'Americans aren't serfs': House Democrats unveil bill to 'keep corporate investors out' of housing market
To help address the nation's housing crisis while at the same time confronting Wall Street greed, three California members of Congress on Saturday touted new legislation to target rent-gouging in the U.S. by private equity firms and investment giants who have gobbled up huge numbers of single-family home and residential units in the years since the 2008 financial crash.
"Wall Street should not be any family's landlord."
Co-authored by Democratic Reps. Ro Khanna, Katie Porter, and Mark Takano, the Stop Wall Street Landlords Act aims to "deter future institutional investments" in the Single Family Residential (SFR) market by ending taxpayer subsidies to profit-seekers as a way to help struggling families battling housing costs amid rising inflation.
If enacted into law, the proposal would impose "a tax on existing and future acquisitions of SFRs" by large institutional investors, a statement from the lawmakers explains. The legislation would also prohibit federal lending institutions Fannie Mae, Freddie Mac, and Gennie Mae from purchasing and securitizing mortgages held by Wall Street firms who leverage their size and ability to purchase large numbers of single-family homes with debt in order to turn around and rent them out for exorbitant profit—a tactic that by itself pushes rental prices ever higher.
Private equity firms and Wall Street rarely if ever strayed into the single-family housing market prior to the 2008 crash, but the market exploded when large firms were given access to trillions in low- or zero-interests dollars over the last decade and as regulators at the Department of Housing and Urban Development (HUD) and the Federal Housing Finance Agency (FHFA) offered subsidies via federal programs such as Fannie and Freddie. In 2015, Sen. Elizabeth Warren (D-Mass.) was among those blowing the whistle by telling HUD that it had no business colluding with Wall Street in such a way.
"These Wall Street investors made money by crashing the economy, got bailed out and now they're back to feed at the trough again, scooping up these loans at rock-bottom prices so that they profit off them a second time—and it is up to us to stop that!" Warren said to a cheering crowd during a Washington, D.C. rally in 2015.
In remarks posted online Saturday, Khanna said there may have been a time following the 2008 financial crash where it made sense for private entities to step in to buy residential units as a way to stabilize the housing market, but that in the decade since it has become clear that Wall Street investors have exploited government policies and a lack of oversight to fleece millions of renters who find themselves at the mercy of a housing crisis they did nothing to create and have no way to combat.
Khanna said that with 25 percent of single-family homes in the U.S. being bought up by profit-seeking investors, these firms are "hurting the American dream of home ownership" and the economy overall.
"We need to stop the financialization of housing," Khanna said. "Americans aren't serfs. We're not suppose to pay money to Wall Street to go live in a home. What we need is more American families to own their own homes."
"When I was on the