scam hinges on the Government backing of the securitized loan-packaging. Blackshit knew this, financially engineered this, from the get go. Another massive red-flag from the get-go was that Blackshit made it very clear from the start that they had no intention of being in the 'business' whenever the music might stop this new go-around. Key reason why I bought their stock at the time.
2
@Wa He began by purchasing the property with virtually nothing down and then apparently spent most of his remaining savings on an expensive addition before his life (and prospect of home ownership) went sour.
Wishful thinking is not a good financial plan.
Who puts down 15K on an 840K house and then spends 250K(rest of his savings) on remodeling it right away? I know hindsight is 20/20 but, even with low interest rates, I would done some of the remodeling later.
18
I would recommend a fiscal revolution of working people. Stop spending on indulgences. Books are cheap. Internet is really a luxury and has been turned into a way for corporations to
More easily extract with personalized ads that play to your weaknesses. If my financial circumstances were such, I’d get rid of all the extras so that I could save a little. We believe that we need texting and all this stuff but it’s just a sales scam that is extracting wealth from the neediest of our country who will never get ahead. Corporations are taking over because we feed them with our dollars. If you want change make choices that reflect the future you see.
9
This is old news, the fact is this story is sad but not emblematic of the majority of the foreclosures that were precipitated because the owners committed fraud to get their property with a sub prime loan, also the majority of the bad loans were in Florida, Phoenix, Las Vegas and Southern California.
5
Sometimes 'free enterprise' makes me shudder ...
US may be a nice place to visit, but I wouldn't want to live there ...
10
Here in Brooklyn, not only have corporations bought up much of the local homes, but they have tended to be Chinese LLCs. If you think it's hard to negotiate with US corporations, try negotiating with mainland China! My neighborhood of Sunset Park has been decimated by this trend!
17
The smallest beach shack here in my oceanfront San Diego town is now $800,000. When the meltdown was hitting, all sorts of "flippers" came out of the woodwork, bought "cheap", slapped on a coat of paint, and raised the rent.
As "gentrification" slowly but surely transformed this formerly somewhat scruffy town into its upscale successor, renters like me leave the state. I am going back East, some I know are moving to the Baja beach towns. Others are headed for Texas.
And the ranks of people with no homes here continue to grow.
13
Elizabeth Warren would be all over this. Let’s hope that her legacy will have an effect.
10
She introduced legislation a few years ago in the senate that specifically addresses institutionally owned SFR.
4
At some point down the road, a handful of oligarchs will own the majority of housing in the USA, Land of the Free (market).
12
@JP -- Just the way in the late 1800's and early 1900's they bought up huge amounts of foreign agriculture property and now control a major sector of the North American food supply.
Well since corporations are people, it’s only fair they get to own all the housing stock as well.
5
The description on the nickel-and-dime to death methology reminded me a lot of our New York Times subscription: we pay for access, but are expected to pay more should one wish to have full access to certain sections -- I'd love to do the NYTimes crossword, or have full access to the recipes, but we already pay enough.
12
This is what happens when you are foolish enough to believe that you can afford a $840,000 home with a $15,000 down payment. If that doesn’t convince you, then add all your life savings ($250,000) on a kitchen and bedroom remodeling. Really bad decisions can have catastrophic financial consequences. To try to frame this story any other way would be disingenuous and irresponsible. While it is true, as Maya Abood pointed out, that the integration of housing within financial markets does expose consumers and communities to significant risks. Ignorance and greed can pose similar risks.
18
@Enrique Puertos
Right on point!
1
Embedded in this piece is a link to one entitled "How Homeownership Became the Engine of American Inequality". So, less ownership by private individuals means less inequality? But then, that leads to all those unhappy faces in this article. Gentrification is bad because it displaces good, poor people and replaces them with bad, rich people. But then, economic development is being denied "traditional communities" because of racist financial concerns.
You see, you can legislate away whatever you want and use the awesome power of the State to enforce it. Crack down with rent control. Drive landlords out of business. Make sure any "so-called market" functions by rules of justice and humanity rather than the profit motive. All that. But first, you have to clearly define what you'r even talking about and avoid shooting yourself in the foot with self-contradictions. Or the capitalists will win.
This is the tip of a horrendous iceberg that has devastated the American Landscape. The article fails to mention the devious tactics employed by such vultures as Lone Star/Caliber, or Select Portfolio, along with our current Secretary of the Treasury (and his OneWest Bank). It also fails to mention the legal and judicial system that backs these devious debt collectors and their army of desperate, demanding call center minions with precedents aimed at protecting these criminals. It is obvious that the goal of these thieves isn't and wasn't just the theft of property, but the transfer of enormous wealth into their hands, and the hands of those who suborn their criminal activities, followed by a new type of slum lord ownership articulated in this article. People should demand and be allowed to know what these companies pay for the dimes-on-the-dollar "debts"; laws need to be enacted to limit their tactics in stealing homes; profitability should not only be governed, but constricted (this is not - after all - a simple item bought off a shelf). Remember, too, that these companies are also collect federally funded insurance for their "loss." Those mentioned above should not be in business, they should be in jail. The question is simple: when are homeowners (current and past), who've been raped by these vultures, finally going to rise up and demand fair dealing and retribution? Where are our legislators and the legal system? Why is there no real depth in reporting?
6
@The Deli Rama (Ham on Wry) -- "When are homeowners going to rise up" -- answer, Never. He didn't want to sign up because he thought he was alone. Then found 1,200 others, but still afraid of retribution. Yet statistic show hundreds of thousands are experiencing the same, but they continue to suffer in silence.
Americans bluster and shout in secrecy or anomously over the internet. But very few stand up and are "whistleblowers". Why because when push comes to shove, everyone looks the other way and says, "I don't want to get involved". This is why a powerful few (1%) will continue to dominate the masses.
It's kind of like being a renter!
1
Private equity firms are a cross between grifters and vampires, aided and abetted by the GOP.
8
I see this spread thru this and other posts and it is wildly incorrect: "A few thousand people own half of the wealth on Earth. " Truth is less than 10%. That's bad enough, but lests get our facts straight.
1
Mnuchin knows all about this type of swindling.
He profited hugely in the past foreclosure coup.
Why do you think Trump "hired " him?
Birds of a feather .
And the Chisholm woman supports Trump ? Wake up Ms.Chisholm ! Look into Donald J.'s way of doing business : riddled with fraud, cheating, grifting. Pray for HIM to be removed rather than Invitation Homes.
9
If you wonder why there is no one to mow your lawn , fix your toilet , clean your pool or get you a cocktail when you visit or summer in the Hamptons you just got your answer. There is nowhere to live or even rent year round for someone making less than $75,000/yr . FYI no service industry people get paid that amount of money even at $15.00/hour
7
And all of you key punching desk jockeys can comment and cry all you want. In the big picture of things it means nothing. They sit back in their 10 million dollar homes and laugh at your comments. Yes it's absolutely sickening and unfair but what are you gonna do about it? I will tell you, absolutely nothing. We are a nation of sheep and we are herded and directed by the elite. Just accept it and listen to the shepards.Waaaaaaaa
7
OMG - first I am appalled by the amount of money people are paying for just RENT - how on earth can they afford that much ? I have a small 2-3 bedroom A-frame in NJ, have lived here for 20+ years now & my mortgage is just $1100 monthly. There was a plot afoot some years back to try & get me (& I assume others) to sell....then somebody 'inspected' the house & decided I needed to do 'certain repairs' - which I promptly did & they disappeared again....it was all very suspicious & I wondered if there was some scheme afoot to buy out the neighborhood. My mortgage is paid on the nail every month, and I check the account regularly ! I think the 'entrepreneurial' spirit in this country cultivates this greed & semi-criminal attitude to everything, which seems to have culminated in the clodhopper resident in the WH right now - gone are the days of decency & doing right by the little guy. How terrible for society that all that fair-minded stuff that was put in place in the early 50's is now all getting thoroughly undone.....seems the more loot they can finagle from the world, the more loot they desire - never enough cash for the greedy ! May they all go to their graves realizing way too late what they have done !
137
@vcragain -- They know exactly what they are doing. They have provided for themselves, their children and grandchildren. Beyond that they don't think about anything. They believe the planet will fix itself or science will have discovered a 'fix' for climate change by the time their grandchildren are grown. And if there is a problem in the meantime, they have several homes in different continents to 'weather' the storm.
11
@vcragain, I'm no fan of Trump, but this phenom is not invented by Trump, if that's what you're implying. And, your neighbors can tattle-tell on you if you think you're upkeeping your own property (eg. not mowning your lawn, not fixing your fence or roof). This has nothing to do with people plotting to take over your property, but your local code has certain standards that everyone has to comply with. Otherwise, your town can put a lien on your property to force you to do the necessary repairs.
This is not nothing new. As property owners, we have a lot of rights, but we also have responsibilities as well. This is certainly one of those.
2
Let us go to the root of the problem :
"The house was $840,000. He put down $15,000 and sank the rest of his savings into a $250,000 bedroom addition and kitchen remodel, reasoning that this would increase the home’s value."
When I bought my house, the rule of thumb was 20% down, not 2%. Had Mr. Ellingwood lived by this, and had he not gone do deeply into debt for a high priced divorce lawyer, he probably would still own his house today.
16
My building in Brooklyn has 100 units and was bought during the 2008 recession by a local megadeveloper for $8 million. That’s $80,000 per apartment. In New York City. I looked up my rental history and in 2009 the previous tenant’s rent doubled. My rent is stabilized but is a lot more than they were paying — many old tenants moved out & probably received buyouts.
2
It may have helped the person depicted in this article to not have financed such an expensive home. Moreover when people go through divorce and tend to see the worst in their former partner it does not usually behoove them to spend excessive amounts on an attorney. Family courts don’t have jury trials. His front yard looks awesome!
5
The very wealthy win both ways..."long & short". They bought foreclosures for pennies on the dollar. Banks, hedge funds, and other big money are responsible for the crisis and yet this resulted in millions losing their homes and tens of millions loosing their jobs and savings. This group was never made whole. Moral hazard only applies to the middle and working class it seems. These mortgages should have been written down and refinanced. This would have saved the neighborhood from reduced values and would have keep people in their home and children in place and not uprooted.
The U.S. economic system is rigged against regular middle class working folks. Just sophisticated Indentured servitude.
6
This is a fascinating article. And with all due respect to Chad; I am left wondering what is more damaging financially? Putting $15,000 down on a house that costs $840,000, or marrying the wrong person?
14
@Paul Geoghegan
"The house was $840,000. He put down $15,000 and sank the rest of his savings into a $250,000 bedroom addition and kitchen remodel, reasoning that this would increase the home’s value."
It was the remodel
4
He spent 250k (apparently all his money) to remodel a house that was owned by the bank. We do a terrible of teaching basic financial literacy in this country.
6
We need to force these entities to sell and pay their capital gains which states and the federal government can then use to fund subsidized housing.
2
What strikes me, as a UI/UX designer, is how difficult, inconvenient, and inconsistent the processes are for renters to do basic things like pay rent and request maintenance. You’d think that huge rich companies like this could afford to develop an easy-to-use platform for these sorts of things, seeing as how very keen they are to remedy “inefficiencies” in other areas.
Or they don’t because it’s more profitable to set renters up to fail with ever-shifting rules and Byzantine procedures and then collect fees, jack up the rent, defer maintenance, collect more fees, evict, rinse, repeat.
I rented for years from a big (but local) property management company and while they had some issues, it was good - they didn’t arbitrarily move goal posts/change rules, rent was very reasonable, no weird hidden fees, buildings were maintained by an in-house local crew. I couldn’t imagine renting from some huge awful non-local company that treats properties as nothing more than investment vehicles (and not people’s homes) and is unrelenting in figuring out new ways to extract ever more money from you. Ugh.
5
The "conveyance" fees are common among most renters and appear as nothing more than a price gouge. I though there were laws against such behavior. God bless capitalism.
7
When Wall street started buying up individual homes after the Great Recession, I thought "residential homes require too much irregular maintenance and what does a bunch of suits know about prop management?" It was obvious they would ignore maintenance, squeeze the lemon as hard as possible, and hope for a quick capital appreciation. As Uncle Warren says, "Beware of Wall Streeters bearing fees." The problem now is those securitized slices are dispersed to investors with even less knowledge or desire for home maintenance. The homes/neighborhoods have only a downward trajectory. Renters should leave fast, wait for the cookie to crumble, and re-purchase the homes as a DIY flip.
9
I would like to buy a smaller home, just for me, rather than stay in the family home that is now far too big. Too many smaller homes that I like are in foreclosure and I’m not going to get involved with expensive bridge loans. The housing market in California is to ridden with bank and lender corruption, making it more expensive than it should be.
12
Just thinking about the factors affecting the housing market.
* The laws of supply and demand still work.
* Big business is buying housing stock to create rentals.
* Leisure industry — like AirB&B — is buying housing stock to rent as vacation rentals.
* Population is growing faster than supply of housing stock
* Foreign investors sheltering funds in investment properties.
14
@Richard
All of the above.
BTW, the words Grab and Pyramid come to mind.
10
And what would happen if the whole home burnt down that the guy was now renting?
This ‘Feature’ article in the NYTM immediately reminded me of an article I read in Fortune (6/21/19) “Meet the A.I. Landlord That’s Building a Single-Family-Home Empire” (I’m always attuned to anything that involves the deceits of this Disguised Global Crony Capitalist Empire — in which all Americans now live).
In fact, the CEO (or Emperor of this ‘too cute by half’ Capitalist ‘looting scam’) is Sean Dobson of Amherst Holdings, also referenced here.
It seems that uncovering the vast scope, scale, and deceits of such Private Equity Pirates’ schemes to rob Americans or any ‘citizens of our world’ of their American Dreams are becoming massive projects for the principled media to ‘expose’ as parts of what Prof. Robinson first accurately diagnosed in “Global Capitalism and the Crisis of Humanity”:
“The U.S. state is a key point of condensation for pressures from
dominant groups around the world to resolve problems of global
capitalism and to secure the legitimacy of the system overall. In this regard, “U.S.” imperialism refers to the use by transnational elites of the U.S. state apparatus (hard & soft powers) to continue to attempt to expand, defend, and stabilize the global capitalist system. We are witness less to a “U.S.” imperialism per se than to a global capitalist imperialism. We face an EMPIRE OF GLOBAL CAPITAL, headquartered, for evident historical reasons, in Washington.”
Global Capitalism and the Crisis of Humanity, 2014 Robinson, William, Cambridge University Press
1
Well, the American people are fat, dumb, and lazy. The rich control the media and control politics. The New York time spent so much tome denigrating sanders and now they want to release a peace about the financialization of everything. And here I am reading this media source, unironically, about reits. The people that own the New York Times are invested in these things. You think people care. Nope! This country of “temporarily embarrassed millionaires” will continue to allow this until everything that we own or want is tied to an employer or some private equity that owns your employer. It’s disappointing. The American project will fail and the rich will come out unscathed. When the finance industry is our biggest industry we fall. Since Reagan the finance industry has become an ever larger sector worth more and more while extracting wealth from poor and middle class folks. There is nowhere on earth one could go to avoid the Rich’s oppression of capitalism.
12
@Jay Day
And, amazingly, a significant minority of Americans think the answer to their “temporary embarrassment” is to elect a real estate grifter as President!
2
Does this topic require all of this text? Absurd. Who would read this? Also, does the NYT think that "wall street" can repeal the law of supply and demand? Laughable. I saw something recently in NYT about unaffordable rents in New Orleans. Actually, rents and property values in New Orleans are declining.
3
Wow. What a shocker. America is totally in the hands of a corporate kleptocracy. Even down to the homes we live in. Perhaps socialism really isn't that bad.
14
Greed. Pure greed.
No one should be allowed more than one home. No one needs 2. Especially when people all around the world are homeless.
No company should own homes unless they are offering to rent them at reasonable amounts to middle and lower income class people.
Get rid of those ugly McMansions, too! Wasted space. Wasted energy. You only need a big house if you have a big family.
5
Here we go again. GOP inspired greed destroying America.
7
Sadly, every single tRump voter deserves as much punishment as possible for giving the rest of America Herr tRump. Every renter, home-owner, farmer, business owner, etc. etc., deserve additional beatings until morale improves.
5
Dear Lord, what a nightmare!
3
Ben Franklin said "Never a borrower or lender be." Smart advice.
A $15,000 down payment on an $800,000 house? Ridiculous. The buyer was in waaaayy over his head.
16
The 15K down buyer for this story was a bad example. Thousands of better ones exist. Dig deeper.
3
Although your former house may have been “grabbed” (or more accurately ‘stolen’) from your family by the same banking/‘finance sector’ of this Disguised Global Crony Capitalist Empire, you shouldn’t be surprised or dismayed because (as the Mob says)“it’s not personal — it’s just business”.
The first sector of this Disguised Global Crony Capitalist Empire is the ‘financial sector’ — followed by the; corporate, militarist, media/propaganda/TVad, extra-legal, CFR ‘Plot-Tanks’, and finally the dual-Party Vichy-facade faux-democracy sector of the Empire.
There should really be no surprise, because, along the lines of the phrase, “beauty is what beauty does”, we’re now all living in a world where “global Empire is what global Empire does”.
4
Empire is what Empire does:
Although your former house may have been “grabbed” (or more accurately ‘stolen’) from your family by the same banking/‘finance sector’ of this Disguised Global Crony Capitalist Empire, you shouldn’t be surprised or dismayed because (as the Mob says)“it’s not personal — it’s just business”.
The first sector of this Disguised Global Crony Capitalist Empire is the ‘financial sector’ — followed by the; corporate, militarist, media/propaganda/TVad, extra-legal, CFR ‘Plot-Tanks’, and finally the dual-Party Vichy-facade faux-democracy sector of the Empire.
There should really be no surprise, because, along the lines of the phrase, “beauty is what beauty does”, we’re now all living in a world where “global Empire is what global Empire does”.
3
These 'Private Equity Pirates' are just one part of this Disguised Global Crony Capitalist Empire that is looting all it can get ---and even claiming to be using AI technology to help the Empire steal your home:
https://fortune.com/longform/single-family-home-ai-algorithms/
No regulation under Emperor Trump means that the UHNWI, "Ruling-Elite", < 0.01% ers, self-appointed and uber-selfish "Masters of the Universe” --- which constitutes the Disguised Global Crony Capitalist EMPIRE, can feast like wolves on any asset-class of not only the working-class, but even more deeply on the Middle Class.
3
This story doesn’t do Chad any favors. Am I supposed to feel sorry for him? He made a large number of massively idiotic financial decisions, and then he is just totally astonished that the house, which he doesn’t own and which he isn’t paying the mortgage on, is no longer his. And...?
14
America The Ruthless.
Jesus was able to forgive those who were putting him to death, because "They know not what they do."
These people though. These money machines. They know exactly what they are doing. Squeezing and squeezing and squeezing, till people are near suffocating.
Unforgivable.
6
Of course the thieves are Trump's best friends. But why does Chisholm love him so much? Talk about deluded.
5
The American financial system : greed,greed and more greed.And backed up by the government! The greatest country in the world, eh Donny?
2
Obama dropped the ball on this. Straight from Bedford Falls, right back to Pottersville. Say hi to Sean Vannity, Teflon Don and Uncle Joe when you get there. Really feeling the Bern now.
3
Thanks, Joe Biden.
3
@Marc Satz Anyone who owns more than one home is part of this societal problem.
The MIT thesis cited in this article, is it written by Maya Abood or Meredith Abood? Article says Maya, thesis says Meredith.
Shantanu
Of course, these are all major Trump supporters who are in on this con!
5
Great article but you failed to give credit Alana Semuels who wrote this same article last year and you cited her same sources: https://www.theatlantic.com/technology/archive/2019/02/single-family-landlords-wall-street/582394/
4
Welcome to the latest version of the predators' ball. It is time to loot the country and the millennial GOP with its Grifter-in-Chief is just the group to do it.
2
There is a lot of blame to unpack in this article-much like articles about student loan debt.
I wish the NYT could have found a more sympathetic protagonist. Ellingwood made stunningly bad decisions from beginning to end. He put down about 1% to buy an $800K house. He spent a quarter of a MILLION dollars on renovations. He missed mortgage payments. He missed rent payments.
While these investment companies look awful, Mr. Ellingwood doesn't look much better.
The housing crisis and the student loan crisis are because of greed-on both sides of the coin. Financial lenders would make the Ferengi proud. And many of the borrowers would warm PT Barnum's heart.
When you borrow more than you can ever repay who should we blame? Only the unscrupulous lender? I myself blame the lender and the borrower.
Bernie and Elizabeth can level the playing field for the people who were truly responsible and still find themselves in dire straights. But Mr. Ellingswood with his $800K house bears much of the blame for his predicament.
10
Dana, your left hand is fighting the good fight while your right hand is pulling the lever, voting for Trump and the continuation of the greed party of the 1%. Only in America. It really is just that simple. Astounding, rich in irony and sad.
5
Who puts $15,000 down on an $850,000 home?
14
It’s a Parasite Economy folks. Mortgages, student loans, car loans, credit cards, bank fees, medical expenses, drug prices, social media (FB), all rigged to leech money or data to spin into gold.
We’re a service economy now and we’re being carved up and served up and we don’t even know it until it’s too late. Caveat Emptor should be inscribed on our money not ‘In God We Trust’.
4
"For decades, Americans have experienced a populist uprising that only benefits the people it is supposed to be targeting.... The angry workers...are marching against the arrogant. They are shaking their fists at the sons of privilege... They are massing at the gates of Mission Hills, hoisting the black flag, and while the millionaires tremble in their mansions, they are bellowing out their terrifying demands. 'We are here,' they scream, 'to cut your taxes.”
― Thomas Frank, What's the Matter with Kansas? How Conservatives Won the Heart of America
2
“The company certainly didn’t seem to care about the floodplain at the back of Ellingwood’s property”
Is this his property?!!
2
I am a Landord and this article is proof that Wall Street private equity firms own our legislators. Years ago I would see many foreclosure listings on the HUD website, but now I see almost none because the of the secret deals done by these firms. Imagine a 40 page lease that they use... what a joke! This points to the nightmare these tenants go through when their house is owned by one of these companies. I don't see any change coming, but journalism like this will help!
7
But let's be sure to elect either a rightwing Republican or a neo-liberal Democrat. The beatings will continue until morale improves.
4
Wall St has resurrected loan-sharking and now rental-sharking.
It's better renting from the mafia - at least the mob as landlords would treat their tenants better!
Isn’t “revenue leakage” like “trickledown” economics Reagan conned Americans with? Fancy MBAs are nothing more than glorified financial plumbers closing all leaks that could conceivably trickle any wealth to society.
“Ancillary revenue is the first kind of low-hanging fruit.” Like the money that many renters depend on to pay rent, utilities, feed the family or buy the medicines needed to live - and pay the taxes the wealthy Wall St profiteers evade. It all goes to the lazy shareholders starring at a screen desperately wanting more returns and money for nothing off the backs of society.
No wonder there's no such thing as low cost affordable housing - especially government provided - that cuts into the obscene profits of the profiteers. It's essentially the same problem we have with healthcare where the profiteers make the basics of life needlessly more expensive and unaffordable to most.
“convenience fee” for paying how the landlord demands? Shouldn’t the landlord be paying it? How's that legal? Legal tender is still legal, isn't it? Or is there a fee for using that too?
“the company follows local laws and practices on all legal proceedings.” Proof laws are written by and for the wealthy.
Before long societies around the world will have to rent planet Earth from the ownership class that will own everything.
1
Late stage capitalism, my friends.
6
“For seven and a half years, meanwhile, Ellingwood watched as his home began to crumble. “
It is not his home. He is a tenant and the home belongs to someone else.
3
@Laidback The that someone else should maintain it!
well, a lot of you complain about these issues yet vote for the status quo in Biden.
4
As a real estate investor, I am sad to see the NYTs write an article designed to simply inflame. Of course no one would condone the behavior described in these well-chosen anecdotal sorties, but here are a few thoughts to consider.
HUD estimates that there are 20.8 million single-family (SFR) homes for rent. 80% (16 million units) are owned by individuals. The remaining 20% (4 million) are owned by various institutions. Per this article, 260k are owned by private equity firms. That’s 1.25% of the rental market and about .2% of the total SFR market (136 million units). Really, they don’t own that much.
These PE firms acquired the bulk of these homes from 2011 to 2013, after which prices rose too high. Did it ever occur to anyone at the NYTs that these PE firms overpaid for the homes? The costs of managing a large network of homes have always been a major concern for anyone in this space. In any case, these PE firms bought at a time when no one else would and not only put a floor on home prices, but actually prices to levels that put many of them out of business.
I could site a number of other issues with this article but at the end of the day, if I didn’t get along with my landlord, I moved.
7
@jldooley While the overall rate of institutionally owned SFR may be low overall, their ownership is highly concentrated in some neighborhoods. In some neighborhoods REITs own up to 35% of the single-family houses.
Following the housing crisis, REITs bought houses in bulk through federal programs such as REO-to-rental. They got these SFR at a discount--they didn't overpay.
2
Maybe Bernie has a better vision for America's path forward compared to Biden who actually re-wrote the bankruptcy bill to disadvantage consumers at the behest of the credit card companies thereby earning the nickname "Senator MasterCard".
5
His wife should’ve “stood her ground” against him, saving the family from financial ruin (provided a sympathetic prosecutor). FWIW, my church recognizes self-defense, but not divorce. How did they predict that California would twist divorce laws that death could be better than life apart?
All the time, effort, taxpayer bailout money and continued govt involvement in the mortgage market to perpetuate this system. Would have been easier to refinance all these underwater mortgages. Could have paid banks to do the paperwork. And, all these years later, all that equity would be in the owners hands. Coulda done that. Nothing would have precluded it. The Trumps and their ilk get to refinance when the market moves against them, not you. (And this guy with his spiritual oneness house? Get over it. You can’t afford it.)
1
By the way, one of the companies that profited from this was run by Steve Mnuchin. Kamala Harris could have gone after them but instead chose to focus her energy prosecuting the parents of truant children in a case of the government practicing corporate welfare for the well heeled but crushing underfoot the poor.
Perhaps one of the saddest part of this article:
But shortly after the birth of Ellingwood’s second son, in June 2010, his marriage fell apart. He and his wife each sued for sole custody. To pay his lawyer, he planned to refinance his house, and his grandfather advanced him his inheritance. By 2012, Ellingwood had paid his lawyer more than $80,000, and in the chaos of fighting for his children, he stopped making his mortgage payments.
If you are getting divorced anyway, maybe it is better to figure out a way to preserve your assets for your own children rather than funding the college tuition of your divorce lawyer's children....
8
This is a money grab from the America Dream, the American Family. This claw back on the Middle Class is an example of many that will implode capitalism. Capitalism will cannibalize itself if not kept in check.
4
And yet it looks sadly enough, based on yesterday’s election results, like the American dream needs to be dragged through the mud for a while longer before folks are no longer placated by bread and circuses.
3
Just more examples of how capitalism has no ethics, no boundaries, no compassion but an overwhelming need for greed. These people don't care how many folks they hurt. The call center in Romania says it all.
2
Let me get this straight: it's not socialism to subsidize banks and private equity with taxpayer money. Do I have that right?
9
Fantastic reporting about a complex but deeply important part of AmerIcans’ lives.
So many tricks with money, the rich getting richer, sponging off the ever-squeezed and disappearing American middle class.
Nowhere to run. Nowhere to hide. Especially in a corporate owned residential rental home from Invitation homes.
1
The corporate raiders of companies in the 80's moved on to become the corporate raiders of real estate ; like locusts they will continue to move from field to field . Communities need to demand state , and city elected officials put a stop to these predatory practices by passing stringent laws prohibiting the practice described in this article . The not cashing the rent check is an old ploy of New York landlords , they also rip them up and claim they received the check in that form , meanwhile charging a late fee . No area of businesses they buy are exempt from their greed . First they cost people their jobs by hostile takeovers of companies , now they cost them the roofs over their heads . It is up to us hold them accountable by assuring laws are passed to curtail these practices ; we have the power of the vote to end their nasty plays and by holding our law makers feet to the flame . Bravo to Ms Chisholm .
1
Thanks to bailouts by corrupt politicians using fear to further enrich the donor corporatists over equal protection, they first defrauded with bad loans and related gambling derivatives and now own it all. Bad financial bets needed to be felt, but real central planning bailed them out at our expense.
One thing is strikingly apparent in this article, this is as Yogi Berra once said, “it is dejavu all over again”. In 2008 and 2009 started by the mortgage crisis and now it is the vultures of the REIT’s. We in our country never learn do we.
So much for Federal regulations.
2
It may not be this election, or the next, or the next one after that, but some day enough people will revolt against this gross wealth inequality. And that inequality will be reduced, by a little or by a lot. I just hope it's through legislation and not violence or revolution.
You have to have a college education just to understand the process of how these private equity firms make their money. How in the world is anchorperson on the nightly news going to explain this to "the American people," who need to know why their rents are so high and they're being charged outrageous fees--and that this is something legislation is meant to remedy or curtail. However, if I read your story correctly, you're saying that these companies are now too big to fail, since Fannie Mae (the taxpayer) is on the hook for any collapse of the market. I'm ashamed Vanguard is participating in this scheme. And the woman who has the Facebook page and couldn't be bought by the rental company, well done, but open your eyes: this is what Trump does, to his citizens, in so many ways.
1
Homeownership is an indication as the wellbeing of an economy.
When homeownership is undermined, the economy in a sense is undermined.
The methods applied by financhial entities in this story are not sustainable.They are basically methods employed by financial vultures to create value for their financial entities. Meanwhile the asset they are trading in not being maintained.
They are messing up people’s lives and dreams big time.
What has been created is an economic and financhial war zone.
It’s a story about how ugly Capitalism can become when predatory business methods are employed.
2
More than 40% of Americans earn $20,000 or less and many don't earn much more. Most of us are on the hook for something, education, a car, medical expenses. To get people to keep buying way back when jobs became less secure and salaries stopped going up banks and corporations handed out credit cards like candy. If you can't afford luxury goods, we'll target needs like housing and transportation. Since then there's been one scheme after another including, buy a house it's a good investment. It can only keep going up in price. Some comment that this guy was foolish, that he's not sympathetic because he bought the hype. What about people who thought they were being sensible by buying a mobile home only to find that the land under them is owned by a corporation that raises the rental fees beyond what most can afford and also tack on all kinds of service charges. As someone commented earlier, well, that's how capitalism works, which is why I want to see it overturned.
3
Homeowners used their homes as ATMs when the market was soaring. When it crashed, they lost their shirts. It wasn't solely the banks fault.
4
@M
Weird I thought the Banksters were PAID TO QUALIFY PEOPLE FOR LOANS?
1
Nobody is talking about the real problem. The real problem is that too much property is being built for a demographic that does not exist. There is a glut of property which families cannot afford and a shortage of properties that they can afford. Subprime was one way to get people into homes and lifestyles they could not afford. Rent is just the Take II version of the subprime. Those who defaulted on their subprime mortgages will default on their rent in the next downturn. The market solution will be for serial defaults to continue until the fall in property values matches the rise in income, which will take a while. The cause of this crisis is Wall Street Greed and Fed hubris which seeks to substitute lack of income or return on assets with low interest lending.
If I were a 30-something, I would consider leaving the US...this is no longer the land of opportunity, just the land of government enforced inequity. After reading this I will not vote for keeping the status quo and vote Biden, my vote will go for someone who is willing to change things, yes, hate to do it but I will vote for Bernie.
2
Let's say you see a house in your neighborhood for sale at a good price and you buy it as an investment. You rent it out to pay the mortgage and taxes. The rent you charge and the agreement about who pays which maintenance costs is between you and the renter, right?
If you used your money for a down payment and took the risk of owning an investment asset, you're not "taking advantage of" someone who couldn't or wouldn't buy the house for themselves.
If you try charge more than the market will bear or ask your tenant to pay too much in extras, they'll leave and you'll have an empty house - and bills piling up.
That's how the free market works.
If you don't like a deal, don't take it.
If you want to stick it to "greedy" professional landlords, don't rent from them.
Problem solved.
4
The discussion is about corporations that buy large numbers of foreclosed properties, slab new paint, then rent at inflated prices.
I found this article distressing, sad and infuriating. Why are taxpayers subsidizing loans to these companies? Why are laws governing landlords’ obligations to their tenants so weak? Why should a tenant have to pay for mold remediation or other major repairs? Why should they have to pay full rent when major appliances don’t work? We need to encourage laws that make the relationship between landlord and tenant more equitable. If huge corporations find that too burdensome, they can easily sell the their housing stock and park their cash elsewhere. I’m sure that would make housing more affordable, even in pricey markets.
3
People need to read their leases, AND understand them, before signing. You can't just unilaterally stop paying a fee you've agreed to and think it's going to be ok (as Chisholm did). When you sign a lease, you're entering into a contract. If you don't understand it, ask questions. Don't make assumptions.
11
As a small-time individual landlord, this confirms what I have noticed the past few years. Every rental I compete with seems to be owned by some corporate entity which was not the case ever before.
I believe that individual landlords and homeowners should be the ones getting the breaks and the loans, not big companies. I can't think of a single reason why having a corporate landlord would be better for a community than a local person owning and having a reputation to manage.
That said, people like Ellingwood just make me shake my head. I live in LA and know his area. He's in a $4k/month house in Woodland Hills - he could easily be paying half as much. Sure, the landlord sounds awful but have some personal responsibility. Most of his issues seem to be fees because he is spending all of his income on a house he clearly cannot afford. Why?
14
How about equal protection under the law instead of any benefits and incentives.
1
Government is making it more and more unaffordable for ordinary people to own a house.
Mortgage rates are low but local taxes are going up at astronomical rates and are no longer deductible.
Our house is paid off but local taxes are now higher than what we once paid on our mortgage.
13
Government does not love you. All unequal benefits to special interests end up making more worse off.
I really wish I would witness a single presidential candidate refuse to answer a fluff identity politics question from a debate moderator to speak to these important matters with some in-depth knowledge that is not gained in talking points. There are so many important issues facing us.
26
@Henry Fernando
Have you heard this guy, Bernie Sanders? He gets criticized for staying on topic, but he talks incessantly about precisely these issues. Too bad so many voters don't listen.
"Homes" are engineered to be international investment vehicles, legally, financially, physically. The is no limit to the demand and the local market is near irrelvant. Building more homes is in no way going to saturate demand. Might as well mint more Bitcoins.
Unless you're in the market for this sort of financial instrument you're not likely to be happy with this. This includes all who just want a place to live.
5
Better to let people build than let more central planners ruin your local markets.
“Housing Grab”? If I were selling my home I would welcome any buyer willing to meet my price. That’s the way free markets work. Are you saying sellers should be forced to accept lower prices if the buyer is an individual? Good luck with that.
9
Real estate is far from a free market. It is fully regulated by government that prefers special interests over equal protection. The more central planners lie about their love fir you, the worse off most will be.
Liberty, equal protection and free markets work, but fear mongering keeps the people in chains.
Private Equity and their thirst for money is destroying the social fabric of this country. Besides single family homes they have their hands in off campus college housing emergency ambulance services, emergency helicopter services, urgent care facilities, emergency room services, and outpatient facilities.
Todays large market gains were because private equity and health care feel like they have their guy on the democratic side of the aisle.
The status quo remains. To them all is good.
Just think it is not state and county public health facilities that will be testing for COVID-19 but for profit private labs.
24
@sailorgirl Agreed. Private equity firms have also killed the economy in Puerto Rico too. Again, capitalism without any restraint will eventually turn predatory and dangerous.
This has been going on since 2009. Only in the last few years have California legislators noticed a housing availability and affordability problem. Their solution? Shrug off the vultures who buy up formerly owned houses and diligently work to eliminate the rest of owner-occupied homes. Dismantling existing SFR zoning to increase density will make all Californians renters before long. Developers and real estate investors make hay while we bleed.
15
@S We already have about 10 million people in Los Angeles so why do we need to increase density ? Do we have too few people?
Lately upscale neighborhoods that have tried to become historic preservation zones have failed and the opponents have been developers, not homeowners .
6
The more you want central authority to “protect” you, the more you will suffer as a child.
1
This article contains numerous and stunning examples of wealth redistribution, from working families to Wall Street and investors. Aided by the government, of course.
22
@Susie
The frightening this is the number of people in America that are AFRAID of the one presidential candidate that wants to stand up for working people and to put a check on the power of corporations.
1
Really now, after the huge tax breaks, coupled with record low interest rates, how else are giant companies expected to make any money. You must remember Giant companies are people too,according to this Supreme Court and entitled to the same (or better) constitutional rights, whichever is necessary. Giant Companies have never been sentenced to Capital punishment however, no matter how many people they knowingly killed.e.g. Tobacco companies.
13
There was an article about private equity partnering with public pension funds promising 40-50% returns while doing their shady work bleeding other private pension funds dry and engineering companies like 'toys r us' to bankruptcy with saddled debt. Just google it.
8
That's another failure of capitalism and why we need BERNIE.
16
Private equity destroyed the likes of "toys r us", perhaps KMart/Sears and Circuit City where new owners take huge debt against the company assets and sell parts of it on the theory that sum of the parts are more than the total, saddling debts on the company before moving on. In the end, employees working years on the job lose their jobs, their pension contribution if any, 401k amounted vested by the company when contributions began and so on. Blackstone, Bain Capital and a slew of companies are big players. Wasn't Mitt Romney part of Bain Capital, now preaching ethics?
Now real-estate is their target. Why, many boomers in their 60s and 70s have equities tied up in their real estate (primary homes), these companies bundle reverse mortgages and all sorts of financial derivatives aimed at sucking people dry. And yes, they contribute to PAC which in turn gives it to establishment candidates be it DNC or GOP. Biden, Pete are no exception to receiving this blood soaked money.
13
I can never figure out whether it's a feature or a bug that these stories inevitably feature incredibly unsympathetic victims. Mr. Ellingwood's eyes were bigger than his wallet, and he made repeatedly poor financial decisions for no apparent reason. Ms. Chisholm appears to have wanted nothing more than to make money for herself- a true Trumper, I guess.
27
I'm not a trumper but Chisholm asked for a fund for tenants. She declined the money for herself.
2
@jz They could skip the personal sob stories for that matter. But it seems to be a rule that we must be presented with the tale of some careless sap who didn't timely pay his mortgage because Life Happened etc.
1
This is what happens when “money is speech”.
Our government is owned by Wall Street, and is promoting this rather than protecting the country from it.
Those who don’t learn from history. . .
14
@Grove
Money didnt help Jeb Bush , carly Fiorina, Meg Whitman, bloomberg or Steyer.
money is power and power corrupts . The more money you give to the government in the form of taxes and the high cost of regulations,the more corruption you get and the poorer you get if you aren't a crony or government employee. Big business loves big government because they get contracts ,grants, favors, waivers. Big corporations usually support democrats. Small business people support republicans
1
It's very easy to write a sensationalist article about individual cases of people who were hurt in the housing crisis of 2008-09 and blame "big bad Wall Street and the greedy bankers". What about the greedy consumer class in this country who need to buy everything (including housing) NOW and are willing to max out on their credit to do so?
What ever happened to saving for the things that we want, including a house. It's not a fundamental right. If many of the buyers pre-housing crisis had put down a greater down payment and borrowed less, they would be less susceptible to losing their homes if their income declined.
I'm certainly an advocate for increased financial regulation, but understand that today, only a decade after the housing crisis, you can buy a house with 3-5% down or less. If you use that much debt, it doesn't allow for much of a safety net.
15
@Jeff
Low and No down loans performed quite well, when backed by Gov't (VA, FHA, Fannie, etc) of course when the WORLD WIDE housing bubble hit and the Banksters in the US gave anyone with a pulse a mortgage (2004-2007), the bubble inflated, THEN popped
Once the bubble popped even those who QUALIFIED through Gov't backing starting losing their homes
Over 50% of all loans in 2006 were non conforming (not eligible for Gov't backing, think wall street). Non conforming 1% teaser rates for 12 months, No doc loans, 110% LTV, etc
REGULATORS on the beat help, but like Ronnie Reagan had with the S&L crisis, Dubya had with the Subprime loans, great economies, until they weren't
True. I’m selling a home I one of the boroughs for deceased family member.Buyers are playing all kinds of games asking for seller credits which will enable them to buy the house with very little money. Being skeptical I interviewed the mortgage brokers and yes, true. Unreal this is happening only 12 years later.
2
Welcome to capitalism run amok. Companies like these are mainly responsible for making sure no one in America who is poor or middle class will ever get ahead in their life because they are nickeled and dimed to death with fees, penalties, and rent hikes. What is the point of working your fingers to the bone if all you can do is run to stay in the same place? The entire system is geared to keep people poor and oppressed.
20
Well written and presented but the problem is not about one man's housing choices or a family needing a home. Why do folks who have apparently never been driven by love, family, or a need for security blame Americans being exploited by our own rapacious capitalistic greed? Have readers noticed this scheme is financed by securities that mirror those that nearly destroyed the global economy? We have given corporations financial domination over our nation and we need regulation now. Securities must have transparent risks and and known sellers. Federal subsidies and tax advantage to these predictors must stop and national resources refocused to help local home buyers and families. At state and local levels we need a plan to prevent communities from being hollowed out by this infectious cancer. While home owners may defer maintainence there is nothing more dangerous and undercutting of local property values than corporate landlords who are maximizing profit. These vultures will spend the least and encourage turnover because that's how they make the most money. I'm surrounded by local rentals of single family homes not built to purpoise and quality of life has plummeted.
6
Scary word to help fix this is regulation (gasp!, we just lost have the voters). In my industry we are forced to use disadvantaged business enterprise (DBEs = small firms, veteran owned, woman owned, etc) on our contracts to give the smaller companies a chance to win work. Perhaps communities and states should adopt a similar practice to guarantee a percentage of homes are sold to families and not corporations.
5
Capitalism devours itself and this article is a testament to that fact.
Like hard core addicts Capitalists will not stop until they kill us the planet and themselves or there is an intervention.
I'm working for the intervention! Join us! #Bernie2020
6
When such blatant examples of cut-throat capitalism are part of typical business-as-usual practices, who would eschew the protections offered by a liberal, or even —gasp!— a socialist democratic government? Only those who have the rest of us by the throat.
4
Also those whom the @gop has convinced to hate “others” more than they love themselves.
Excellent reporting. It seems the housing market collapse was a win win for Wall Street, they got bailed out AND got to profit off their own negligence.
7
The bank bailouts were largely opposed by Republicans and only passed because of support by democrats. Contrary to popular belief the bailouts involved trillions of dollars not the several hundred billion reported by most media . The Nation and Bloomberg have diagrams of the trillions in bailout money . if bad actions are rewarded as was done by the bailouts bad actions continue. The NYT recently ran a story blaming the financial crisis of 2008 on people who bought houses they couldn't afford . The NYT overlooked the role of mortgage securitization and credit default swaps in the collapse of housing and the rise of foreclosures . The NYT also overlooked the role of firms like Moody's that gave the securities based on housing AAA ratings.
Helping people keep their houses by helping them get loans just helps banks. if you want to help homewowners let the banks reduce principals , which they would be more likely to do if you dont help people get more loans
5
@Molly
Weird didn't Ronnie Reagan have a Banksters credit bubble and bust like Dubya had the subprime mortgage bubble?
Didn't Mr Grey (regulator) warn Ronnie starting in 1984 about the S&L's taking on too much risk?
Didn't the FBI warn Dubya that there was "an epidemic of mortgage fraud that could rival the S&L crisis" in Sept 2004? Hmm didn't Dubya take agents out of the white collar crime division?
By 2007 there was ONE full time agent on the entire USA looking at mortgage fraud
Kinda think it might be the guys who "don't believe in" Gov't or regulator oversight might've messed up there?
Obama did not save homeowners who lost to the greed of Wall Street. If he had saved them a lot more people could view the Democrats as for the people.
5
Many of us called on Obama to fix this, and instead he chose to hand over billions to Wall Street, no questions asked.
Fortunately, Biden will no doubt come to the rescue next year.
(I kid, of course.)
7
Nobody is commenting on the rabid trump voter, Chisholm, in the article. As far as I’m concerned, she is getting everything her trump vote deserves.
5
These prayerful people like Ms. Chisholm who believe in Trump, just when is it going to dawn on them that his closest buddies and advisors like Thomas Barrack are praying every day that they won't wake up to realize that their hero Trump is laughing at them every night in his bedroom at the White House? Trump has been ripping tenants off for decades, learning at the knee of his crooked father Fred. And now you Trump voters are crying and whimpering about how these real estate investment companies are doing great damage to your lives and long term security. Good luck, you have given your support to your tormentor.
6
The value of US residential real estate is $30trillion. $60billion is a rounding error.
More class warfare politics.
4
Just checked online for value of U.S. residential housing. Total $33 trillion at beginning of 2019. Quick math says Wall Street's $60 billion is about .2% of that total. While Wall Street could be the cause of some localized problems it seems to be a stretch to think they are enough of the market to be ..." putting the American dream even further out of reach". Please check my math and the value of US residential housing.
3
Fabulous reporting on a truly repulsive industry. Although I sympathized with Chad's story, I think this piece would have been stronger had it followed a different individual or family. This guy way over-borrowed. There are other folks who are working hard and living prudently who are completely shut out of the housing market in the first place. To me, that is even sadder. Chad at least got a shot.
11
@Alex
Agree with your comment. Paying $80k in lawyer's fees for a divorce case was the first one of many bad, emotion-based financial decisions.
1
Little late covering what’s been going on for a while NYT down there on money alley.
Names. Arrest, take professional accreditation from the lawyers, Entrepreneurs, financiers and other grifters along for and facilitating the predation. Confiscate their property, cars, boats, the whole shebang. Like you do to drug dealers, on the corner or running the op.
Make them work for the minimum wage for a decade.
Bid’ness in Sicily.
5
Thank goodness the Senator from Visa and Master Card will be the next president so these investors will be protected from the Ellingwoods of the world.
4
And it all happened on Obama's watch. And in California under Kamala Harris who smiled as she collected those Wall Street checks. The media would like to pretend otherwise. In California we know the truth. The Democrats were enablers, not protectors.
6
A president Warren would have done something about this.
2
I would make it illegal for anyone to buy a house that they do not intend to occupy. Or perhaps limit such a purchase to one. These greedy business practices are destroying the housing market and destroying neighborhoods. Nor should non-American citizens be allowed to buy American real estate. Why are we selling our previous country to the highest bidder? while driving up housing costs and contributing to homelessness? It is immoral and un-American.
4
And one wonders why there are more homeless people on the streets.
4
These companies are vultures, picking apart the last remnants of The American dream; home ownership. Racketeering clothed in corporate culture: LLC's are fine garments for our private equity firms. Please tell me we won't reward them again with anything except prison terms.
4
Predators who go after poor and middle-class people. Same as it ever was. Will Someone please give these people another tax cut ??
3
And people wonder why housing has become so unaffordable in this country? We’ve been house shopping recently, and what’s become apparent to me is the real estate market is the most under-regulated market around, which is why it’s filled with sellers, real estate agents, flippers, corporate agents, and buyers who are liars, cheats, and thieves. Smh.
5
Still this paper and the establishment democrats would keep the status quo, of course. Crocodile tears. But well-mannered for show.
2
The Coronavirus Black Swan Recession (or Depression) is around the corner. Those who lose their jobs, businesses or income cannot pay the rent. Wall Street will be left owning property on which their renters are not able to pay rent. How many people can Wall Street evict? especially when there is nobody else available to take their place and pay rent. Wall street firms will ultimately lose those properties when they cannot pay their debt. This all could be easily for-seen. Those who defaulted on their mortgages in the last recession will default on their rents in the next one. Only Wall Street is stupid enough not to understand this logic. Like they say, you cannot extract blood out of turnips, all that will be left will be turnips.
2
It’s cheaper to keep her.
1
REITs are the hot new trend in Toronto as well. The corps can afford to buy up city blocks and put whatever 4 walled sky box they want, and somehow they make millions and billions.
It makes for a hotbed for scams too. Most classic is the overseas "landlord" who asks you to send a cheque and then they send you the key to check the place out. Since investing in condos is almost "guaranteed" to give a 10% annual return, business is a'booming.
A regular everyday working person like me can no longer think about affording a purchase in Toronto. Maybe even get priced out of renting too.
4
Kudos to Francesca Mari for this excellent piece.
But...how sad that the New York Times is so late to the party! Where was this coverage ten years ago? Or heck..in the weeks leading up to Super Tuesday?
8
Producing nothing of value, they are the definition of rent seekers.
Wanna bet no body will do anything about it?
4
But they vote for Biden, Mr. Wall Street.
3
Thank you very much, Francesca Mari, for this excellent report, and thank you to everyone at The New York Times for getting Francesa's work out to everyone in the world who has access to The New York Times.
2
On this shocking crisis see also:
-Aaron Glantz, “Homewreckers”
-The 2019 documentary by Fredrik Gertten, “Push”
Nothing will stop this terrible depredation except new political leadership who will force through powerful financial regulation, which may be as rapid, disruptive and transformative as was this land/home grab. If ignored, there will be much more disruptive responses and social upheaval. We must reverse the toxic transformation of single-family homes into globally traded commodities.
For example:
Two parties make an offer on a home. Both can afford it (cash or mortgage). One will live in it, work in the community, pay local taxes, send children to schools, etc. The other represents a real estate investment co. and will never live there. SIMPLE NEW LAW: The sale must first be offered to the individual buyer who will actually live in the home and community.
The following law would also help return our cities and communities: companies that buy single-family homes as investments must wait 10 years before selling them again (instead of 30 times a day).
This is housing, not gold. “The full integration of housing within financial markets” is killing our communities and cities, and preventing hard-working millions from living stable productive lives. Housing is a human right now denied even to those who could have otherwise afforded it.
It is good to see this article. Thank you Francesca Mari, Aaron Glantz, and Fredrik Gertten.
6
So is the Senator from Dow Chemical going to do anything about this after he is elected President?
3
This ‘Feature’ article in the NYTM immediately reminded me of an article I read in Fortune (6/21/19) “Meet the A.I. Landlord That’s Building a Single-Family-Home Empire” (I’m always attuned to anything that involves the deceits of this Disguised Global Crony Capitalist Empire — in which all Americans now live).
In fact, the CEO (or Emperor of this ‘too cute by half’ Capitalist ‘looting scam’) is Sean Dobson of Amherst Holdings, also referenced here.
It seems that uncovering the vast scope, scale, and deceits of such Private Equity Pirates’ schemes to rob Americans or any ‘citizens of our world’ of their American Dreams are becoming massive projects for the principled media to ‘expose’ as parts of what Prof. Robinson first accurately diagnosed in “Global Capitalism and the Crisis of Humanity”:
3
And put an end to the Anonymous ownership L.L.C.s !
6
A rabid Trump supporter being abused by a Trump crony and she doesn’t see the connection between the Trump administration and its business first policies. Ms Chisolm has gotten exactly what she has voted for.
6
@Deirdre
You do realize that most of this man's financial difficulties of this happened during the Obama Administration? Stop acting like the Democratic Party is not complicit in the corporate rape of America:
NAFTA
The repeal of Glass-Steagall
China entry into the WTO
All spearheaded during the Clinton administration. Also notice that at no time did the Obama administration order any criminal investigations related to the actions of Wall Street investment banks and their role in the financial crisis.
@Carl
Glasss Steagal? That have ANYTHING to do with the five investment banks (wall street), you know the guys who ran this bubble (subprime) which according to Dubya's working group and the Federal Reserve was 2004-2007, AS Dubya gutted regulators and ignored regulators warnings?
NAFTA? Oh right that Ronnie Reagan thing he proposed, negotiated by Poppy Bush and voted against by 60% of Dems in Congress
WTO? lol
Is it any wonder there's a housing crisis and huge increase in homelessness? These predatory property managers setting people up to be hosed forever. Where is the governance to keep this from happening? It is eroding communities. This has to stop.
4
Something started happening in my small city in the Mountain West around 7 years ago.
It is no longer possible for people who live and work here to buy a home, and rents have skyrocketed. Yet jobs are scarce and temporary. Our college town now crushes anyone who doesn’t already own a home, young people especially. Nothing but new banks were built, which made no sense, and national real estate firm storefronts, which were never here before. When a small house goes on the market, and a young family with an approved mortgage acts immediately to make an offer, they always discover it’s already been sold for cash. We constantly find notes taped to our own front doors pushing to buy the house for cash immediately. It has been a breathtaking transformation in our community. We are blindsided and many no longer see any hope of making a life here.
This is a defining crisis affecting several generations of Americans. Now we learn this isn’t a local market phenomenon. When people give up here, they crash against this wall elsewhere. Our local leaders can’t help, and our national leaders and legislators don’t talk about it. It was barely mentioned in the democratic debates. In fact, the individuals shaping US economic and housing policy have participated in this, buying thousands of homes themselves (see Glantz, "Homewreckers").
Legislators, hear the people: immediately regulate the financialization, capture and weaponization of housing in this country! Before there’s nothing to lose…
11
I can remember how rare a word "foreclosure" once was. The other day, the city of Detroit held a meeting with hundreds of homeowners who had been foreclosed on, possibly by mistake.
The fact that foreclosure has become so common is a reflection of how the middle class has been dismantled.
14
Spent $15K and borrowed $825K to get what he wanted immediately. Spent/borrowed $250K more to have more of what he wanted. Realized "adulthood was upon him" after having done more of what he wanted. Chaos ensures. Finds $80K to help make things go his way.
An escape hatch opens. A chance to just walk away. But, no. Signs up for another ration of self-abuse.
And so it goes.
22
Southern Nevada serves as an example of corporate housing with inflated rents and excessive home pricing. It's almost impossible to rent a house or an apartment in Las Vegas with all the fees and cost attached to rentals.
In days gone by, it was just rental houses that required one month's security payment with your application. Now apartments want a first and a full last month's security payment as well. Not to mention all the other "fees"; administration fees, rent application fees, pet fees (which can run $700.00 + a year per pet), etc. It now cost $3000.00 down to rent a not so fantastic $1,000.00 a month apartment. That's highway robbery. What does the State of Nevada do about it? Nothing.
Our state is booming. Thousands of apartments and houses being built wherever there is a open lot. Everyone wants a piece of the pie. What will be just desserts is when our water supply is gone, which considering Nevada just had to build a deeper 4th pump (Lake Mead) to siphon water (when we hit pump #3 we were in crisis mode), we'll be dry in no time. And yet the building continues...
Rent in Las Vegas has gone up 20% this year alone. Californians, Amazon employees, Raider fans and employees moving in to the valley has sent greedy property owners raising rents and values of homes faster than a speeding bullet.
Shortly, Las Vegas will back to the #1 city in the US underwater (and out of water). What short memories our dear leaders possess.
14
@Valerie I live in Las Vegas, and it's unfortunate that you read this article (you did read it, right?) and still believe that "Californians, Amazon employees, Raider fans" are the problem with the Vegas housing market.
The fact is that corporations exactly like the ones listed in this article are willing to immediately pay cash for Las Vegas houses to add to their portfolio.
THIS is why your rent is so expensive, and why you can't afford a house. Any realtor will tell you this.
5
@Michael-in-V Not completely accurate. We had a real estate agent tell us that the reason for the increase in pricing is due to the influx of Californians along with people coming to work big business in Nevada. Corporate companies (especially foreign companies) purchasing property is also contributing to the increase. The two are not mutally exclusive of one another. Listen to our town Mayor speak. She acknowledged that LV is booming and therefore the rent and cost of homes are increasing (supply and demand). Thank you for your comment, but I think I got the jest of the article just fine.
2
It's the rock bottom interest rates.
I'm a small business owner with some cash to invest. There's literally nowhere to put it. We can put it in a CD or a savings account with our credit union, and learn less interest than inflation, thus losing money. Or we could gamble it in the stock market. Or, we could invest in real estate, where we can earn some sort of return. So, real estate it is. Now, with the interest rate continuing to be so incredibly low, we earn a much greater return by borrowing against the properties we already own, and buying even more properties.
If interest rates were reasonable, we'd happily plunk our money down in some sort of savings vehicle, and not worry about he hassle of being landlords. But with King Orange continuing to scream about (his own) interest rates being too high, we don't foresee stopping this practice any time soon. I feel bad for the people looking to buy a house who have to compete against us (all cash offers), but I don't know what else to to.
9
It is more nuanced than the article suggests.
1. US residential real estate is valued at $30 trillion dollars. $60 billion is a rounding error.
2. Many pension funds (most of which benefit middle class government workers) invest in these type of PE funds. So it is not just Wall street that is supposedly benefitting from these investments.
12
Where is the nuance?
Would you want to rent from this company?
4
this is exactly what's happening under our noses in NC. rentals are more than double mortgages, and the available houses are drying up for ordinary people. it's not just foreclosures, it's houses still under construction in desirable locations. hedge funds are buying new houses in cash, because it's a good investment to have seven years without maintenance. prices are skyrocketing, because they monopolize the rental market.
11
I am just glad that the big companies were there to buy up all of the real estate that was available during the financial crisis. Otherwise we may still be slogging through it instead of enjoying nearly ten years of unprecedented economic growth. Another victory for capitalism.
6
Yes a good thing we bailed out them out.
@Mike, not true. When companies buy up real estate, particularly single family homes instead of office buildings, they keep immense pressure on prices instead of letting prices settle and having individuals get in to obtain equity and share in the prosperity. Hedge funds are a cancer.
4
Concerned inflated real estate and cost of living also driving up cost of HVAC, electrical repairs. As real estate costs rise and take more of a persons income, (along with college tuition, and healthcare in particular), contractors are adjusting their costs ever higher. Food cost are climbing too. Who hasn't noted the gotcha trick of reducing quantity/size of food items, while keeping price as high or higher than before? Some can opine Americans have become spoiled, that we need to realize much of the world would love to live where they do not have to worry for the safety of their families in the day to day, where they do not have to bribe officials and law enforcement to get by. They can say we should work harder, work a second job. Some of us already are. There points are valid from where they view us. From where we are, we see many flaunting their wealth. We know many can easily live very well off their dividends alone without ever touching principle.
A question to the wealthiest Americans is, at what point will Americans be pushed no further, and what will that be like?
4
"The house was $840,000. He put down $15,000 and sank the rest of his savings into a $250,000 bedroom addition and kitchen remodel, reasoning that this would increase the home’s value."
Seems like he might have been better off putting the $250,000 into the down payment, foregoing the addition and the fancy kitchen. His payments would have been lower and he might have been able to make it through the hard times. You can't magically have it all right away.
The behavior of property owning companies sounds like something Elizabeth Warren would have done something about. But we'll never know that now as she appears to be out of the race. Centerist Democrats are in bed with Wall Street so this sort of vulture capitalism will not get fixed by them.
28
@ws
Agreed. Do you remember the NYT's article on student debt, where the article focused on a woman who borrowed almost $150k for photography classes, figuring she could repay her debt after she became a professional photographer but found out she was unable to pay her loan when her dreams failed to materialize? The article expected the reader to feel sorry for this woman. Now this guy with his $250k room addition. Whatever.
2
This is a story of how not to live your life. He bought into a housing bubble with a minuscule down payment. Mistake number one. Then used his savings for an expensive remodel. Mistake number two. Then as a newly wed with a young family he surrounded himself with his extended family. Huge mistake number three. A married couple is supposed this rely on each other. Having some family nearby usually works ok. Having a ‘family compound’ that consists solely of the extended family of one of the spouses? Toxic to just about any marriage. Then when the out numbered spouse probably can’t deal with being completely surrounded by her in laws and files for divorce the over-indented new father breaks the bank to lawyer up - likely egged on by his neighbor/relatives; nobody likes being bullied but I’m having a hard time feeling any sympathy for the corporate bullying this guy is dealing with. Sounds like karma to me.
10
@Sara He didn't just buy into a bubble; he bought into a bubble just before it burst. Who in their right mind (except a multimillionaire) would have bought an $840,000 house in 2007?
2
What's worst about all this is that it wouldn't take much improve the experience for renters, but due to pressure from investors these companies must wring every cent out of their tenants.
Isn't unregulated capitalism wonderful?
5
Sickening. My husband and I are of modest means, and were deeply fortunate to find our little Victorian in Cincinnati. Our house was affordable largely thanks to its age and outmoded facilities- exactly right for our frugality and aesthetic. That said, we saw so many older properties that would have been similarly priced, were they not in the hands of investment houses and for-profit flippers. Affordable houses are becoming a rarity thanks to these fleecers, and it disgusts me. A last disclaimer: part of why we were able to buy our house was thanks to the seller, a widow who insisted upon selling to an owner occupant, rather than an investor or landlord. I am eternally grateful for her perspective, and concern for her neighborhood.
23
Chad puts 15K down on an 840K home and is surprised that it turns out to be a financial disaster? Where is the personal responsibility?
He has had some misfortune, but it was compounded by making one bad decision after another.
Life isn't fair, and stop blaming others for your mistakes.
This does not excuse the reprehensible behavior of these financial companies, which frankly does not surprise me.
13
Not a good investment by corporations. The US will have a population decline as Trump, republicans and "centrist" democrats makes us meaner. Not to mention a possible pandemic.
I fully expect a big decline in demand and price in this next decade.
They will have to open the borders just to keep growth happening. and they will.
3
This is the underbelly of the housing crisis that politicians are unwilling to acknowledge or talk about. LLC's and the "flip daddies;" foreign purchasers from places like China arriving by the busloads with buckets of cash (especially in states like California) to scoop up properties to rent; and vulture capitalists like Steve Mnuchin who gobbled up distressed properties using often illegal and certainly unethical methods to reap millions and millions of dollars during the financial crisis. (I can barely look at a photo of Mnuchin without feeling angry and repulsed.) America doesn't need more luxury condos with high fees that serve as second mortgages, or high end gated communities. We need basic bare bones affordable housing: units that are well designed for efficient use & storage, more quadplexes, more duplexes, smaller apartment complexes that aren't shoebox rooms, and much stricter laws governing out of state/out of country buyers. We also should have laws that limit LLC's and flip daddies: limit the number of homes bought/owned in a given area coupled with strict transparency laws as to the money behind the name (to prevent a person operating under multiple LLCs to game the system.) We have a national housing crisis which is really criminal in a country as wealthy as the United States. When rents mimic and often exceed a mortgage payment and/or take 30% or more of a person's income that is an indication of capitalism run amok.
7
@Twg
Steve Mnuchin's background per Wiki and other sites shows another silver spoon person who's only known privilege. Asset stripping at Sears. Insider deals. Purchasing troubled institutions, stripping and flipping. Shady hedge fund plays. No surprise DJT is comfortable with others he considers worthy of his class and ethics. As a lowly food service worker who happened to be at Countrywide in Calabasas, CA, at then dawn of housing bubble bust, asked a loan employee worker "how do you sleep at night knowing you were involved in this?" "On a very soft pillow" he replied.
5
The problem with astronomical wealth, aside from the Wall Street gambling class, is that with so much wealth they can outright buy and own most of America’s land, housing, and everything else that can be bought and owned.
Astronomical wealth inequality came from the billionaire class freeloading on society with astronomical tax cuts while evading taxes on everything else, and skimming, more like scalping, from the wages they pay workers who actually generate the wealth for the billionaire class.
The nation, the world even, is becoming like those company owned towns where your job and your earnings all go to the ownership billionaire class. Wall Street is merely one of their tools for taking over everything. This is American style capitalism that Bernie and Warren have warned us about and voters keep ignoring or fear to heed to our peril. Biden is the safe bet to do nothing.
13
Question. Who keeps these houses clean and tidy when they are not rented?
I hope that Zillow develops an algorithm to tell these “corporate” houses apart from real home owners.
Such a system would allow regular folks to stay away from towns with very high concentrations of corporate housing.
My concern is they will contribute to further community decay.
5
I think towns should take it upon themselves to limit the number of properties a person/entity (related ones too) can own in that town. Sounds un american but it would solve the housing crisis at least here in Oakland if not California.
It would allow for more housing stock and get rid of slum lords.
Plus the government should get rid of depreciation; it only serves to make the rich richer and pay less taxes.
6
@Mariquis
Sounds more like socialism to me. Remember America is a Capitalistic society with a capital "C". And even if capitalism grinds everyone into the depths of poverty America will forever remain capitalistic. That is why they are so afraid of socialism. Maybe they will grow to love capitalism more when even the elderly loose their social security.
2
If we are going to be inexorably channeled into serfdom for the use of predatory capitalism, one would think the geniuses doing the math on shifting every fee possible onto the consumer would understand it cannot go on forever. In nature it is impossible for the parasite to be bigger than the host: both die.
So in order to keep the MBA laden PE industry thriving, and anymore only measurement of the well-being of the parasite matters, we must acknowledge the host needs sufficient income to 'feed the leech'. So clear the decks for a national $15 min wage, reinvigorate labor rights, pass zoning laws that curb profit-taking by corporations and concurrently open up new construction, change the tax code so all bear their fair share, take money out of politics so our polity is not warped beyond recognition by big business and you will come to a state where the host is now healthy enough to bear the parasite. Keep on as we are and all is going to fall apart.
5
That was solid!
2
I think the state should provide some legal resource for the tenants against big rental companies. Fighting alone and social media don't seem to be enough.
2
I hope President Biden brings the kind of swift relief and regulation a President Warren would have initiated upon her swearing-in.
4
@Gypsy Mandelbaum
Maybe he will, maybe he won't. He's been courting wall street for the past year. And, his track record isn't all that impressive in consumer financial matters. Maybe he will change though. Maybe.
Trump won't. Maybe Biden will.
We still have a general election where neither Presidential candidate has shown much fortitude standing up to wall street regarding basic consumer-finance issues.
4
@Gypsy Mandelbaum
You are asking for socially responsible policies. That word "SOCIALLY" is the big bug bear. Americans are dreadfully afraid of the "SOCIAL' word - even Social Security.
2
How does someone buy a home for $840,000 with only a $15,000 down payment? How do they have $250,000 for improvements and then stop paying the mortgage? Why does the bank allow hedge funds to purchase these homes for half the price but won’t renegotiate with owners?
What a mess. It would seem the grandfather has a lot of money but not very good lawyers and a grandson who is not all that smart.
There are some things I just won’t do and that is living above my means.
7
@Deirdre
The banks are in cahoots with the hedge fund managers. How do you think this bubble began?
4
Reading these comments, I'm disappointment (but not surprised) at the lack of empathy and overwhelming ignorance of the commentators: yes, not all decisions by Ellington may've been advisable, but this does not mean that the private equity industry should be permitted to abuse him and many others like him this way. It's absolutely disgusting, and a benchmark of our country's decline.
10
I don't like these predatory companies but Chad is not necessarily a great example of a responsible person being targeted or run out their home by any means. A few of the examples are like that in particular where people decide to withhold rent in full etc. A lease is a lease regardless to whom it is to.
4
If you want to understand the specifics of who did what that has resulted in a loss of the American dream for the middle class, read the book Homewreckers by Aaron Glantz. You'll learn exactly who was involved and exactly what they did. And some of the answers will surprise you the same as it did me.
5
Yet another way the 1% tries to leach off society. Doesn't matter, we won't do anything about it. Last night's election results proved that, once again.
2
@Tim many pensions (e.g. teachers, etc) invest in these private equity deals. Not just benefitting the 1%
2
@T K
But they do not benefit from the enhanced earnings of their pension funds. Their actual pensions are always ten years behind what they should be.
1
@T K
Renting is a extractive exercise. Just because pensions are in on it, doesn't justify the practice.
3
I have experience with landlord tenant law (pro bono, tenant-side) here in Washington DC.
Here’s some non-legal, common-sense advice to protect yourself:
(1) Always communicate with your LL, property manager, and their agents (for example, landscapers, exterminators, or maintenance staff they hire) clearly and in writing (email/text is fine);
(2) always review your lease carefully before signing to understand your obligations and theirs. Check whether you are agreeing to waive your right to be informed (here it’s called “notice to quit”) before LL can proceed with an eviction;
(3) always keep records of rent and other types of payments. If you notice any discrepancies, immediately submit a written request to see the “ledger”;
(4) take and save dated, color photos or videos clearly showing illegal, dangerous, or unsanitary housing conditions;
(5) NEVER make a verbal agreement with a LL about ANYTHING. If you absolutely must, immediately follow up in detail in writing requesting them to confirm exactly what you discussed;
(6) NEVER make a partial payment of rent unless you understand (and have confirmed in writing) EXACTLY the terms under which you are making it. Partial payments often don’t get you current and it can be better to pay $0.
4
Here in Spring Hill there is a small subdivision of 36 brand new homes, not a single one is for sale, all are rentals. In a decade odds are the entire area will look like trash given the behavior of the landlords in other neighborhoods. What is funny is two blocks away there are $500,000 plus houses going up, hope they enjoy their new neighbors...lol.
3
Thank you NY Times for publishing a well-researched, eye-opening story. This is why I read your newspaper.
4
Sadly after reading this I have ever increasing dread in regard to my children's future in this country. They will never have the same opportunities I had as a boomer. Sanders has been weakened in the primary race by "Good Ol' Joe" and big money as a means to assure that big money keeps it's grip on power. At what point will the people of this country wake up and see the writing on the wall? Greed and wealth have taken over our country in ways that cripple young peoples futures. Institutional financial companies are buying the country and our government is helping them. This is not going to end well. At some point, people are going to be desperate enough to turn on this developing oligarchy. That people think the mainstream Dem's are going to stop this are sorely mistaken. Joe will surely not make waves and we will fall further into a very cruel and predatory version of capitalism with fewer and fewer rights and laws that protect us individuals. Our country has the best government money can buy. Our forefathers would be turning in their graves.
6
This is an extreme example of Plunder Capitalism, a rigged economy that helps the wealthiest concentrate and increase their wealth while consigning the rest of us to an increasingly precarious existence one layoff, illness, or injury from destitution. It's why Bernie Sanders' "socialism" has such appeal. And also why the "Party Establishment"-- generously funded by the beneficiaries of the rigged economy-- are so intent on stopping him.
3
The housing market is just another form of intergenerational wealth transfer. You can blame the "greed" of private equity, but which age demographic has created these beasts and is predominately benefiting from their profits? It's definitely not Millennials, Gen Z or Gen Xer's (most of whom cannot afford stocks, let alone to invest in private equity)... Wall street owned rentals aside, it's not like the 55+ who own most of the property in america are bastions of charitable consideration. Even boomers with just a handful of rental units are callously capitalizing on the hyper-competitive rental market their NIMBYism created via sky-high rents, fees and pushing utilities and maintenance onto their desperate tenants.
Millennials and Gen Z have basically been relegated to a lifetime of financial water-treading and serfdom to the benefit of what I and other members of my generation have come to think of as 'Boomer Feudalism".
7
@nicole_b Thank you, from a landless Gen-Xer, for making this crucial, accurate, and infuriating point.
1
despite this great article and all the comments - Black Rock et al has nothing to fear - no one in congress has the guts to change this - follow the money. the prosperity gosple says its ok.
4
@Ed ---"Corporations are people".......remember who said that?. The 99% haven't been dumped on enough yet to do anything about it.
We should all be ashamed of our Lobbyocracy. Other western countries, with far less resources, protect their citizens rather than caving to the 0.1%. They do not have these problems, at least to the same degree. Most Americans can no longer afford the time or money to travel so they are easily misled and believe the scary stories about socialism.
2
Was there ever a prominent public morality that would cast shame on the feckless exploitation of working people just looking to get their needs met (housing, healthcare, education)? When did it become so openly OK and even enviable to take advantage of decent people? Private equity places profit/greed over every decent moral value there is. By any social or spiritual measure, this is violence, this is evil.
4
Just goes to show you in America under the Grand old Polluters/GOP affordable housing does not exist. I am for regulating these greedy businesses and land owners. Capitalism is only for the 1 percent. 99 percent are always struggling and never get ahead. Give me government intervention anytime. I support the Dems they support regulations to stop the abuse we read about in the article.
1
1. Predatory Lending then bundled and sold
( the big short)
2. This house of cards crashes the market
3. People lose their homes because of 1 and 2
4. Corporate personhood buys the 5 million houses and holds to create housing shortage
5. Predatory Renting Practices and housing inventory is squeezed while banks tighten lending to people
6. Today’s crisis of lack of inventory, affordability and homelessness
Explain how this has all been legal and not considered criminal in your next article !
2
Good old Wall Street. Always stepping up to demonstrate its devotion to and support for the economic health of our nation and its diverse communities. What rubbish that is.
It's no mystery why Bernie Sanders and his rebellious ilk have become such a force in American politics. The younger generations of Americans, whose allegiance (and votes) Sanders has captured, are among those most seriously afflicted by the erosion of America's moral, social, political, economic, and legal foundations that we're now enduring.
The deeply corrupt Trump/Wall Street/Republican axis is tugging at the very rug on which it stands. It is sowing the seeds of its own destruction.
2
Wall Street, private equity firms, big corporations = PEOPLE.
Throw an LLC or other legalese around their bank accounts, and it still comes down to evil - people without a conscience, people who solely care about greed and money, THE WEALTHY 1% versus the other 99%. And they keep winning!
Freedom is no longer the American way, replaced by serfdom.
3
As a country court clerk in Oklahoma dealing with foreclosures after 2009, I was always upset that guys would come to the sale with pre-printed little bound pads of $10,000 cashier checks used to snap up house, and these guys were working for a corporation based in Malibu, California. Basically the guys who caused the crisis were major benefactors of the crisis--and the Republicans reinforce this behavior with tax breaks for the very same real estate moguls.
Seems the only deadly sin condoned in the USA is greed. I say it is a sickness, and out of pity for the super-rich they need a good dose of redistributive taxation as a cure for their pathological avarice. It would make them better people, and all of us happier.
2
Fees are going to kill us all. I don't understand why someone with such a large income (low six figures) would have to rent int the first place.
And I've seen this change with my own eyes. In the 2 years since I bought my house in suburban Atlanta, nothing is going for sale. It's all going for rent.
2
Vulture capitalism through private equity greed. Everything in the US is about the almighty dollar not whether it serves the interest of Americans. Where does it end?
1
In a Capitalist society, usury never goes out of style.
3
These greedy home poachers only see opportunity because of the chronic housing shortages in so many US cities. The best way to stick it to the speculators is to undercut them with competing housing supply. Flood the market with more homes that will provide housing opportunities for all Americans who want to live near their job, family, or community.
3
This is what happens when you want govts out of the way so you can just get on with business. What these predators want is to be able to prey on little people unfettered by fairness.
These billionaire predators are then admired, swooned over, and encouraged by govt.
Welcome to the US unregulated capitalists. We have millions of the prey species you'd prefer. Come and gouge them. We'll check your practices for fairness sometime in the future after your first billion, or not.
438
@Craig Murray Makes you want to vote for Sanders, but I'll be with Biden hoping he goes a little farther left. Here in CA I voted for Elizabeth. I hope she endorses Biden. He's got the BEST chance against trump.
14
@Craig Murray
The government didn't get out of the way and instead had a massive bank bailout because of the housing crisis of 2008. The bailout helped the banks not the people who owned houses and was supported by democrats and opposed by most republicans
24
@Jane Roberts
Nope. Trump will wipe the floor with Biden.
7
"Taxation without Representation" is supposedly why the American Revolution happened in the first place (although history majors know it to be quite different). How are fees not taxation without representation? When fees are a major source of profit, they aren't fees, they are consumer taxes. Inequality will continue as long as fees can be charged unabated.
2
Forget REIT Rental management as they have no "moral" business common sense once they see a legal/financial opening to print money. "I did not know" does not work anymore and they are responsible. The bigger issue is the thousands of workers (including REIT lawyers) in REIT Rental businesses that looked way, enforced, financially hammered, and demoralized customers at the direction of management.
2
I thought about investing in a REIT mutual fund but now I question their ethics and morality.
1
As long as these houses stay on the rental market, it’s not necessarily a tragedy. The big lament of this article is that it makes fewer houses available for purchase, which is true. But Americans should reconsider their obsession with home ownership. It’s not always a good thing, and plenty of people have good lives and build wealth while renting.
I rented until my mid-30s, when I bought a house a few years ago. I miss renting. Home ownership brings a lot of stress and expenses. And in the case of divorce or changing jobs, it makes a stressful situation even more complicated and expensive.
Yes, my home is appreciating. But I’ve also spent tons of money in repairs and maintenance, not to mention time. My equity on paper exaggerates what I realistically would pocket if I actually sold my house when taking into account all expenses. I also saved waaaaay more cash when I rented. Now that cash goes into my house, which looks nice on paper, but money in the bank is nice too, and more liquid and available for other investments.
And plenty of homeowners don’t maintain their properties. While it’s sad to see some of their homes fall into disrepair, there are other homes being built or remodeled. Stronger renter protections are needed to force landlords to maintain livable standards, for sure. But there’s nothing wrong with renting!
12
@Itsy I can agree with you on the ownership vs rental issues. However, after reading this article, these renters have all the expenses and liabilities of ownership with the equity of rentals. Which is zero.
Plus I loved the part of the government backed bonds being issued based on rental income. Companies take 5% of the risk while the taxpayers are on the hook for the balance. They, of course, reap 100% of the profits
You got to love these guys. Capitalists all. Except of course when they lose money. The privatize their gains and socialize their losses.
Isn't this socialism? Taking from one to give to another.
2
@Itsy
Yes, there's nothing wrong with renting until your landlord jacks up the rent because the private equity fund that owns it wants higher returns. Thanks to no national rental regulations, that can happen anywhere to anyone.
// But Americans should reconsider their obsession with home ownership.
Yes, I imagine Biden will be singing that tune shortly. Reconsider your obsession with affordable healthcare, education and housing costs.
You can live a good life in a basement apartment shared with other people, of course. If it was good enough for the 19th century servant class, why is it not good enough for you? After all, you have it so much better than peasants in third world nations.
2
Extremely thorough and well-written article. The profiteering of large public companies has found a new food source - the American dream.
7
Federal tax laws are stacked in favor of investment ownership of real estate. The federal government has no longer made wide home ownership a goal and further destabilize the middle class into non-permanent housing
(renting). Personal home ownership is now limited on tax deductions (i.e. cap on loan amounts, RE taxes and no depreciation) which means an individual is less likely to be able to surpass the standard deduction which equates to providing no government subsidy; an investment owner of real estate almost never pays income tax due to these deductions not being capped. Why not make it a level playing field and cap the deductions for investors in real estate projects? Getting ride of the tax incentrives for real estate investment ownership would drop the price of the investment real estate properties (including single family homes); would make it so investors pay current income taxes to there local jurisdictions and make it so a homeowner would be on an equal playing field for purchasing a home. All of the revenue raised from removing the investment real estate deductions should be plowed back into developer incentives to drop the cost of new development to increase the housing supply and help with the affordability and homelessness problems in large areas of the country. If we continue to have more and more renters expect more local rent stabilization laws (NY, CA and OR) to protect the current renters. The next generation will just have to start living the #VanLife.
6
This just reinforces my opinion that capitalism is not based by a "free market" and competition, but instead, is based on monopolizing. Anybody notice how popular Monopoly, the game, has been and continues to be?
22
Ironically the game monopoly was originally meant as a critique of capitalism.
14
This man made mistake after mistake after mistake in dealing with the circumstances that confronted him. But that's water under the bridge now. I'm sorry he believes he is somehow, someway going to get the house back, I just don't see that ever happening given his circumstances and the corporate owner of the property has no incentive to sell, but every incentive to let the property slowly fall down around his tenant ears. Sooo happy to be where I live, in a lovely home, with a beautiful yard, in a safe city in a safe walkable neighborhood to my supermarket, pharmacy, other shopping, and 2 bus lines that will take me where I need to go, part of a good public transportation system. I could pay off my mortgage with money from my IRA now that I'm retired, but for now I still make the monthly payments and combined with my real estate taxes, the cost comes to about $830 a month. I understand that circumstances can often keep people in places where they really shouldn't be, but if you don't have to stay, consider checking out other areas of the country, like my beautiful "small" city on a great lake. California is not the end all and be all of human existence, folks!
17
@Jan N Good, Jan! Glad you're well.
There is nothing predatory about a 30 yr old who tries to buy a $800k house, puts down only $16k, then uses $200k in savings to remodel the house. Sounds more like an expansion of white privilege by blaming lenders instead of Chad for an atrocious financial mistake.
Notwithstanding this, I do believe this article rightly points out the need to regulate these corporate trusts. Perhaps a law limiting their ability to purchase single family homes is in order to allow normal families to compete fairly, reduce the affordability crisis, and allow the home to be used for its actual purpose...to live in it instead as a pure profit engine.
26
The article is interesting, but when it comes to buying a dream home or not paying enough mortgage to cover your home, it can be a real nightmare. In other words, Chad Ellingwood's story doesn't fit the article right. On Super Tuesday, Bernie Sanders took the state of California, and we have seen the number of homeless people begin to grow.
Some billionaires like Michael Bloomberg and Donald Trump already got tax breaks to make a large investment, but what about the middle class? Well, Bernie Sanders can make a zeal against Trump to bring money for their wealth. As for Ellingwood in that piece, he should live on with his own life.
4
For every thousand hacking at the symptoms, there is at most one unearthing the roots.
How else would we have this problem of unaffordable housing?
5
The answer to this is not that we should have bailed out homeowners like this man, whose unreasonable purchase is romanticized by a writer with the typical neoliberal bent toward homeowners. Instead we need to aggressively stabilize rents — all of them, everywhere.
The U.S. has long intervened in the market to protect homeowners, by engineering the 30-year mortgage plus the interest tax deduction and by suppressing property tax increases in many states, most notably California. Yet rent stabilization is anathema to most communities.
And homeowners’ capital gains on their properties are protected from taxes. A $500,000 profit is untaxed by the federal government.
American taxation
is an aristocratic approach that puts the greatest burden on workers, who subsidize the coddled ownership society beyond all reason.
7
This was a mistake from the get-go.
A man who seemed to be just 30 years old, and with no indications of wealth, purchases a home for $840,000? He put down a mere $15,000? That's not even a 5% down payment...how did that purchase even go through? And what on earth would have been his mortgage payments?? And then on top of that, he sank the rest of his savings into a $250,000 upgrade to the home?
73
@Lisa Obviously he was projecting a future profit when he sells the house; if his intentions bore fruit, then he wouldn't be complaining. If he were to sell the house, say for$1.5 to $2 Mil (which is the going rate in some LA neighborhoods) then, will he complain?
1
And that is why Bernie has resonance. I don't like him, but I absolutely emphathize with what he is saying. To listen to those financial shows, CNBC, it's all about profit profit profit and no one delves into the immorality of those equity firms like Blackstone, Vanguard, etc
48
Yes, but instead of going after rapacious companies like these real estate conglomerates he chooses to pick on Amazon. Bernie has his heart in the right place but he doesn’t understand enough about finance or how the economy actually works to be effective.
9
@Susan
He picks on Amazon because they literally injure and kill their workers. Warehouses in CA had ambulances on standby because workers were fainting and having heat strokes due to lack of air conditioning. They had to be shamed into adding air conditioners.
Their warehouses were built that way, against standard building codes, because Amazon was able to obtain exemptions on things like HVAC systems and number of bathrooms.
Sorry, but this is not the economy working to be effective.
5
Susan you are wrong about Bernie going after Amazon.
Amazon is based on one idea, profit at whatever cost to anyone.
Working for Amazon is like working for modern day slaveholders.
Owning a home for most working class people will become impossible as real estate conglomerates and now Wall-street are against any type of wage increase. Meaning they will have to keep renting and with real estate moguls (mafiosi) in charge of our country that rent will increase irrelevant of inflation and the cost of living.
Real estate moguls behave like the used car dealers of old, they sell you a lemon that you can’t return or cancel.
By keeping wages the same for three decades, the working class is kept under control as they are in Russia, China and India, three autocracies and America is now number 4.
Americans have been in full denial and are still believing they live in a democracy, keep on dreaming.
5
It's the late 1990's/early 2000's all over again. People can't afford rent but can't afford to buy a house, not even with low interest rates. 1 in 4 are at least a month behind on their car payments. Student debt hangs over the heads of hundreds of thousands of young people who may never pay it off. Consumer credit card debt is at an all-time high. Meanwhile the wealthiest thrive, quite well, despite the fact that the coronavirus is nipping away at the worldwide economy as more people get sick every day. Welcome to the Great Depression 2020.
32
The reduction in the Fed interest rate most likely will not stimulate the demand side of the economy, but will certainly facilitate the borrowings that these companies require to continue to leverage their investments. Also, the 2017 TCJA (Tax Cuts and Jobs Act), which purportedly provided approximately twenty additional dollars per pay check to the middle class, also provided these REIT investors with a QBI Deduction (qualified business income deduction) of 20% on their REIT dividends.
15
I'm a realtor. I also lived in an area that was hit very hard during the foreclosure crisis, and I saw some of these large-scale investors come in and literally buy entire neighborhoods, hundreds of houses at a time.
In some cases, the neighborhoods went from being mostly owner-occupied to almost 100% rental. And this dramatic transformation occurred in only a few years time, greatly destabilizing these communities.
The other impact has been extremely low inventory for regular home buyers. We simply don't have enough houses to sell, and one reason is definitely because so many homes are now rental properties. At this moment, my market has 10,000 fewer houses available than just 2 years ago!
I don't know what the answer is to this but it is absolutely a problem that deserves more attention.
107
This is the stuff of Mafia tactics.
51
A damn disgrace.
44
Chad’s story didn’t resonate. There is an implicit theme in this article that Chad and the house have some kind of spiritual connection and everything else in the world should rearrange itself to ensure Chad gets to stay in the house. Why is he so desperate all the time to stay in that particular house? He should just get on with his life. Find a property where the landlord has a better handyman.
224
@Sanjay agreed, why would anyone want to own a home. For the individual there will be no tax advantages or investment growth within five years. Why will this happen, because Americans want the easy life, and want to send in a post card for their taxes.
4
@Sanjay - I also felt like the writer could have picked a better personal story to start this essay. I am not following the money story exactly, but it sounds like Chad either borrowed $1.1 million, or borrowed $840,000 and then spent his whole life savings of $250,000 to update his home. To me,it seems amazing that somone who just turned 30 would access to that level of wealth. The mortage payment on $840,000 with a 0% down payment must be close to $4,000 a month, right? I kept thinking about that and it made me hard to see him as a victim.
82
$4000 property taxes which are probably over $1000 a month
5
This describes exactly why the wealthy have an predatory incentive to crash the economy every once in a while.
44
brought to you by Biden. Warren or Sanders could solve this.
40
Brought to you by Donald Trump more likely. What has Biden got to do with it?
So much for capitalism. Maybe a little socialism would work better.
37
So many cry out against America's, yes America's already existing form of modified socialism …...
And yet,
They silently approve of the egregously predatory capitalism as described in the article above……….
Can we agree - and even accept - there are good and bad examples of both socialism and capitalism………
Painting with too broad of a brush on either is a mistake and often dangerous……...
28
@RB The electorate is not ready to see nuance yet. Almost, but not there yet.
1
A perfect example of greed-based capitalism destroying the American dream. Greed and corruption permeate our society. Can we really sue, regulate and legislate our way to a saner existence? I'm not hopeful that we can, and it grieves me to think of the world we are leaving our children.
26
Goddess bless Predatory Capitalism!!
4
I spend my days mucking about in the homes and future homes of the well-to-do, the filthy rich.
If half of you saw what I see every day, you would be marching with pitchforks in a heartbeat.
I have to counsel new hires about suppressing their rage at the gross inequity of life in America, in order to be able to buckle down and just do their jobs.
Each billionaire costs the greater society at least a billion dollars, which they use to further inoculate themselves against risk and discomfort.
The rest goes towards a second or third house, with rooms never lived in, while millions of their neighbors struggle to pay the rent.
You are getting skewered, America.
775
@Dan in Orlando As we saw last night when given the opportunity to vote for people that might change this dynamic, even a majority of Democrats want no part of it. So it's going to be toiling for the rich for the foreseeable future.
61
@Dan in Orlando So should we let government decide what kinds of homes we should be allowed to buy?
5
@Dan in Orlando
Exactly.
A few thousand people own half of the wealth on Earth. That means they own as much as the other 7 billion of us.
A few thousand people cannot possiblity be as productive as 7 billon people.
They have half the wealth, but didn't "create" half the wealth. That means a large part of any billionaires wealth, from Putin, to Soros, to Trump, Bezos to Bloomberg, is not really their money. It is stolen money.
The next time you are in a small store, ask the owner what it costs them every time a customer uses a credit card. (My dry cleaner only wants me to pay every third time I pick up, to save money.)
The amount that they charge for a transaction is thousands of times the cost of that transaction. It's a scam.
Every transaction takes a little piece of wealth from the customer and the store owner and teammates it to global billionaires who own controlling shares in these global banks.
Bloomberg made his money selling the Bloomberg terminal, a machine that makes it ever easier to manipulate markets to extract the productivity of worker/consumers, small businesses, and small farms.
Small business people and small farmers need to realize that a millionaire is middle class now.
Millionaires that think they have more in common with Trump or Bloomberg than their employees and customers are deluding themselves.
Global corporations are your biggest competitors, your nastiest suppliers and your greediest creditors. Stop helping them destroy you.
64
This situation is hopeless. Regardless of who gets elected president, republicans will block any and all restrictions on these predators. If they can't block it, their 'business friendly' judges will.
30
In Northern California, BlackRock Inc. is the largest holder of single family rentals with over 4000 properties. They represent global money that distorts local property markets. There is no transparency. California is trying to pass legislation to regulate its rental increases, and we don't know how media is being distorted by outside interests.
34
@Pete
We could start by making OWNERSHIP of all property totally transparent and illegal to hold by an anonymous LLC.
2
Gee I wonder why Bernie’s words resonate with so many. No other candidate talks about housing and finance in the way that Bernie does. Venture Capitalism meets Vulture Capitalism. What else is new? This is why it costs hundreds of millions to build one small affordable housing unit in San Fran and New York and literally the only one.
For the past 4 years there has been this daily, no, HOURLY onslaught of outrage media. It is real and soul crushing. What makes it soul crushing is that no one ever offers solutions. You wonder why depression and suicide is on the rise?
Bernie is the only one trying to offer solutions to the moral and fiscal depravity and the Democratic party calls for moderate solutions or no real solutions as the key to success. Democrats decry Trump’s caring more about the market than the corona virus when maybe what their call for better organization and leadership is really just another way to allay investors’ fears. They know that the fringe benefit of Trump projecting some sort of organized response is market stability.
12
This story is a horror show of bad financial decisions. Tiny down payment to cover a fancy remodel? Refinance for a custody battle? Nevertheless these companies should not take advantage of people and should pay much higher real estate taxes than people since what they are holding is really commercial property.
20
Anger about rapacious capitalists squeezing every last dollar out of consumers is growing. Bernie Sanders is popular mostly because of this. No wonder the very wealthy, regardless of party affiliation, are worried they could lose a sliver of their wealth to increased taxation and legislation that confines their plunder. Many swimming in wealth were not self made. Many were born into that wealth and privilege. Think the presidents son-in-law has been solely focused on bettering the plight of the less fortunate in the Middle East with his so-called friend in Saudi Arabia, or could it be he has ulterior motives to increase his net worth? I know here in Atlanta area how developers swoop-in and buy up land for development of housing and mixed use to grow their wealth above all, and how they begrudgingly offer a few affordable units to the mix so that local politicians have something to crow about to cover their backsides. This stuff goes on all over the country, and that big tax cut was, intended or not, mostly beneficial to the most wealthy. Same as always.
22
We, through our democratic means, should vote that any entity that owns more than three homes and rents more than two out, shall be taxed through the nose. People's need for shelter must not be the mechanism by which wealth is enhanced. This is disgusting.
20
Wow. The government was the ONLY provider of capital in 2008-2011. You provide capital , you gain ownership! Instead of these being public houses, on the Austrian model, the taxpayer subsidized private equity to gain ownership. We just won’t let rich people not be rich in this country.
13
At the end of the story, it's like Mr. Ellingwood is bleeding and being circled by giant sharks yet still believes he can fight them off by being an "irritation"? Wow, that's some incredible optimism. I'm a realist/pessimist and just can't see a happy ending here. I think Americans need to spend some time studying basic contract law as it applies to housing issues. Ignorance is not bliss unless you can pay your mortgage and property tax on time, 100% of the time.
7
Another reason why we need more government regulation, not less.
Rapacious capitalism needs to be tamed.
31
And we wonder why there’s a critical housing shortage and millions of homeless camped on freeways and along creeks. How much payola is given to politicians under the guise of bundling and contributions but who can never get anything even started to solve these problems. Apparently, who cares?
25
Democracy and the American Dream won't survive predatory capitalism, gotcha capitalism. And predatory capitalism owns our government, including under so-called "Democratic" Party administrations "managing" economic recoveries.
12
Sean Hannity of Fox News is one of the biggest landlords who did the same thing- buying “distressed properties” from people down on their luck then renting back to them at usurious rates.
And he used HUD loans (our tax dollars) to make it happen.
31
Agreed. I spent months cash in hand looking for a home in the downturn but agents were reserving their cooperation for the REITs that would control the market and make big paydays for the agents.
13
With our current representatives, dems and gop, and president in the pocket of corporations what can we expect. This is a tragedy of greed supported by our leaders.
Vote them out of office!
9
Republicans and democrats are responsible for this. Many of us who have reits in our sustainability portfolios are responsible. This article helps make us less unwitting about it. The problems inherent in this housing exploitation, however, is hegemonic to our capitalistic culture.
6
@kateillie
NO!
Baby boomers are responsible for this.
Once upon a time people bought a house to live in and didn't look at it as a "starter home" and "aspired" to "buy up" and up and up. They didn't look at it purely as an investment.
Boomers turned real estate into another get-rich-quick scheme.
2
This is exactly how I got mu Fannie Mae house. 5 years old, on market for 2 years because defaulters removed kitchen. No kitchen, no mortgage. The buyer must live in a Fannie Mae house for 5 years before selling, so no corporations able to buy. Finally went to action for $97k, I paid $75k in 2011 for a house in 2006 was appraised at $500,000.
The taxpayers bought this 2600 sq ft house for me, basically.
What’s happening now? They’re building 1200 sq ft houses like crazy with three bedrooms and they’re selling for $300k, this is in unincorporated Naples, Fl. No one has learned a thing.
20
An entirely predictable outcome of the Republican tax bill. Most Americans no longer can deduct the interest on a mortgage of unless their itemized deductions exceed the standard deduction. A rare situation for most of us. Investors, however can deduct all mortgage interest against their investment income as well as take a loss against other income in most cases.
72
@Dave Aldridge I've been complaining for years that I had nothing to deduct because I was a renter. I bought a house...and bang, the law changed. Still now deduction.
3
When someone makes a lot of money in some activity, others soon follow until the higher supply brings prices down.
It's called capitalism, and unfettered, it it the absolute best system of allocating resources in the most efficient manner possible.
1
@George Orwell I disagree. Unfettered capitalism over an extended period leads to a very small class of very wealthy and a large underclass.
In the U.S., the strong middle class that emerged following World War II was a direct result of tax law that kept the rich from keeping too much of everyone else's money. The top income tax rate was 94% during WWII and stayed 70+% until Reagan.
The federal government collected a lot of taxes and spent it on many things that required workers - weapons, roads, space program, etc. That's what helped form and sustain a thriving middle class.
Redistribution of wealth seems to have little downside. The economic working paper, Tax Cuts For Whom? by Owen Zidar, shows no net increase or decrease in job creation over a 2-yr period following a tax cut or increase on top 10% earners. Wealthier people do not spend in a way that stimulates the economy. Rather, they invest in a way that is neutral or removes stimulating money from the economy by taking it from the poor & middle class.
Unfettered capitalism is often followed by revolution when 99+% of a country feels they're getting played.
9
@ George ... no George it’s called economic rape of the average citizen, vulture capitalism and it must be highly regulated before it eats itself and us alive.
I am a former rating agency analyst who worked on these SFR deals. The companies could never explain the high overall level of fees charged, or how they managed to keep maintenance costs so low in most markets--some notable MSAs excluded (I wonder if local ordinances in those areas prevented the companies from passing responsibility on to the renters).
I can't tell you how heavy my heart is from reading these stories. I only wish we had dug even deeper and forced more accountability. Even still I wonder whether anything would have changed from the perspective of my former employer.
17
Giant real estate companies and the finance industry first generated and profited from the mortgage bubble, then from its collapse, and finally from owning and renting private homes. When the bubble burst, driven only by short-term profits, finance refused to readjust mortgages to their lower value and collect smaller payments, preferring in low income neighborhoods to foreclose, get nothing, stick the city governments with the bill to destroy the houses, to maintain the threat of foreclosure for middle class homeowners. Families and communities were devastated. Financialization has turned homes into used goods, where it can be more profitable to let them deteriorate then keep them up. George W. Bush pushed home ownership as an investment in America, and now it is—for predatory finance companies.
20
Thank you, Francesca Mari, for this straighforward and informative article. When the government financial "planners" started to promote investing rather than saving, that was the demise of this country. People can no longer acquire financial wealth through work. The gift of financial wealth has been given to those who lie, cheat, scam and terrorize those who wish they could simply live the lives people lived when I was growing up in the 60s and 70s. Hopefully, the United States can return to being a country where work allows people to acquire stability and financial wealth through savings instead of investing in the greed of those who hide behind the curtain of the corporations they run.
17
@Barb I'm afraid those days are gone forever!But really, none of it matters because we are going to do nothing to alter climate change and civilization as we know it is going to collapse! Sorry!
1
@Barb I'm afraid those days are gone forever!But really, none of it matters because we are going to do nothing to alter climate change and civilization as we know it is going to collapse! Sorry!
Private equity firms have become the bane of our existence. They are the quintessential models of vulture capitalism and they need to be brought low. There isn't an area of our lives that are not touched by these greed monsters, but the concentration of their wealth and powerful connections will be almost impossible to bring to heel.
490
@Lucy S. Our government has failed to perform what its goal is as stated in the Constitution: "We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America." To allow what this article describes, our so-called government is NOT providing for the domestic welfare NOR for insuring domestic tranquility. I'm coming to believe more and more with each passing day that we need the equivalent of the French Revolution in this country.
47
@Lucy S. The reduction in the Fed interest rate most likely will not stimulate the demand side of the economy, but will certainly facilitate the borrowings that these companies require to continue to leverage their investments. Also, the 2017 TCJA (Tax Cuts and Jobs Act), which purportedly provided approximately twenty additional dollars per pay check to the middle class, also provided these REIT investors with a QBI Deduction (qualified business income deduction) of 20% on their REIT dividends.
24
@Dennis Menzenski
Yes. Republicans and the centrist Democrats that compromise with them are refusing to enforce the laws.
Anti-Trust laws were passed in previous generations to prevent businesses from becoming too big to fail. They have gone unenforced for decades, even by Clinton and Obama.
Fraud is a crime, with jail time as a possible sentence.
The same corporations keep getting convicted of fraud, but no one ever goes to jail. The corporations end up paying fines that are SMALLER than the fraud they committed, netting them a profit, even after conviction.
Wells Fargo gets caught again and again.
The government has the legal right to dismantle a corporation that refuses to follow the law, but this country would rather execute a human than a thieving corporation.
Billionaires now own HALF of all wealth on Earth. They own as much as the other 7 billion of us. They could not have "created" as much wealth as 7 billion people through their own productivity. That means they had to have taken the productivity of others and made it their wealth.
A billion is a thousand millions. If you are a millionaire, do you think that billionaires work a thousand times harder than you? Are they a thousand times smarter?
No, they are a thousand times more willing to take the wealth created by sometime else and put it in their bank accounts.
If welfare recipients had stolen all the money as Republicans claim, they would be billionaires.
A billion dollars is evidence of crime.
251
Greed at it's 'best'. Capitalism devoid of ethics may be the worse system we can think of, given that it functions under the noble title of 'democracy'. And yet, filled with selfishness and and avarice, multiplying the current odious inequality, whipping ownership to smithereens. Social justice is crying, for lack of an alternative!
20
Americans have been taught since childhood that Socialism (aka Communism because they don’t know any better) is the opposite of Democracy, and that rapacious capitalism is the beneficial and discounted price we pay for freedom from Communism.
Some people will believe anything, no matter how obviously wrong.
Have a blessed day, suckers.
Is it any wonder my city's main library branch is a de facto homeless shelter and San Francisco reports over 28,000 homeless in that fair city. All the more reason to restart the Section 8 Federal housing programs. PE/hedge funds are killing housing opportunity just as they are killing the rest of our economy. How many of your favorite brands have folded under this PE/hedge fund onslaught?
42
And the moral of this story is....don’t get a divorce. It’s too expensive.
10
If this article doesn’t make your blood boil I’d say you’ve got no heart to pump it.
26
Nothing new here. Thanks for the alert!
2
Nothing will change with this anti-regulation administration. The Trump supporter is shooting herself in her tattooed foot. #sad
33
I am unable to read this entire article. It is so horrible!
11
We need Bernie!
12
@Bilsimo we also need the senate and congress.
8
At first, I wasn’t sure what the story was, a cautionary tale about how important it is to do everything to maintain a marriage, how *not* to dissolve a marriage, or a housing problem. The article’s first 6 paragraphs paint a less-than-sympathetic portrait of a man who blew up his life, and kept blowing it up through bad decision after bad decision.
I have friends/acquaintances who insist on punishing their soon to be or currently ex-spouse using lawyers and sometimes even bringing child protection services into the situation for the express purpose of punishing their spouse. In every instance, I counseled at every step, don’t do it. None of them listened, they were too angry....
And later, they asked me why their kids were screwed up, or they simply blamed the ex for everything that was wrong.
Learn to get along, learn how to communicate and argue in a healthy, constructive, non-injurious manner. Choose to dissolve marriages without acrimony.
Relationships are as much of a crisis as the housing crisis the article spends the rest of its time talking about.
.
19
@SMcStormy That thought crossed my mind as well. Maybe Chad should have hired a marriage counselor before turning to the lawyers?
But, in contrast to the many smug, judgmental comments her, Chad's early decisions weren't outside the boundaries of what a lot of aspiring homeowners did before Bush/Cheney and their greedy supporters crashed the economy, especially housing. They were assured by everyone but a few that values would continue to climb, growing their equities up into more comfortable ratios, and it's common to reach up somewhat, whether in acquisition of upgrading dated features.
What they couldn't, and didn't, know was the reality of big financial players' fraudulent bundling of ever-riskier loans, and what would happen once the default avalanches began.
There have to have been millions of Chads who thought they were on a sustainable course. His divorce was a wild card, but millions losing jobs because of the crash, and with them the ability to stave off default, are a much more systemic problem than one young homeowner having made the wrong bets on home ownership.
He's just an example, neither a sympathetic poster child nor a foolish spendthrift.
1
@DMC /agree.
.
So, remind me again how Biden speaks more to our moment than Bernie?
29
They don’t call him Senator MasterCard for nothing
1
This is an excellent article, but having lived through the nightmare of the housing crisis, losing our home, our rental home and half our savings to Treasury Secretary Mnuchin and his greed, I honestly couldn’t finish it. In reading, I remembered viscerally how the mortgage company, One West, would never negotiate. I was told that over and over. We lost of course, because they were making up their rules as they were going, and we were gamed.
I remember Trump saying that the crisis was an amazing opportunity to scoop up properties and then flip them, I guess into these “time share” type companies, because that’s what Starwood is. I’m sure if we could look at his tax returns we would know for sure that he’s deeply invested.
It’s been 10 years, and it still makes me sick, angry and tearful. I voted Bernie in California’s primary, because we need reforms and Ole Joe is in way too deep with the credit card folks and gutted the bankruptcy laws that are there at last resort of people like me. Believe me I still feel shame about it, too, just like the guy in the article. It’s not anything you willingly enter into for sure.
Happy to be through all this, and so sorry for so many still suffering in this new mess of a pyramid scheme.
528
@Suzanne That shame is not yours. It belongs to the vultures who preyed on you and millions like you. Just b/c they have no conscience, doesn't mean you have to carry their shame.
55
@Suzanne Thank Obama for that. I voted for him and was part of the group of CPA's ranting about the blow out starting in 2002. Obama should have bailed the homeowners out but he did not. Another loser that became a multi millionaire after he was president because Wall Street paid him back.
18
@Lillies
I certainly wouldn’t feel shame either. The vulture capitalists are the true evil and anyone who gave me grief for not measuring up to a long-absurd standard of American “success” can take a long walk on a short boardwalk. I couldn’t care less what others think about how I choose to live and consume. I could live in a van on a California beach and be happier than so many I know killing themselves for a house full of Chinese-made junk. True wealth is knowledge, brains, experiences, and relationships which I have in abundance.
This country’s obsession with wealth, money, and possessions is obscene and immoral. I opted out of the typical capitalist-driven, consumptive American lifestyle in my twenties and, except for a few years when my ex was rolling in the dough and happy to bankroll me into his “dream” lifestyle (which still didn’t fix his alcoholism and spiritual crises), I’ve never regretted it. I’m all in with European-style socialism after living in Scotland for a while except that right now, evangelical Christianity’s growing theocracy and, of course, Trump and his sick cult are a greater threat and fear to me. I want to first return to some semblance of political and moral balance while we recover the growing diversity and freedom from religion we had as a country and then wait for the younger and, finally, larger generations to push us further left once selfish and self-absorbed Boomers cede their iron grip on wealth and power.
20
Warren Buffett says along with equities, single-family homes are a very attractive investment right now.
Appearing live on CNBC's Squawk Box, Buffett tells Becky Quick he'd buy up "a couple hundred thousand" single family homes if it were practical to do so.
Mr. Buffett said this in 2012 without the slightest thought to what that action might do to "a couple hundred thousand" families. Its like the Lords enclosing the British commons or something. Who watches out for the average working family?
35
Sanders is trying to watch out for the working family. But that’s socialism
1
Nothing we can do about it by electing people like Biden and Trump. Biden supports the banks over people.
19
"Capitalism is the extraordinary belief that the nastiest of men for the nastiest of motives will somehow work for the benefit of all."
John Maynard Keynes
72
And at the same time, the players in the Democratic party ensure we get Biden, not Bernie. Say what you want about the corrupt Republicans, at least those who bought into Trump's Snake Oil did so in the name of something different. Pathetic not to be able to see him for what he is, but not more so than the left once again seeing the choice and accepting the tepid alternative, saying in essence: "Wall St. status quo is preferable to actually addressing the problem."
17
This is the kind of journalism that I keep my subscription for.
This feature might not get too much buzz in the wake of Super Tuesday and Coronavirus, but this should be mandatory reading.
51
We'll never know, but it is worth speculating what a President Warren would do about this. I doubt the corporate parasites would find comfort.
22
This is how wealth gets transferred to the wealthy from regular folks and the poor. It's a sad sad dirty story.
34
No kidding!
Shortly after the 2009 recession, and after the tax payer funded Wall St. bailout - I thought the circumstances were ripe for one the biggest land grabs in modern history.
This is the thanks we get for not locking these crooks up?
23
You left out the part about Renaissance Jared and his ilk, who rent units where the wind blows freely through, where sewage seeps from the upstairs bathroom to the kitchen, where tenants are dunned for rent and evicted while landlords refuse to keep the place even habitable. The same landlords who make their real money from tax breaks credits created just for them by legislators purchased at reasonable prices. Just like his pop-in-law.
Renting is no answer to this mess.
You can call it capitalism, as many here are doing, but there is no risk to these investments. They're cash cows that would make Devin Nunes proud to be a farmer.
29
This article is written as if Colony, Invitation and the other owners in the picture are the only villains in the story.
It is true that some of these companies and sections of personnel within them are quite villainous, but there is a missing piece of the picture here: the town councils, county commissions, and other bodies around the country that make it prohibitively difficult and expensive to build new housing, combined with the local property owners who obstruct development. If these barriers were removed, new construction would flood the market and prices would drop.
California is the epicenter of this problem, and the Times has, on occasion, covered it faithfully. But, too often, you thoughtlessly attack owners, investors and developers. Instead, why not shine a light on the actors who have within their power TODAY the ability to absolutely undercut and destroy the situation that allows this profiteering to persist.
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@MR
There is truth in this.
However, real estate developers used to get away with raking in the money and leaving the communities with the bill for infrastructure.
I'd like to see legislation that would allow individual homeowners to add rental units to their homes. That would spread the wealth around.
It is interesting that there is so much money to be made in rentals...and so little building going on. I wonder if they are related?
10
That also includes the banks the federal government as bad actors.
3
@Sharon I think the ADU bill is fantastic one and I also hope it gets passed - it will certainly increase supply, which, if it happens enough, will decrease prices.
The core problem afflicting California is that there is not a lot of money to be made in *most* rental properties, specifically because building them is so expensive, and revenue growth is hampered by legislation of so many sorts. The cost to develop, build and maintain properties is so high that returns are negative or negligible unless the projected rents are high enough that the units are very expensive. This is why no one builds low-cost housing, and why all the new housing that does get built is "targeted" for high-income households.
The NYT itself recently reported that a unit of "affordable" housing costs $800,000 to build in San Francisco, the most expensive such costs in the world. No developer is going to pay $800,00 to build housing that she/he will lose money on. Therefore the only builder is the government, who by the way are not excellent at building properties.
The core point is: development costs are the primary driver of rent costs in markets with constrained supply growth, and to the degree they are impacted by policy choices and local politics, it limits supply growth. This keeps rents high and gives existing property owners the ability to charge whatever they want if demand is growing.
2
I have had the unfortunate experience of living in an Invitation Home, we lived in one for 4 years to stay in a school district.
We are always going to be renters because we have student loans & soon parent loans for our kids.
We have had bad landlords that were individuals & then the big companies. The issue to me is that communities don’t protect renters from hazardous living conditions. I have asthma & we have had mold in multiple homes and there is no enforcement of maintenance standards. Laws were written to protect landlords not tenants and even when they are in place, there is no enforcement. We have spent thousands on legal help that did next to nothing for us.
There is a shortage of affordable housing in both ownership & rental markets and it getting worse every day. Towns need the taxes so there is no incentive to cap housing prices.
There is a reason people are homeless.
We have been lucky, we still have a roof in her out heads & my son is in a good school district. A third of the houses on our block are rentals, I just saw an Invitation Home sign go up. I wish I could warn those people not to sign up but they will & it will drive all the rents up on our street. No doubt we will have to move again.
19
This was supposed to be a life-saving tactic. Empty houses deteriorate, taxes are not paid. Towns welcomed this approach, after all, if the town foreclosed for non-payment of taxes, your house would be sold for pennies on the dollar. Vote for Trump or vote for Biden, it won't make any difference.
6
I think it's ironic that on the same page you have an article which supports the claim made by Sanders and his supporters that Wall Street and the wealthy have their greedy little hands all over our economy and our aspirations for a decent life there are the accolades for a has-been, ultra-moderate candidate in thick with Wall Street and the moneyed classes. Who will speak for change? Who will speak for the poorer people of our country? Who will have a clarity of vision that doesn't depend on what the latest poll says would be convenient? Who will lead us in getting rid of the streak of meanness which seems to pervade our country? Biden, with his wishy-washy ideas and sentiments? I think not. Biden so bidden to do the work of a Democratic Party that hates change....unless it benefits a certain class of people. Biden, who has spent all his time making jokes about the term democratic socialist, ridiculing it instead of saying what HIS specific ideas are. Biden, who has spent his time painting an image stalinesche=like of Sanders---as though a 78 year-old grandfather is going to singlehandedly not only give us reforms but turn us into a member of the iron curtain.
From my perch here in Italy...in the USA it's same-old, same-old.
12
A flavor of this grand capitalist play is flooding this tourist town of about six thousand that hosts three million visitors annually. People and (I assume from sales to non-local entities like LLC’s) corporations purchase homes to rent and make “lots of money per night” with zero regard for the concept of neighborhood. Grand design, no? The markets will control themselves, no? It’s so “Puritan”: he who has the most money is blessed by god.
9
Private equity firms initially enriched themselves by destroying millions of jobs, saddling companies with debt and paying themselves with the borrowings. In order to amass even more wealth, they acquired homes after the financial crisis and now employ unconscionable practices to maximize the amount of money they extract from renters. What will they do next? Hold our food supply hostage? Turn our bodies into vessels to increase their shareholders "value"?
25
this type of practice should be a crime, and if not, should be heavily regulated. charging tenants for things like "landscaping" where none exists is extortion.
19
This a huge problem for NYC. Not just single family homes, but apartments at every price point
6
This situation is Obama's legacy, the result of his decision to bail out the banks while doing nothing to help the ordinary citizens who were robbed by them. At this point, do we really want Joe Biden to step in? I don't think so.
15
@SRF I agree. But trump is the worst scenario. If he doesn’t lose by a landslide any chance of sanity and all hope are gone.
1
I could not agree with you more. I am another person who was in foreclosure for two years trying to get a loan modification from BoA back in 2012. Never happened, lost my life savings etc etc. I spun into deep depression and PTSD and am just in emerging recovery. I will be a member of the financial underclass for the rest of my life, living on less than 12k yearly (I’m 66). I despise Biden. That administration did nothing to help people like me. And I won’t be voting for him.
Read Evicted, by Matthew Desmond.
2
IMMEDIATELY: Call your Democratic Congressional members (even if you're a Republican) and reference this article.
This has got to be stopped.
Spread the word to your families and urge them to call their local and state representatives and bring this up in local and state town meetings.
This cannot be allowed to continue.
11
As if calling your local representatives will get anything done. We are not their actual constituents you know.
1
I have never heard anything good about private equity firms. The word "bilk"comes to mind.
But it is worse than that. Wherever there are extreme problems, especially in areas that used to be run by government, they are there: separating immigrant children from parents and confining them in concentration camp-like spaces, violent private prisons, even fire departments.
Decent housing is a human right just like healthcare. Owning and operating private equity firms to ruin people's lives is nobody's right. These leases should be illegal and void. So should buying homes you're not going to live in.
9
This is a HUGE problem and has been for a few years. Some of these companies are the biggest landlords in the country. This is NOT the American Dream.
13
Their greed knows no bounds.
Having just gone through looking for an affordable place to live, I can state unequivocally that this is part of the problem with homelessness in our country.
When an honest, hard working person can't find an affordable place to live due to the overpriced housing market, you can understand why we have so many people both cohabitating and living on the streets.
Many times recently, when a property management company told me what the rent was on a small apartment, I laughed out loud. Who do they think they're kidding? Currently, most 1 bedroom apartments are going for thousands of dollars, when just a couple of years ago, they rented for $800-$1000.
There's very little concern for those of us who can't afford these exorbitant prices. When there's a majority of homeless people in our country, will we do something about this problem, or will those who are homeless force us to do it?
13
If he had settled for joint custody which he ended up with anyway he would still have the house. Choices matter.
4
$16,000 down payment on an $800K house and then $250,000 for KITCHEN and bath renovations? And he's so emotionally attached to the house that even now he's willing to rent to live there?
8
Pair that phenomena with the explosion of Airbnb in the rental market and now you see why housing is barely affordable. There is maximum pressure to extract as much rent from individuals as possible.
20
We bailed out the wrong group. It may have seemed like the right idea at the time, but bailing out homeowners who were targeted with subprime mortgages would have also stabilized the housing market. This is a failure of both Bush and Obama in their response to 2008.
But even before that, when the older generations went along with an idea of “trickle down economics” the result became trickle up misery, but the misery is by and large hitting the younger generations the hardest.
There is money to be made exploiting those less fortunate than you. Our government should be putting it’s thumb on the scale to create a more even, and stable, environment where exploitation is not rewarded but ingenuity is.
13
One more huge example of soulless corporations paving the "road to serfdom" that Milton Friedman was sure would be the government's doing. Why more people would complain about Bernie Sanders being a Democratic Socialist than be upset about issues like this is beyond me.
Wake up.
9
What a sad predatory economy and society we've created. It's not just climate that is a shameful legacy for the future. How do you think Mr. Ellingwood's children will feel about home ownership? about stability? about longterm reward for hard work? I hear a number of young adults tout their new "gig and sharing economy" with ride-share, rent-share, clothing-share, cooking-share --happy to let a restaurant purchase pots and knives, do the cooking, and then have Skip the Dishes bring me whatever I want-- and what I hear is that they're choosing to be indentured, possibly for life, owning no value assets.
That said, I do hope Ellingwood separates himself from this emotional and abusive battle by seeking cheaper rent elsewhere and beginning to save for another property to purchase. His relationship with this house is toxic.
8
This is what Elizabeth Warren should have focused on in her campaign since she is the one who is most knowledgeable and credible on the subjects matter. I emailed her campaign many times about it but in vain.
10
I hope Biden isn't taking donations from these companies.
7
Stories like these abound on forums like BiggerPockets (where real estate congregate), but from the point of view of the "investors." They grow rich on the back of their fellow Americans mainly by exploiting them in their hour of need. Shameless and shameful.
I was and am a fan of Barack Obama, but I agree 100% with the criticism of his administration that it allowed banks and others to profit off the financial crisis while not doing enough to help the little people. I hate to say it, but in many ways, this helped the rise of Donald Trump, because the little people felt behind.
13
President Obama was in many ways a terrific, if moderate President. What he was not was a king: he was able to do what Congress would allow. Even Bush II, who allowed the financial meltdown, actually tried to do a bit more but was stymied.
And there were plenty of wolves and vampires with money or access to credit lurking out in the dark, eyes aglow, waiting to pounce on unsuspecting middle class America.
3
Wall Street first destroyed communities across America by annihilating small businesses from drug stores to hardware to electronics. Small businesses that often provided livable wages and job security were substituted with minimum wage jobs with no or meager benefits and zero job security.
Then the recession hit and huge numbers of American’s lost their homes. The rich cats on Wall Street suffered the least from a situation *they caused* and we bailed them out?!
Now they are picking through the best of these communities taking homes and further pilfering America. They rail against universal healthcare, infrastructure maintenance, support programs for those in need, etc., etc.
At what point do we put constraints on these monsters? At what point do we say, enough ?!
At what point do we say, stop ra_ing and pillaging America so the wealthy can get wealthier ?!
And people wonder why Sanders is so popular with younger people?
.
11
Reading this, I cannot help but think that we are reverting to feudalistic times. Will we soon have to tip our foreheads to our "betters" or masters? After all, they have the power of the realm behind them.
How Ms. Chisholm could possibly think that Trump/Kushner, two big landlords, will improve things for tenants/peasants is just crazy. She should pray for her awakening.
9
Can't wait to keep this status quo going. All in for Biden. All in for the companies!
3
One good thing about landlording becoming institutionalized is that institutions can develop reputations. People will start googling for reviews of these institutional landlords and learn to avoid ones that abuse their tenants. That will pressure these landlords to do better.
@Vanyali1 Potentially. Another side of this is the “property management” companies. There are some (Real Property Management comes to mind) which are national in reach. They collect rents, manage leases, do the maintenance (or not). They usually require income of 3x rent for a tenant to be eligible to rent to begin with and they strictly enforce residents-per-bedroom laws, so even if people want to double up they can’t. It is not “illegal” and once one company starts doing this in an area it seems they all do. I don’t know who owns these homes, whether it’s individual owners or these financial groups. But the dynamic is similar. If you live in an area where the market is full of this, all the landlords have bad reputations but you have to live somewhere.
IF you have wondered hypnotic suggestion can be instilled as confusion and forgetfulness and fear, I assure it can. And no legal system will protect you.
We built our home when my youngest son was in the first grade, now he is 47.
My home my husband and I built on land we bought on Trails End Road in Rhinelander Wi was acquired thru coercive hypnosis amping up my fear of winter. This was not a single person but a scheme by power users to acquire a $50,000 home shortly thereafter worth a quarter of a million using social workers and police. As one said to me years later continuing the harassment WE'RE ALL IN THIS TOGETHER.
My husband was denied retirement on his own property, in his own garage, by the united effort to undermine us using psychological and emotional pressures, avoiding, or trying to, physical coercion. His early death avoided supporting an entire new family remanent from an earlier cop skimming. I was terrorized to force me into a law suit which had I done so, would have resulted decades later in a settlement paying my medical bills, legal fees, and the grandchildren's back child support leaving me with nothing. And this after a childhood TBI on the school playground for my son, after which we chose to live among friends rather than gain by law suit.
You forgot to mentioned the part where Chad stopped paying his mortgage. Sure there's lots of rotten corporations out there, where would you like to begin? All these shenanigans started with Bush and the replublicans. At every turn accountablilty and regulations are tossed. This is what you get. AND here we go again as interest rates approach zero, which is the root cause of house over-inflation.
3
The unfettered Capitalism of this country is obscene. Everyday less is provided for more be it the bank or the airline or insurance or school. We need to rise up and say enough. It seems to me that the population is cowed. Why do the majority of Americans believe that universal health care is impossible? Why don’t they believe they deserve it? I’m disgusted.
8
This is capitalism at its worst.
9
But by all means, let's bail out Wall Street at the first sign of trouble.
5
Meanness is its own reward: Steve Mnuchin was one of the worst housing profiteers and look where it got him: one of the highest level jobs In Washington, in charge of MONEY for Trump.
19
Just when I thought I couldn’t get more disgusted. No small wonder we have a huge population of desperate people in this country.
11
This is one of the reasons we need Bernie in the White House and progressives in the House and Senate. Banks were bailed out and they get virtually free money and tax breaks. What do they do with that money? Take over homes, raise rents and engage in fraud. They also do stock buy backs and fire employees while CEOs coin it. Biden has promised these “scoundrels” that nothing will change. This, among other things, needs to change and fast. Bernie Sanders is our only hope!
9
An entire generation is in indentured servitude to the banks with a trillion in outstanding loans. Our younger generation will never be able to buy houses, let alone ever be out of debt and start a grownup life. Now, knowing they can only rent, the bankers are squeezing every last recourse from an entire generation. This is how Biden thinks we should live. Enough. Sanders2020
5
@Lilly Renting and being in debt does not preclude one from becoming a grown-up.
After reading this it's no surprise that Bernie Sanders has so much support in California. It's also no surprise that the homeless population in this country is growing at a time when a supposedly strong economy should be producing opposite results. The root of the problem is pure greed - the worst possible product of unregulated capitalism. Local, state and federal politicians have known about these rental rapists for a decade and have done nothing about it. It's time to clamp down hard on these wolves.
363
The worst possible outcome of unfettered capitalism is not greed - greed is already there, an underlying motivation. The worst possible outcome is Republicanism.
7
@Molly4
And now the Democratic Party is on track to nominate as its 2020 Presidential candidate the Vice President from the administration that enabled this up-and-out transfer of middle class wealth. With a huge assist from Wall Street's hometown paper, The New York Times.
7
Is Biden going to fix this? He was part of the Obama administration. They were in charge when all of this went down.
11
Not seeing any injustice here. He took out a loan to buy a house. He failed to pay his loan. His bank threw him out and sold the house. He decided to rent the house. The new owner owns the house and can ask for whatever they want. As a tenant, if he is dissatisfied, he is free to leave. End of story, goodbye. Just another dead beat, poor credit, chronically non-paying renter. Keep you sympathy at the door.
15
@BT. They CHEATED him out of it when they went ahead w/the court hearing even though he had paid and they said he didn’t have to go. The default judgment in their favor was achieved by malicious trickery. He should never have lost ownership.
9
@BT True I cannot find very much sympathy for Mr. Ellingwood, I suspect he could not afford this loan ad should have never qualified for it. My sympathy is for the legitimate renters that have had mold, flooding, lack of maintenance and lies told in order to avoid having to lower returns to investors. If you are paying your rent then you should be able to have a reasonable expectation your house will not kill you or your family.
5
@BT If that was the beginning and end of the story I would agree with you. However, reading the entire article it becomes apparent there are predatory practices designed to extract (and one may argue extort) fees upon fees simply for profit to the equity firms and shareholders; not to mention cutting maintenance costs so much that the properties quickly degrade. And saying rental checks were never received when they were? Come on, even if now the argument is that the amounts were incorrect, initially saying they were never received proves deceitful and ill-intentioned at best. America can do better.
8
Thanks for this piece. There has also been reporting about REITs buying nursing homes and leasing them
back in some cases at rents that don't allow the facility to maintain patient care.
On top of the basic problems with corporations owning all these properties, anyone investing in a REIT that pays them a dividend gets to deduct the dividend as a business expense on their taxes, thanks to the 2017 tax cut fiasco. Even if they are simply an investor, or as in my case, an investor in a mutual fund that invested in a REIT.
Not surprising but offensive.
25
Apparently all of America has become Kansas as in "What is Wrong with Kansas?" The decades old book looked at a state that the voting population kept voting against their own interests. America has a number of Dem candidates who presented very strong solutions to the destruction of unbridled capitalism but rejected these candidates for more "centrist" candidates. It doesn't make much sense to continue to vote for individuals who won't recognize the problem and continue to allow the capitalists to rig the system unless we are voting overwhelmingly to become Kansas. A country bankrupt and corrupt in that case we have the government we deserve.
28
@Jena...Recall that Eric Holder, Obama's milk toast AG, announced a hands-off policy with the Wall Street criminals, claiming the result would be a disruption in our financial world if he took them to task. They certainly learned their lesson, didn't they? Now comes Status-Quo Joe.
5
People forget how drastic the housing crisis was...you couldn't unload any of these properties because there were no buyers. Masses of empty homes were dragging down neighborhoods and cities, that were starved for tax revenue at the same time as spending more to maintain blocks with empty homes. These 'vulture' funds performed a valuable service at the time, and had the capital to do it when nobody else did. They made their investment and took the risk. It would have been far worse if nobody stepped in to soak up all these vacant properties. In the USA we have this more fluid and liquid system, and it tends to clean up big messes more quickly. The real problem is twofold...allowing bubbles to happen over and over through lack of regulation, and a lack of wage growth so that middle class Americans cannot afford to buy anymore.
5
@Andrew
Have you considered the effects of this scam spreading through the world? The nation of IRELAND is about to become a diaspora. And if you think that is an exaggeration, consider that the ROMA were an entire territory ejected after military conquest. Genetics confirm this!
2
@Andrew -".. These 'vulture' funds performed a valuable service at the time, and had the capital to do it when nobody else did. They made their investment and took the risk."
When was the investment made and to whom? That reduced regulation and bubble didn't just happen.
1
@Andrew
"People forget how drastic the housing crisis was...you couldn't unload any of these properties because there were no buyers."
That was certainly not the case here in the Los Angeles area. My spouse and I -- and many of our friends here -- sat out the bubble for years, hoping and praying for a market correction that would enable us to finally become homeowners without the risk of losing our shirts. Then when the crash finally happened, the banks were given permission not to "mark to market," while quietly selling off their REO portfolios to hedge funds at fire-sale prices. Those investment funds proceeded to hold tens of thousands of homes off the market, trickling them out one-at-a-time to keep prices inflated. And they're still doing it -- while using their monopolistic power to market-manipulate and rent-gouge. (Los Angeles and San Francisco today have more homes sitting empty than homeless people.) Meanwhile, those looking for a fixer-upper home in this artificially inflated market won't find any for sale. Real-estate brokers funnel them to the hedge-funders, who "flip" them at price increases ranging from $200K-$700K.
Just like affordable health care, home ownership has become The American Pipe Dream.
12
The story is semi-interesting, and probably has the desired effect of getting people angry at the wealthy, but it could be instructive: What were the government policies, starting in 1965 with the HUD Act, and other legislation, that set up conditions for the 2008 crash, and the destructive monetary policy that followed?
3
@Eric
Yes, the article tells only part of the truth, the Congress acted despicably in selling out the protections of the US public.
3
@Eric That Had NOTHING to do it. It was the mortgage companies that gave out loans to Americans & illegal aliens that had NO credit scores that justified the trust in their ability to pay them back.
when they tried to bundle them together into bonds the Wall St analysts revealed that they were JUNK bonds backed by junk mortgages & instead of taking the warnings to heart & downgrading the bonds The Analysts were FIRED for doing their jobs!!!
2
@Peter S.Mulshine
My analysis goes deeper and is based on data. What were the factors that enabled the mortgage companies to sell junk? (Hint - Fannie Mae insurance)
Hint (who supported Franklin Raines when the regulator was trying to hold him to account?
Welcome to the land of neoliberal economics. It's a strange land where there are very few "rights."
But who needs "rights" when the invisible hand of the market works its magic and puts everything in place?
In the 1930's we responded to a national housing crisis with public housing. It not only responded to the plight of thousands living in crumbling tenements, but proved much needed jobs during tough years of high unemployment.
After WWII there was another housing shortage. Ten million men were mustered out of service and had no interest in moving back with their parents.
Again we responded with the national highway program, the growth of the suburbs and affordable, single family homes with government backed mortgages.
In New York we complimented this process with the state construction of coops along with urban renewal programs and the expansion of public housing. Both the middle class and the working class were able to find affordable shelter.
And then neoliberalism hit and housing simply became another financial asset to be bought, traded, sold, bought, traded and sold. Neighborhoods became irrelevant. Community stability was not something that could be securitized. Housing laws, already tilted toward landlords became a maze of confusion for tenants and a boon for the lawyers.
The moral of this story is that it is past time, once agin for public intervention to re-set the housing market playing field. Anything short of that is a bandaid over a gapping wound.
55
@Drspock
I assume you are one of the few people who think regulation might bring the system back on track? Great comment by the way.
2
@Drspock
I recommend a return to public rights granted under our Constitution. All removed under the 'scare' and 'threat' terrorism, implemented overnight, continued without public input.
3
@Drspock Explain to me why you refer to this as "neoliberalism?"
Local governments and school districts depend on property tax revenues. The article doesn't mention the possibility of small local governmental units facing the legal departments are large, well financed financial firms like Blackwood.
8
@cornbear
I have seen people in Dallas gouged by growing property taxes, then investment businesses buying their properties (allegedly for "development") and getting tax abatements. Individuals driven out by tax increases, then corporate giants getting taxes rolled back, imagine that!
8
I own and rent out the house I was raised in. The one my parents purchased in 1950. I keep it up, it is in just as good condition as the day they moved in. Almost daily I get a postcard from these thieves wanting to purchase my house "as is." As though it's some shack barely standing. I tell them everything I have is for sale. Give me the fair market value of the house and 20 years rent and we have a deal. So far, no takers.
42
The idea of these people knowing that you are a owner and are sending you proposals makes me sick. Your bargain will make them stay away... for a while
1
Why doesn’t he move? It is not his house. Somebody else owns it. What difference does it make what entity owns it? He just lives there. The market is supply and demand. The renter controls the demand side. If he does not exercise his control by moving, the price goes up.
4
I don't believe the market is so free. Plus, maybe we wouldn't notice if people like him were linked to the house because of the family, neighbours, etc
Probably this companies know people will move according to the prices. Prices that they can control in a way that, basically, know where a person should live
4
@Michael Blazin Because he has ruined his credit, and doesn't have the money needed for a rental security deposit in a very expensive market.
It's the upscale version of what happens to lower-income renters.
20
@Michael Blazin My first impulse was to say the same thing. He has no equity in the house, which was lost when the house was sold in foreclosure, so why stay? But the end of the story tells the tale - he has no money to move and since he is a foreclosure case, no one will rent to him except, most likely, under the same circumstances that he's current stuck in.
5
There’s plenty of affordable housing in much of the Midwest. The Walk Street investors seem to have ignored many areas. Yes, some people have suffered because the economy went down early in the Obama Administration and investors that were willing to take a chance and wait, prospered. I hope that a followup story talks about property owners who in 2009, had several investment real estate units and who, as a result of the recession, had to take tenants to court to regain control because rents were not paid. In some areas, this process can take over a year and meanwhile taxes, maintenance, insurance, and mortgage loan payments must be made by the owners.
2
@Rock Winchester
Where in the mid-west?
@Rock Winchester--Not true. The market and economy crashed under the Bush Administration in 2008 well before Obama was elected and long before he took office in early 2009. Obama inherited an economy that was already deep in recession. You can't rewrite history, no matter how uncomfortable the truth makes you.
5
@Rock Winchester When I lived in West Michigan, there were plenty of houses that were much more reasonably priced than the ones on the coasts.
The rent-control debate usually is a discussion about renters and landlords – there are human beings on both sides, as we typically frame it.
But the reality is that we are often mischaracterizing the "landlord" side of the debate. It's one thing to debate protections for renters whose properties are owned by a single person. It's quite another to debate protections for renters whose properties are owned by massive private investment companies.
Renters might get more traction if they framed the issue accordingly.
12
My heart is pounding reading this. We have a housing issue here but nothing compared to this.
We also have protections against the majority of the sharp practices outlined in this outstanding report, along with a well functioning social protection/ welfare system.
How people are not out on the streets and not just protesting online is a mystery to me? For clarity I am not suggesting/ advocating violence, but the wholesale destruction of rights and the abandoning of any responsibility by the landlords in this report is extraordinary. There is a touch of Dickens about the whole thing.
The consequences of all of this, sooner rather than later, in terms of social cohesion will be very telling.
95
Most of Europe have a free market with reasonable consumer protections. The US [and UK?] are entirely biased towards the wealthy, who control the legislature, who make the laws, which favor the power.
13
@Mel
I read that the vote in Ireland brought life back to a third party due to the lack of affordable housing in home-owned Ireland. Consider that this may well have been a long con to drive out Irish into the EU lands. History is made of such, the last being the ROMA ousted from their homeland in India, confirmed by genetics.
1
@Mel you are absolutely correct. americans are complacent and in many ways deserve what they get. today they apparently will accept more of the same by supporting mr. biden, who has done nothing of consequence in his public life and is riding on barack obama's coattails in this primary election.
10
More and more of the U.S. population is waking up to the realization that the nightmare envisioned by Frank Capra in "It's a Wonderful Life" is upon us. There are no more neighborhood savings and loans operated by community minded nice guys and the Potters of the world (represented by Trump and McConnell) have have come to dominate. The country has become Pottersville. Too bad there is no Hollywood ending in sight. But perhaps if enough people wake up to what has happened, the November election will bring some relief.
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@Ken Golden
Mr. Potter is an immoral libertarian Bank CEO who supports (and captures) both parties. I could name names, but there are only four mega-banks and you know who you are.
@Ken Golden
The people have been asleep for years. And it was the 1964 election, the Reagan tax cuts, the democrats support for Franklin Raines at Fannie Mae and Andrew Cuomo at HUD, among others, who that set the stage for the housing situation we have today.
5
They will control municipalities taxes, zoning, and many aspects of infrastructure development and civic and political life, with profits as the priority and an eye to exploit those municipalities for maximum profit. Beware.
30
Ironic that this story shows up and provides more ammunition for me and my plan for my home when I eventually leave this world. I've been hearing about various corporations coming in and buying up lots of single-family real estate for years. I also receive notices weekly from companies that offer to purchase my house as is. I've already made it clear to the person I've designated as my beneficiary of my house that under no circumstance should my house be sold to a company. I want my home sold to a single family or individual. Luckily, I live a block from a top elementary school.
31
@Steve May be sold to a buyer who is not a corporation, but turns out later to be a lawyer who will turn it over to a corporation.
3
@Steve
Good idea! Thanks.
2
This is another chapter in the long sad story of the grossly immoral activities of the financial sector. Where is regulation to prohibit scams to obtain properties, force landlords to maintain the homes, prevent add-on fees and curtail the ability of private equity funds to borrow money in order to buy US-based assets? And who are some of the ultimate investors in REITs? Pension funds and institutional managers making decisions on behalf of middle-class retail investors who don't understand their investments.
Furthermore, those shares bought by JPMorgan and packaged into mutual funds are being peddled under their so-called Chase Private Bank label that charges outrageous fees to unsophisticated people with relatively modest assets. Thus we see another round of financial genocide - individuals at the mercy of self-interested "financial advisors" who are chasing fees without fiduciary responsibility.
46
There have been several editorials recently decrying the single family home and urging California to change zoning laws so big apartment blocks can be filled with renters.
Never mentioned is how SF home ownership creates the basis and bedrock for a stable middle class, how free-for-all uncontrolled immigration led to some of California's housing shortage, or how a nation of renters in big apartment blocks create yet more power and wealth for the 0.01%.
16
@The Poet McTeagle
"Overpopulation is a mighty force driving economic inequality."
Peter Turchin, War and Peace and War (Page 265).
Hart-Celler set up the conditions leading to 'a nation of renters.'
1
I sympathize with the anger expressed by others. But simple economics clearly shows that you can extract only so much from folks before the well runs dry. And I would suggest we’re at that point now. All the fundamentals necessary for a decent life are totally out of balance: housing, transportation, healthcare and childcare costs are growing exponentially, yet wages are stagnant. We can look to politicians for answers, or we can advocate ourselves.
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@T. Johnson
The US is overpopulated, and as a consequence quality of life for the working class has declined. University is no longer affordable. It was, from 1870 to 1970. Tuition at UC Berkeley was zero from 1868 to 1968. Rent for students could be covered by a part time job. Rent is no longer affordable. Rent was affordable 1890 to 1970. Homes are no longer affordable. They were from 1890 to 1970. One salary will no longer support a family. It did, from 1900 to 1970. Engineering used to be a good career path. Now, employers hire H1b visa's at cheaper wages. The silent generation, who have paid attention, understand what has happened, and why: overpopulation.The US is overpopulated, and as a consequence quality of life for the working class has declined. University is no longer affordable. It was, from 1870 to 1970. Tuition at UC Berkeley was zero from 1868 to 1968. Rent for students could be covered by a part time job. Rent is no longer affordable. Rent was affordable 1890 to 1970. Homes are no longer affordable. They were from 1890 to 1970. One salary will no longer support a family. It did, from 1900 to 1970. Engineering used to be a good career path. Now, employers hire H1b visa's at cheaper wages. The silent generation, who have paid attention, understand what has happened, and why: overpopulation.
What is your theory?
@Eric
While I agree, I'm 72, undoubtably like you. The young are the targets. This is why war is a 20 year affair. The young are raised in turbulence and destruction so the permitted calm 20 years later is accepted no matter if all support is gone.
Population is always an easy target. The UN interventions are to accomplish the above. Arm the opposition, kill and dispossess a million, give the new gov. elbow room.
1
@Eric...Overpopulation is the unmentionable that reminds us Homo sapiens is not the highest form of life on this planet. No other life form is on a course of destroying the habitat--including its economic habitat--that it needs to survive. Denial is our fatal flaw.
5
I assume the amazon effect that outstripped the need for strip malls has not helped either. It only added to the great supply of money chasing new ways to make up for ways to make money.
6
Perhaps if the Mass Media and the DNC had supported Bernie and Liz this go around,we would be able to address this horrible housing crisis.Instead they have put more of an effort into beating Bernie than trump,and kept calling Liz unelectable.
Biden was one of the prime players in contributing to this current crisis with his support of current bankruptcy laws and banking deregulation.He will lose to trump anyway because of the electoral college,even with Amy as his VP.
I'm 63 and own my home.My heart goes out to the younger generations.
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@Nora I don't think Biden is responsible for current banking deregulation. Didn't this happen post Obama era when, in fact, banks were regulated with the Dodd Frank Act? If we insist ingoing back years into a candidates positions and calcify their policies, we are in big trouble. This article is a window into the worst of financial practices in our capitalist system. I really don't understand why Ellingwood didn't flee this money pit situation and start over.
Do we need restructuring of our financial system - Yes. Will we have a revolution? No
2
@Nora
The "safe" candidate is unfortunately the boring and uninspiring one. The Dems are banking on an "Anyone but Trump" strategy to get out the vote, and ignoring yet again the fact that what it actually takes is voter passion for the candidate they set forth.
6
@Nora
What is your theory as to cause and effect leading to the present situation?
Even more than housing, the privatization of basic essentials for life as well as the sale of utilities is going to be an enormous problem.
There are domestic and international private companies buying up water rights and distribution systems. There have been instances where local governments sold their utilities or water rights to private firms, with the result that the rates went up to maximize profits. There are also countries where local residents got their water from wells, but were forced to buy water at high rates when the local governments allowed the creation of privately owned water systems. People literally revolted.
Water, electricity, and essential utilities should not be privatized.
84
Nor should health care
2
Outstanding journalism.
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@Colin Barnett
Great story telling. Not sure I'd call it journalism - no discussion of root causes.
4
Land, Labor, Capital.
Rage against the machine? Or gas it up and take it out for a spin.
Your call.
4
It astounds me that Biden won big on Super Tuesday. Do people not remember the 8 years that Obama/Biden were in office and refused to do anything meaningful about this?
80
@Trevor Bajus
People do not remember. Even when it happens, they don't understand why.
“That men do not learn very much from the lessons of history is the most important of all the lessons that history has to teach.” Aldous Huxley
7
@Trevor Bajus What were they supposed to do Trevor? How did they refuse? In 2010 dem voters stayed home and let the GOP do redistricting and pretty much do away with anything else good that they tried to get accomplished...ALL OF THIS BECAUSE DEMS STAYED HOME. Think Trump will help this?
3
@Trevor Bajus - Are you joking? Obama inherited the worst economy since the Great Depression, another massive mess created by another tax cutting Republican administration. Then the Republicans fought him on every front effectively undercutting the efforts to restore some balance. After 8 years our national deficit was being reduced and then we get the Great Orange Blob who immediately seeks to cut taxes on the the weathiest and deregulate most areas of life. These are facts.
9
Terrific writing that even this peasant can understand (if I read with my mouth moving). The same thing has been happening with older apartment stock. REITs in slums that will not put a dime in the properties.
38
@PatitaC
Hmmm . . . what did you understand about the role of the HUD Act, Hart-Celler, Congress's pushback on attempts to roll back Fannie Mae, Andrew Cuomo's role at HUD, the bail out of banks and the following monetary policy?
1
And when the economy goes into a recession, these Masters of the Universe will come running to us tax payers for a bail out, cause, y'know, they are Too Big to Fail.
I'd rather be a Democratic Socialist than a National Socialist Republican.
180
brought to you by years of low capital gains taxes & the resulting accumulation of wealth. Happening to farmland now as well. What can't it happen to...nothing. maybe we'll be buying our food, clothes,cars & slots at colleges from these guys soon enough.
these aren't nice people. their greed has no bounds.
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@chris
Correct, and excessive population is the great enabler. Before 1970, there were vacant lots in town. And reasonable interest rates. And higher taxes on high incomes. Add your own factors and draw a schematic.
1
I remember right around 2008, Mitt Romney was videoed saying to a group that they should scoop up all the foreclosed houses and fix them up and rent them. He was excited. Here was an opportunity to take people's houses, throw people into the streets and profit. As if the people were not real and had no lives or children. We are on the precipice of such a situation again as trump and cronies roll back banking regulations that Obama put in place. As the mega wealthy buy yachts the size of football fields, Flint spews leaded water at it's neighborhoods and people work without schedules, child care and sometimes dinner. Shame on this country.
121
@lulu roche
Shame on the electorate who put the policy makers in office - and kept them there. As for the banking regulations, don't you remember Barnie Frank and Maxine Waters screaming at the regulator who was trying to corral Franklin Raines?
1
@lulu roche Yeah, and to think that I went to war for it once. Certainly wouldn't do it again today. Let the corporations have it.
1
Similar practices have been in use for decades, but only now it's news. They used to do this only with more "vulnerable" populations. Shady practices like pretending they lost a check and then fee slamming ought to result in JAIL TIME but won't.
If corporations are people, then corporations can go to jail. IF someone were going to propose legislation, I would favor something that allowed individual officers - and major investors - to be held personally responsible for the misdeeds and malfeasances of their corporate entities.
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@Red Ree Actually the % of home ownership was increasing prior to the housing bubble. Once housing prices collapsed, that is when corporations swooped in and started buying up these houses en masse.
And you can't put someone in jail if they have not done anything illegal, and few of these transactions are illegal. Rather, this is a systemic problem that results from rich people writing the rules regarding capital gains and real estate investments. And it is a result of high income inequality, which allows the wealthy to buy up properties in economic bad times while ordinary folks get shafted.
4
@Red Ree
I favor revoking forever the status of 'personhood' for corporations. But the young have no concept of this as it was existing when they were born; the exact reason we carry out the 20 year plans. IF it exists in the world you grow up in, its normal and must be endured.
5
I just want to say, after renting from “mom and pop” landlords, and trying myself to be a good landlord using very expensive property managers, that mom and pop landlords are bad for renters. They don’t maintain properties and aren’t responsive to tenants. Even when I wanted to do the right thing and handed over 20% of my rent to a property manager whose job it was to take care of my tenant and my property, repairs were still not done, the tenant was still not happy, and I had to end up taking the property managers to court to get them to hand over several months of rent and the security deposit. Renting housing has been a scuzzy endeavor for a long time. Bringing some professionalism to he rental market will be a good thing for renters in the long run, even after enduring these growing pains.
10
@Lily The point wasn't corporate versus mom and pop landlords, the point was corporate landlords versus owning your own home. You will pay a premium for any landlord.
And FWIW, I am a pop landlord, I have never used a property manager, I do my own repairs, I keep my rents reasonable and I still make a profit.
6
@Lily Except, what you seem to be missing since you were so fortunate to have been able to own a home to rent, is that since these companies are scooping up all of the property, they are making home ownership AND even rental out of bounds for most working people. Your theory originates because you did not want to work your own property, you hired probably the cheapest manager so you could stick your head in the sand, they scammed you and it cost you more, so now you think we should all just let the corporate overlords take care of us since that is the easy route. Dear lord! People with money do not see out of their plastic bubble. And letting these parasites take over all the housing so that landlords don't have to work (Oh! the headache of property ownership!) just makes larger and larger tent cities. But you are fine with that as long as you do not need to mow your own lawn.
2
@Lily I think mid-sized non-private equity landlords are fine. If they own properties mainly in one area it's different than a national company. There needs to be more recourse for renters dealing with these large, lawyered up companies. There's no reason a person should be paying $3, 800 a month and not be receiving regular repair and upkeep services
1
They cut out the middle man this time. Instead of providing sub-prime loans to homeowners who really couldn't afford them, they decided to just buy the properties and rent them. With loans from the federal government, we're back in the same situation before the housing bust in 2008. It will happen again, it's only a matter of time. And of course, they'll be bailed out and we'll all be on the hook for it, again.
49
This article would be better if it gave us some denominators. What portion of the US housing market are we talking about here? What portion of the market in houses formerly covered by distressed mortgages?
Ultimately, the context is political. Do we want a society in which one's home depends on a mortgage? If so, how much are we willing to subsidize it. I suggest that it's not as good a deal as many have assumed.
8
The problem with this ....and so many investigative articles is ....What are we supposed to do about it ?
The problem is outlined in exhaustive detail but there is nothing about potential solutions.
Are there any states that regulate this ?
31
@Fed Up
If you are looking for the regulators who should be on the case, note that Federal law usually preempts state laws that regulate banking (the role of the OCC was expanded in the 2004-2010 period - "coincidentally" the period before and after the financial crisis). But property acquisition and transfer issues are subject to state laws that are typically not preempted.
For these housing acquisition issues, Federal law should regulate private equity firms and bank loans to them, and states need to police sleazy tactics leading to expropriation of property.
8
It’s already illegal for landlords to fail to maintain their rental units, pretend they aren’t getting paid to unfairly evict people. This is all already illegal. The problem is enforcement.
5
@Fed Up Everyone likes a good story. Most do not like to actually go to work.
And yet the people keep electing and re-electing these same robber barons ...
87
@Ardyth Shaw - in case you haven't noticed, Bloomberg is not doing well with the electorate
@Ardyth Shaw
Excuse me, the people elected Al Gore and Hillary Clinton. Dubya was 'elected' by Katherine Harris's tampering with the voting forms in Florida and Trump was 'elected' by Putin.
1
Lots of problems to talk about - a dumb simplification of this article is that the sub prime and highly sketchy mortgage industry created a class of homeowners who were not really homeowners (liars loans, extreme arms, negative equity loans) because they had no hope of every paying down their principal. The crisis came and went and now they are (arguably more appropriately) renters, some of whom are being taken advantage of by increasingly corporate bad-behaving landlords.
The real problem and root cause (paid minor lip service at the end of the article) is supply of housing in California - prop 13 keeps legacy homeowners in and turnover artificially low, most homebuilding and zoning decisions are made at the local level, where existing homeowners have disproportionate power and of course don’t want more housing built — why dilute their homes’ values?
9
@Perfect Commenter
The root problem is excessive population creating demand. Housing supply depends on land, and the supply is fixed.
1
@Perfect Commenter
Just out of curiosity, I read that Prop 13 was originally for single family homes but was sabotaged to include business that resulted in massive funding loss for schools. Why no anger at this sleight-of-hand by big business?
2
It’s about time this article was written.
The corporate takeover of home ownership is the main cause, in my view, of the home affordability crisis is the US.
So what do we do now? How about we close down these greedy companies and return their spoils to the citizens of the US who were damaged by this immoral land grab?
471
@Dave
My solution is to dissolve the Washington Congress and utilize the state elected Senators and Representatives as intended by our forefathers in their Constitutional Conventions. The state officials travel to Washington for a month in the summer to do the nation's business, then return to inform their constituents.
IF nothing else, they are easier to reach at the state capitol and harder to cave to influence by big business.
8
@Dave
Corporate ownership is a consequence, not a fundamental cause. Think deeper. Gather data. Try the US Census. Analyze. Synthesize. Create a model of cause and effect.
4
@Dave
Looks like America wants more of it. Who cares about the article. Pointless if you elect people who will enable more of it.
5
No doubt Elizabeth Warren has a solid plan for this crisis and would execute it better than anyone. Perhaps if journalists and pundits had replaced every “but is she electable?” storyline with one about her actual skills, Americans might get the leadership we actually need.
175
@KHAnderson
You’re correct: Elizabeth Warren does have plans — four — to address the issues detailed in this story. That’s why she got my vote on Super Tuesday, even though I figured her campaign was doomed.
11
@KHAnderson Primary voters rejected Warren because of what journalists said?
@GW Elizabeth Warren needs to be put in a cabinet position to turn this ship around.
3
The cognitive dissonance required to simultaneously take on the fight against a corporate rental property business and to support Trump is amazing. Doesn't Chisholm know what the Trump family business is?
134
That irony is rich.
4
@Phil Well Ms. Chisholm seems to have carved out a nice consultancy gig for herself, hopefully motivated by helping her fellow renters but who knows her motivation?
5
@Phil
Yes . . . and worrisome for immigration policy.
1
What a timely piece!
...is what I would be saying if this were written ten or eleven years ago.
15
@Clotario Right? Also - their example is of a guy who bought a house close to a million, got bailed out once by his inheritance, and whose family had enough to also purchase in that neighborhood. Why not examples of actual working class people who make the average wage of the U.S.??
6
Unregulated capitalism has run amuck in the US. We have a huge homeless population, and many of them have jobs but still cannot afford rent. Our state and federal legislators should look at a country like Finland and how it solved its homeless problem. Of course, our problem is that we have a Republican Party that does everything it can to support the worst elements of capitalism, and even some Democrats who are anti-regulation. We taxpayers need to understand that having people in homes prevents other problems that just add to government spending, including emergency healthcare and food support. And we need to demand that our legislators stop supporting Wall Street and big corporations at the expense of the poor and middle class.
324
@BG
Moderates seem to prefer Wall Street running things.
13
@BG Huge homeless encampments in Los Angeles. With the lack of basic sanitation, they are at high risk of CoronaVirus and even higher of spreading it. The chickens are coming home to roost in ways we can't imagine.
12
@BG Blaming the Republican party for this mess is not fair. The issue is worst in California which is a Democratic hotbed. California has some of the most liberal governments (both state and local) in the country and they have done nothing to thwart these sorts of aggressive landlord tactics.
10
This should be illegal. THIS is what is killing the middle class and creating homelessness. I'm trying to buy my first house now, and I can't compete against these companies in the market. And the rents they charge are a good $1000 or more over what a mortgage for the same house would be. This needs some regulation. I hope the next government addresses this because it is a serious serious problem.
62
@Mary
Symptoms. The root cause is excessive population, providing leverage to the wealthy and their hirelings in congress (both parties).
2
@Mary . It really is unfortunate that these predators exist, but the simple truth is that they do. The market may be overvalued in Brooklyn given all they've gobbled up, I'd consider that before committing to a home in BK.
1
$16k down on an $800k house with a $250k addition = high potential for financial failure. No mystery here.
104
@Shelly Blake Well said. No sympathy here.
1
@Shelly Blake There is no place for personal responsibility in this story. It is all "Look at Those Villains!" and "To the Pitchforks", repeated ceaselessly in the comments.
3
No person can live in a home and enjoy its equity too.
If someone has enough cash for a down payment to get on the property ladder, they still need to budget and be able to pay a significant amount beyond paying a mortgage for maintaining the property, especially if the home has to withstand changing seasons and pay for property insurance in case of accidents or natural disasters.
For a property owner to break even on being responsible for a property, rents collected must equal not only the mortgage, but also the cost of maintaining the land, building exterior, and interior, plus any local regulations.
One can bring down costs of owning and maintaining a home by gardening organically, planting a bee friendly and rain garden, using a rain barrel, and being diligent about home upkeep.
Maintaining housing stock and not infinitely building massive concrete apartments then demolishing them at the end of their short life span compared to traditional housing, becomes even more important as cities grow and demand for safe rentable units increase.
2
Be careful what you wish for. The promise of a home is getting more illusive as the cost of land and bad zoning make it harder to build. People need to have a more realistic view and need to move away from these very high cost areas. Between predatory practices and gentrification, we will have no affordable housing that isn't slum housing in this country. As someone who has built affordable housing all my life, I cry over what we are doing. We need a national conversation. We need a government that will support consumer protection, but we also need some education so that before people sign a lease or buy a property they know what they are getting into.
31
@Anthony Mazzucca
Or, we could reduce demand by reducing immigration. The price of land is increased by increased population, since the supply of land is fixed.
1
Sure to be unpopular but, why is the homeowner absolved of responsibility? The entire story is a result of a choice that he made. He CHOSE to pay a lawyer but not pay his mortgage. He could have chosen the reverse. Does he not have any culpability? Any agency?
For NY Times readers, the answer seems to be no, he doesn’t.
But for all of the rest of us in the real world, we recognize that we do have agency. We do have responsibilities. We borrow money to buy something and agree (promise) to pay it back. If we do not follow through, then we (rightly) forfeit the asset. We don’t expect to break our promise and make someone else suffer for it.
47
@Aaron True! But we don't expect to be bent over backwards and sideways in charges and fees on top of more creative fees.. All in the name of corporate capitalism, especially from an industry that basically didn't exist 20 years ago.
22
@Aaron
It is the fiduciary duty of the lender alone. If they make bad loans they are the sole responsibility. It is their only purpose and duty to choose credit worthy individuals.
This is to protect us fro usury, liberty and debtor prisons like Biden enabled. The guy helped the banks such that students who declare bankruptcy can’t expunge their debts.
Debtor prisons are for loan sharks.
5
@Aaron I don't feel that's the focus of the article. The article points out numerous instances where the tenant fulfills their obligations and the landlords do not fulfill theirs. The article doesn't advocate not paying your rent. This is about a growing trend of corporate ownership of homes that is becoming increasingly antagonistic of tenants, and the ramifications this can have on families in high cost neighborhoods.
Leases in some situations have become so complex and saturated with various fees that they in effect do reduce the agency of the individual. That's why there has been a push to reduce these terms into a reasonable form that an average consumer can understand.
9
These issues have been impacting low-income communities for years. We could’ve fixed the problem before this spilled out to the middle-class and created greater barriers to economic mobility. But we didn’t. We probably won’t fix it now. Should we accept this as the new normal?
20
@Phneyda
Wall Street is preparing to rob us and the moderates are going to assist them.
2
This is a great piece of reporting. I had heard through the grapevine from a real estate broker that investors were grabbing up single-family homes, but I wasn't aware of the scope of the problem. I'm appalled. We're becoming a nation of serfs.
149
Corporations and private equity funds should not be allowed to purchase single or two family homes. Their acquisitions should be limited to large multi-family or commercial property.
How is a middle class family supposed to compete against corporations?
These large institutional investors have incentive to keep houses off the 'market' to create limited demand and push the cost of housing upwards.
87
Unfortunately articles like this read (to me) as people living far beyond their means, because they fall in love with a lifestyle they cannot afford.
The real estate market is being manipulated but we cannot deny our personal involvement in that whether as sellers in neighborhoods that become 'gentrified', or as persons buying out properties in less popular areas in the hope that the area will be up and coming in the future. I have a mortgage myself and easily make the monthly payments, and do not understand why persons like the one written about in this article believe they are somehow entitled to live in a 'house they love'.
24
Capitalism working as designed. The status quo will not change unless we change it.
38
As I read this article it occurred to me that having been born in 1948 I have lived in a time of two Americas. One with a vibrant middle class, living the American dream, and the other a land of shattered middle class dreams.
It is not difficult to identify the inflection point separating the two Americas, it is 1980, the birth of the Reagan revolution. Forty years of deregulation, shrinking govt., salting the courts with business friendly Federalist Society lawyers, and congress passing laws written to favored corporations over people has created a nation ruled by predatory capitalist.
If you pick up the corners of American style capitalism you will find people like Trump and Mitt Romney using bankruptcy and other laws to avoid accountability for bad choices or to exploit hard working Americans to create profits. As I write this comment banking and financial industry lobbyists are colluding with the WH and Republican law makers to complete the hollowing out the Consumer Financial Protection Bureau to make exploitation of consumers even easier than it is now.
Hopefully, 2020 will become another turning point in the story of America. Perhaps 2020 will be the start of new revolution. A revolution that works to restore the balance between the financial interests of corporations and people; a revolution that seeks to make govt. work for all, not just the 1%.
443
@old soldier
The Biden establishment democrats are to heavily invested in this system. They will just socialize the losses for Wall Street and allow them to pick up all the assets on fire sale.
Homeowners will be expected to pay the highest cost at the top of the market, nothing less.
51
@Old Soldier. Agree. Most Americans listened to the Republican noise, and still do, and didn’t look beyond the surface. Back room deals all the time.
15
@old soldier Sorry, but the only Candidate who had a prayer of making these things happen was Elizabeth Warren. Shame on the press for not giving her fair coverage.
60
As a developer of single-family housing, we have historically discouraged rentals in our communities. The neighborhood “eyesores” are almost always rentals owned by individuals (absentee landlords) who squeeze money out of properties by skimping on maintenance. This is a disservice to the tenant and to homeowners in our neighborhoods.
We have found corporate ownership to be a great addition to the housing mosaic as professional management and maintenance enhances the rental stock relative to individual ownership. We have also found operating efficiencies created by “scale” has made rentals more affordable, not less. We are now encouraging “build to rent” programs in our neighborhoods as it allows us to provide entry-level housing for those who are not able to afford to buy a home in our neighborhoods. This encourages diversity and upward mobility, which we believe is vital to the long term health of our neighborhoods and cities.
5
@John Hodge
The "eyesore" in my neighborhood is a resident-owned nonrental property. The owner has the unfortunate attitude that since she owns the property, she can maintain it (or not maintain it, in this case) by her own specifications. A couple of years ago, she hoarded animals and the resulting noise and neglect of the animals prompted several calls to both animal control and sanitation. She has refused to mow her lawn or trim her trees and bushes, resulting in vermin infestation that, once again, required repeated calls to code enforcement. Now, she's decided to stockpile hoarded furniture in her carport. This stuff is flammable and a disaster waiting to happen.
My husband and I have rented the house next door to this nuisance property for the past seven years, and we maintain the house we rent better that this homeowner maintains the house she owns. Home ownership does not necessarily guarantee proper maintenance.
23
@John Hodge
Curious to know what "entry-level housing" means in your neighborhoods? Here in the northeast, even shabby, poorly built and maintained property is out of reach for many, to rent or buy. Gentrifying developers buy up older property, displacing renters, do some cosmetic improvements and double the rental price. Or they sell the flats as "luxury" condos for exorbitant prices, and then receive high HOA fees for maintenance and management.
1
Affordable housing is a huge problem nationwide. Our goal in our communities is to include housing types that can meet the affordable housing requirements of our city-ie police officers, teachers, young couples, elderly on fixed incomes, etc. Not sure what that means in your area, but in Texas we can successfully accomplish that goal.
3
When Dana Chisholm tunes in to watch Hannity every night, she should be aware that, according to his Wikipedia page, "As of April 2018 Hannity owned at least 877 residential properties, which were bought for nearly $89 million. He purchased some of the homes with the help of loans from the Department of Housing and Urban Development (HUD) and most are in working class neighborhoods. His property managers have taken an aggressive management approach with a much higher than average eviction rate."
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@joe
She's a piece of work, that's for sure. Wonder if she's an investor now, as well as a consultant?
14
maybe you can post that on her Facebook group page? highly unlikely she's the only on missing this point.
9
@joe
Besides Individual-1, the felonious Michael Cohen's other client was Hannity.
2
on the other hand, these new renters would have been foreclosed on and out on the street. Meanwhile, others who sold their homes to these big companies had no other buyers during the last real estate downturn.
These deep pocketed buyers added demand to a market sorely in need for it.
shall we cast stone and judge, or look at the situation in a balanced fashion?
7
@Open Yer Mind --These new renters essentially were put onto the street: they were "saved" by the new arrangements, only to be strangled by the conditions, even as the shape of the rental market changed.
Could you not say that these deep-pocketed buyers CREATED demand, when the solutions for underwater homeowners benefited the wealthy, not those in trouble.
8
@Open Yer Mind
On the other hand, if banks and other investment companies hadn't behaved like the predators they are, aided and abetted by lax laws that favor the wealthy and corporations, perhaps the 2008 "downturn" would never have occurred. And there wouldn't be multitudes of people in this country who can't afford basic housing.
36
@ActOnClimateCrisisNow , whatever you are refrrring to, the supply and demand of housing is not impacted by those laws
1
investors in this area too are making the housing market hard for younger would-be buyers, likely part of what's driving costs up and inventory low here too
8
Greedy landlords have been afoot since before America was discovered. Donald Trump is America's landlord personified. Ghastly and terrible the story of Wall Street's housing grab. We human beings don't own anything on earth. We just rent it, as we rent beer.
26
Being a slum landlord is an old business. It just took the smart boys who act like their hands are clean a while to catch on.
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I already knew this. Half my block is now owned by large companies who rent out houses on my block.
23
This should be illegal.
To buy a home to make a profit should be illegal!
3
@William It's one thing to buy one, or maybe two homes to live in and sell for a profit...it's another thing entirely to buy thousands of homes and squeeze most people out of any ability to buy a home and force them to rent at exorbitant prices that needs to be addressed with some kind of regulation.
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I would respectfully request a follow-up deep investigative article to this excellent one, exploring the participation of the New Jersey Kushner Properties’ participation in this “pigs at the trough” housing scandal. Earlier reports by this paper revealed that company’s unsavory involvement with rental properties in low income Baltimore neighborhoods and in sham “opportunity zone” investments. Thank you.
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@John Grillo i’ll second that!
17
This is what is destroying America. This is destroying the ability of nearly everyone under 40 from getting affordable housing, or being able to save for anything else beside a roof and four walls.
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Another reason California went for Bernie. The people need and want protections from these thieves. It's highway robbery.
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@Igyana It's why this Californian voted for Bernie. For the third time.
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@Igyana
It makes me so mad that no-one went to jail.
Here’s a radical idea — build public housing. Not “affordable “ housing which is, in fact, unaffordable for those who need it most, but actual public housing where your rent is based on your income. That would kill the market for slumlords. Then pass rent control for middle income housing. The piranha rental companies will sell their properties as fast as they. An sign the paperwork. Of course you would need politicians who actually represent people to do that. It’s a bitter irony that the tenant activist the article writes about is an avid Trump supporter. And an indictment of the pathetic Democratic Party establishment that would rather lose the presidency than nominate Bernie Sanders.
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If housing was built more durably — masonry instead of wood framing, with other maintenance issues thought through in the design of the house instead of pushed onto the occupants down the roads — then a lot of these issues with rental properties becoming run down wouldn’t be so bad. We build houses to fail in this country. We need to stop that.
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@Rosany
IF it was that simple, Mr O'bama should have done so, but what we do here in the US is to muddle the years of profit extraction, then like now, act surprised at the criminal excesses. Consider that the phenomenal acts of greed are legal. Congress had to make it so, yes?
4
This is disheartening and reads like a dystopian world of hucksters preying on the gullible.
Most alarming is Chisholm’s complete lack of understanding that Trump’s entire ethos is this hucksterish approach. As a real estate investor, developer, business owner and president. On the rare occasions he has been profitable in business it is because of the same bullying, swindling, shady practices she seems to be fighting.
How can she/they not see that?
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@JAS I seem to remember reading that Steve Mnuchin - Trump's Sec of Treasury was someone who led the charge to snap up distressed mortgages out from under people trying to refinance and casting them into the street.....
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This is what capitalism in it's purest form looks like. It's survival of the financially fittest.
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@roark
Wealthiest. Not fittest.
Those with capital can be extremely lazy when government protects you from loses and enables speculation on homes.
After all if you have millions of dollars you just buy in the recession, sell in the exploitation. If things go bad take a handout from government.
Keep on going.
4
This and AB&B are why housing turnover is not happening. We need change in this like medical care. For people who don’t like government this is why it’s needed be cause of the greed some people seem to have.
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The Chad in this story never really owned his house to begin with. It all started when he took a loan he couldn’t afford to begin with.
Lenders had a lot of responsibility for the financial crisis but let’s not throw personal responsibility out completely.
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@David - he could afford the loan when he took it out, he was married and had a two-income household, the divorce wiped him out. Tough times came, but predatory lending and then subsequently the REIT sharks began to circle, making it unnecessarily tougher. The government’s role is to protect its citizens, not the greedy elite few and large corporations/shareholders.
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He put $20k down on a $800k home and spent the rest of his money on speculative renovations. You think that’s responsible?
His $200k on speculative renovation is the same as what the PE funds are doing - investing. Chad is just really bad at it. Leave the investing to the professionals, please.
We can debate about the role of the safety net government should provide but does it really need to extend to Chad, who had about $300k saved up by the time he was 31? I have very little sympathy for this person.
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If you’re putting down 15K on an 840K property you can’t afford it
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Unbelievable. I don't think I have ever read about anything as shameless as this and there doesn't seem to be any recourse for the customers/renters. A healthy economy needs healthy capitalism (which is NOT greed) where companies provide products and services that they can be proud of and that meet the needs of the customers. This isn't that by a long shot.
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@Thoughtful1
I don't think capitalism can be separated from greed.
2
In any real estate transaction, it's hard to beat an "all cash' deal.
6
And how many people have enough cash of their own to buy a house with one payment.
5
This is just a story of someone who made obviously bad choices. The reader’s anxiety mounts as this homeowner makes one obviously risky decision after another.
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The underlying issue with housing cost is not what most people think. The cost of housing and rent have basically tracked inflation. The problem is that *median income* has NOT tracked inflation, which is making the completely reasonable rent and house-price increases unaffordable for normal people.
Certain places have had housing and rent costs that are higher than inflation, but let's be clear why:
1. Low supply compared to high demand. The low supply is due to selfish single-family and condo owners voting to limit development. This props up the price of their houses at the expense of young people looking to buy or rent.
2. Those same greedy homeowners vote to raise taxes for infrastructure but at the same time they vote to *exempt themselves from the tax rate rise*. You see this all the time in my town of Somerville, MA, where the politicians apologetically roll out a huge tax rise and say "don't worry, if you live in your house we exempt you!" Guess what renters: that means all those new taxes fall on your landlord and they will be forced to raise the rent just to not lose money (ask me how I know).
In short: as usual, this is a story about people desperately wishing not to pay for what they get, and becoming angry and resentful when they are forced to pay for what they get. Sheesh.
21
Private equity ownership of massive numbers of homes is a force that conspires with restrictive zoning, preservation, and other anti-development forces to result in home prices out of touch with economic reality for younger working people.
Unfortunately, this article focuses on how the private equity companies interact with individual renters, which in my eye are not even fully sympathetic, instead of the big picture societal problem of large number of renters and fewer owners.
I'm concerned the ask from this article is stronger tenant protections, when it should be restriction on massive institutional ownership of single family at all.
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@JJ there is a powerful bias against renters in this country. Renters aren’t bad people and they aren’t bad neighbors and we don’t need fewer of them. What we need are responsible landlords so people can live in peace.
1
On the one hand I find the article quite shocking. In particular the extraordinary push for profits driving the cost of rents up. I did not know about Mnuchin and Trumps other advisors. Very embarrassing to say the least.
On the other hand I am not surprised landlords want to maximize their returns and do everything they can to make their properties more valuable and receive the appropriate rents.
What I don’t understand, is most if not all states have landlord and tenant statutes that protect renters. Evictions are not easy to obtain, and when a property is in a state of disrepair the owner has to fix it. With all the lawyers in this country cant anyone find someone to help them?
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@Joseph Pileggi
I used to do a fair amount of landlord-tenant legal work, sometimes representing the landlord and sometimes representing the tenant. Your tenant protection statutes in New York and California are vastly different from their complete absence here in the Midwest. Although most Midwestern landlords think differently, it is relatively easy to evict a non-paying tenant in the Midwest.
14
@Joseph Pileggi A year ago, I was fired, had a stroke and found myself unable to pay rent and in the eviction process. Legal Aid (which was the only free help I could find in CA) was the only "lawyer" I could find. Essentially, they are just a bunch of student "supervised" by an attorney (who spent his time screaming at clients) Additionally, I was turned down for emergency aid, Medicaid/Medical and food aid by the county. Apparently the caseworkers are so overwhelmed they book the "intake" appointment and then mail you notification of the date, which was booked prior to the post stamp date on the document. This way the client can be declined as a 'no-show' and the caseworker keeps up with her processing metrics. Caseworkers' contact info is not shared (no email and their VM boxes are full) and they don't answer their phones, you have to show up and wait for hours only to be declined again on appeal IF you can be seen. TLDR: They make it difficult enough that most people just give up. I couldn't find any "private charities" including my own church. Tons of sympathy, but no help...at all....
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@KImberly Smithsom
Been there a bit. Had better shelter staff. Don't give up.
2
Follow the money. Private equity is fueling loan originators who are lending to SFR “developers” large and small. The business in single-family-rentals is so good you can take it to the bank.
Even if - as noted in the article - some players in the space are not stereotypical greedy landlords, the rise of non-owner-occupied single family housing stock has made it even harder to enter the housing market as a normal buyer. People below a certain financial waterline lose, by design.
39
It happened around here also. Houses were foreclosed, then put on the market. There were bargain prices; however, they disappeared quickly. There were no new mortgages by the then reluctant banks. Sales were cash transactions.
Isn't cutthroat capitalism wonderful?
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When the financial crisis hit government bailed out the banks and Wall Street.
Imagine how much better off our country would have been if government rewrote all those mortgages at lower rates and longer terms to let homeowners stay in their houses? Government would have spent far less and had money left over to rebuild infrastructure.
Our system of capitalism has morphed into a perversion of the original. Instead of providing goods and services in a competitive market, it's now all about obtaining more and more capital by any means possible. The more capital you have the easier it is to obtain even more. Ethics, morals and the needs of society do not matter. It's all about having money and getting more.
We are seeing a modern version of the Rentier system where those controlling capital control everything and earn more through income obtained from renting property instead of providing goods and services concentrating more and more wealth in the hands of fewer and fewer people.
History has shown that this does not end well.
598
The government doesn’t “rewrite mortgages.” Taxpayers do. You’re suggesting that your fellow taxpayers pay not only their own mortgages but those of others who behaved imprudently.
9
@Jose Pieste I think Cynical is suggesting that the response to the mortgage crisis of the Great Recession could have been approached more like the response to the Great Depression - with the federal government setting up a system to keep people in their homes. The differences are described by Aaron Glantz in his book Homewreckers - detailing how the federal government was so eager to hand off responsibility for underwater mortgages that they gave them away (in many cases literally for free) to Wall street.
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I’m sorry, this is not a perversion of capitalism. It is exactly what capitalism is supposed to do. The idea that capitalism was going to make everyone rich is mythology, sold to the masses who believe that one day they, too, will be the boss.
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Is this story about a housing problem or about a person down on his luck and making bad decisions?
32
If that's what you took away from reading this excellent and exhaustive analysis of a stone-cold killer business model, you've made your values and view of life crystal clear, @scanmike.
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@scanmike
Or about corporations that:
--first made money off people by encouraging them to borrow more than they could afford,
--then made money by foreclosing on them and getting their property at a bargain price,
-- dumped all costs onto taxpayers?
Don't discount the cleverness and ruthlessness of the very rich.
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@scanmike
it's a story about a housing problem.
3
On Obama and Trump’s watch, the nation rewrote the ending of “It’s a Wonderful Life.” Guess what? Potter won.
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@X and notably, not only does he win, but he never gets his needed comeuppance in the film. I fear Trump goes that way.
8
@X
We see it again and again in the world at large.
Take Angola; fight to be free of colonialists, then fight a civil war, the colonialists reemerge to 'organize' for water and electrification administered thru another country, and the 20 year plan completes with young who have known nothing but war and disruption. Power wins because it outlasts the generation, two or even three, just keep the war on simmer.
2
More like Bush and trump.
4
And the one person who could understand and end these predatory practices was kicked to the curb by voters. Elizabeth Warren. Willful ignorance and male bias is hastening the downfall of this country in so many ways.
868
I feel like so many more people liked her, they were only worried that the imaginary voter in swing states wouldn’t. People panicked and now she’s in last place.
Now we have stories of how democrats do not feel we have the perfect candidate. Of course this happens when there’s voting with head and not heart.
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@J. Clark Its not just the presidency that matters. It’s the senate, Supreme Court and who gets appointed to run government agencies. Any democrat will get Warren to strengthen the consumer protection bureau and help write new financial regulations. No person with any integrity will work with DT. Vote blue no matter who.
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I was just writing the same response. Well said!
31
Obama, 2008. He should have bailed out the homeowners not the banks.
461
Sad but true. Or made the banks actually pay back the real cost of that bailout. The federal government could have helped homeowners but no one was lobbying for them and plenty against. Geitner et al.
96
@e.w.
Why should anyone in that mess have gotten bailed out? The economy took a hit and we needed to prop it up, of course. Obama should have just cut everyone a check and that would have stimulated the economy without rewarding irresponsible borrowers or sociopathic bankers.
I have a hard time understanding why everyone thinks their particular type of debt: housing, education, whatever, is special and needs to be treated that way. Grow up. Pay for what you get. I cannot believe I have to say this to adults.
18
@e.w. Exactly! When he started the program to "help" people facing foreclosure or being underwater, the program did more harm than good. I remember thinking at the time that Obama was doing this on purpose so the people he considers "geniuses" on Wall Street could do exactly what they've done. It was easy to see this would be the result, if you were bothering to look.
13
I don't understand how anyone forgets to make their monthly mortgage payment....for two years. Then has $27,000 readily available to use to halt closure on their property. To begin with, this individual bought more house than he was truly able to cover. Many blame that on the mortgage lender, but we all need to be honest with ourselves in these situations. Having drained his retirement savings and used his inheritance proceedings is penny foolish.
66
@Nick
That's true, but those fees and lease terms - some of which I've had in the past - are awful. And the investors are killing the inventory for people to buy their own homes. After all _I_ can't pay the mortgage with government funds and renters' fees.
They're playing by a different set of rules with the full support of half (or more) of our major political parties. This isn't getting better any time soon.
19
@mjw , but "forget to pay the mortgage" for years - nonsense. Why not set up an auto-pay for required monthly expenses?
1
Thanks for this in depth article.
Nauseating but sadly unsurprising.
We are eating our young - will my young kids ever be able to afford a homeownership?
Will this trend of ever more Wall Street rapacious home owners, turn many Americans enter the modern day version of Irish Tenant farmers?
But at least we are better off than people living in Honduras and Guatemala!
Truly depressing.
50
@Jake You might be surprised at how well you can live in Central America if you have an income stream like social security.
10
@Jake "We are better off than people living in Honduras and Guatemala." Tell that to the more than 500,000 adults and children who are homeless. I doubt they would agree.
6
@Jake
From the NYT article on the Irish elections, that is the general idea. Irish are faced with unaffordable property in a nation of home owners. You're looking at an Irish despora but you don't know it. Only the latest in a long line of historic desporas, the ROMA being confirmed Indian territorial owners dispossessed by warfare.
Private Equity will destroy America. Financial engineering that adds zero value to society. Just as Former General Electric CEO Jack Welch turned a company that made things into a bank with too much debt, private equity is now destroying the rest of America. Politicians of both parties won't touch it.
565
@Jack
Because we do not have two parties. It is a sideshow. The real action is with the 0.5% that pay them off.
73
Not just America. This is a global phenomenon.
9
@Jack
Bernie and Elizabeth both have plans to reign in rampant capitalism, including Wall St.
4
Narragansett has put a moratorium in the building of 4 bedroom houses to try to reduce that practice. We have a problem with unruly URI students occupying certainl areas of town.
5
Invitation Homes definately needs more scrutiny and reporting from the media and public. The government enablers do as well. One of the reasons why section 8 is failure in this country is because the standards to be a section voucher home requires homes to be mold free, have working pipes and utilities. Prerequisites that regular landlords can skip and endanger their tenants with.
As the housing crisis gets worse and home ownership becomes more untainable, instead of radical redistrubution agendas, we need consumer protection for renters. Our current system bends over backwards to protect institutions like Blackstone and Citi, when the true backbone of the economy are the middle and low classes who are being leeched on like never before.
40
@edi
Thank God we have a real estate tycoon as President, with an unimpeachable reputation to boot! He'll get to the bottom of this, you just see.
31
This was all made possible by the fed dumping 4 trillion taxpayers dollars into saving big banks after the crash. What should have been a buying opportunity for individuals turned into a bonanza for private equity. As George Carlin said 'It's a big club and your not in it'
196
@robert conger - Throw in 40 years of (R) trickle-up tax "reform" and deregulation.
11
@robert conger
I conservatively go with $3 trillion ( I may be out of date), but I am glad someone at least talks about this besides me.
That money came from OUR Treasury.
Divided equally among all citizens, it comes to $9,000 per person, it $36,000 for a family of four.
What would you have done with $9,000 for each member of your family?
The two parties helped the global billionaires steal $9,000 out of your pockets, then told you they were "wealth creaters!"
If you are a millionaire, we aren't talking about you. A billion is a thousand millions. A billionaire is worth a thousand millionaires.
If you are a millionaire, ask yourself if anyone works a thousand times harder than you?
Millionaires (including small businesses owners and small farmers) need to realize that you have more in common with your employees and customers than with people that have more wealth than most countries, and therefore feel no loyalty to any country or it's people.
Trump is literally more loyal to Putin than he is to the USA. He says horrible things about Americans, but only praises the guy that orders attacks on our elections.
Until We the People stop protecting global thieves at our expense, our Republic is in danger.
7
How were these molding, insect-infested expensive homes constructed in flood plains built in the first place? Who paid to build them in the first place? Who made sure they were inspected and permitted during construction? Why were they built so shoddily that major plumbing failed after only 10 years?
Edwin Markham's Parable of the Builder leans on the story in Matthew 7, and here both are in real life.
7
Wait...what was it Bernie was saying the other day (week, month, year, decade) about corporations running America and running Americans into the ground?
God help us, but we don't deserve any help if we continue to put Super PAC funded "moderates" into office while we have "socialist" alternatives available who at least have the backbone and the moral clarity to call out the literally ubiquitous corporate threat to regular life.
311
@DES
To enact your policies, first you must win.
7
@mjw In the words of Billie Eilish, "duh."
6
@DES Bernie talks the talk, but Warren walks the walk. Bernie talks and that's it, he's incapable of actually doing anything. Warren created the Consumer Protection agency. What has Bernie done? Talk.
5
With mortgage interest rates so low, the renters should buy, too.
1
@David Anderson
They should and I did, but I'm one of the lucky ones. This investment real estate - funded with your taxpayer money - is obviously much more affordable for corporations than normal people, and people are priced out. I bought a house, but I can't pay for the mortgage with Trump's tax cuts, Fannie and Freddie Mac's money or renters' fees.
14
So glad to see this getting traction! I heard about this first when Aaron Glantz from Reveal was playing on NPR. He wrote a whole book about it, Homewreckers, and it's absolutely stellar. We should all be talking more about what happened to the supply of homes in the wake of the 2008 financial crisis.
117
@Jordan Farr
See also David Dayen's 2016 book "Chain of Title" -- particularly if you want to learn about the ways that Eric Holder aided and abetted the "homewreckers."
4
This is one more story showing why people are feeling used and abused by the wealthy. You don’t have to look far to see why people are voting for Bernie Sanders and recruited by his accusatory rallies.
For anyone who is paying rent a single family home, and at the same time trying to save a large amount for a down payment to buy, Mr. Ellingwood’s story is important. Instead of living in your dream home while you’re saving, live in a rent controlled apartment. It’s the best way to keep your monthly expenses controlled. Forego the dream home, and make saving for a down payment the priority.
289
@Scott , rent controlled apartments are not available everywhere, and the waiting list is long for the few that are a available.
59
@Meme . It sounds like Scott is recommending alternatives that help build a downpayment. If it's a time to save, maybe its also the time to make sacrifices. Living in an apartment for a couple years isn't such a huge sacrifice. In NYC children regularly share bedrooms or live in the living room. It's not at all unusual. If you don't have the downpayment for a single family home its not that you can't have it, its just not time yet.
15
@Scott You acknowledge the problem but have an interesting takeaway--blame the victim. Maybe, instead, you should be actually listening to what Bernie has to say at his "accusatory" rallies. Elizabeth Warren, too.
14
My sister said that this would happen, when she was going thru foreclosure, during the 2008 fiscal crisis. Banks did not want to help these homeowners, they wanted them out or would rent their homes back to them, at a steeper costs than their mortgages, They were desperate to stay since they had children in the school systems. This has been quietly happening for years. It was horrible, to say the least. And this was in rural Pennsylvania not glamorous LA. This is happening all over and there is not much we can do about it. Just don't fall behind because the WOLF is at your door.
248
@gracie15 If only it were a wolf, but its not. It's humans, the most destructive species on earth. Don't equate the horrors of humanity with wolves.
2
@gracie15 The last thing the wealthy want is a middle-class with independent capital that can say "no!".
Thanks for this story. It just epitomises the mechanism by which wealth is being consolidated from the many into the hands of the few. As Abood says, "The financiers are making so much money that depends on our everyday debt and expenses. Our mortgages, our rents, our car loans, our student loans. And all of that is dependent on low- and moderate-income people.” Where and how does this end?
217
@Lonce Wyse It ends in a return to a feudal society where there is a very small group of individuals who own everything, a very small percentage of professionals who serve them, and a very large group of the population forever indebted with no way out. This is the Brave New World envisioned by the 1%.
52
Anyone who hasn’t seen this is not paying attention. It’s not just housing, it’s every small business that generates an income. Wealth will takeover every income opportunity. The part of the tax changes made to take away deductions from individuals and give them to corporations.
Those changes hurt small unincorporated landlords in high tax states.
This effect is going on throughout the economy gas stations, deli’s anyplace money can find.
161
@John
We should remove ALL deductions from the tax code; there should be NO way for anybody to reduce the taxes they owe. Without deductions, the rates can be lowered while still increasing tax revenue as none of the biggies can avoid what they owe.
3
@John This has been going on since the early 1980's. "Greed is God/Good" is what is taught at business schools. Reagan opened the doors by getting rid of regulated capitalism.
3
In one sense, corporate ownership of individual residences is the logical next step after corporate ownership of multifamily residential property and mortgages on both single- and multi-family properties. But there is a big difference in the need for attention to the individual circumstances of the property and the tenant--a huge cost increase that would seem to invite investment failure or substantial hikes in revenues, if the market can produce such increased revenues. If this is a sustainable trend, it will be at the cost of making housing even less affordable.
3
I went to a house auction the other day to buy a smaller homer to move into. The auctioneer told us it had sold the night before through a “private” transaction. The small fry like me doesn’t stand a chance.
I also see more and more new rental properties being built. I don’t like this turn of events . I would rather the town build properties regular people can purchase instead of just rent.
241
@Pat
I would rather the town let people build additional units on their property instead of letting greedy single family and condo owners limit development to prop up the value of their own houses.
In my town in MA, the greedy single family and condo owners vote to limit development to 2 units per property . even though we *desperately need more housing*. The reason they do this is to prop up the value of their own houses, though they say it is to "preserve the neighborhood," whatever that means (basically, "we don't want THOSE people here).
In addition to limiting development, those same folks vote for high tax infrastructure projects, but then vote themselves exempt from those higher taxes because they owner-occupy their homes. Guess where those new taxes fall: on multifamily houses where... renters live! So renters end up paying for the new school, roads, parks and trees that they will never be able to enjoy because they do not own.
And then the landlords are blamed. Lol.
13
@Pat There is a big elephant in the room in society and electoral politics regarding how quickly should big, tax-obscured, privately held gobs of money be able to grow. The wealthy generally want it to be exponential but as the wealth is consolidated, it becomes hard to find places to put it all to work and ensure that steep growth. Tech bubbles, private equity gouging and vacuuming up all the livable space to extract rents is just the beginning. Let's see how things heat up as the idea that we shouldn't live in a new gilded age is cast as more and more radical and the dream of a healthy, housed and educated population is red-scared out of the mainstream political conversation.
10
@Pat Unfortunately, NIMBY turned into BANANA (Build Absolutely Nothing Anywhere Near Anyone) a while ago.
3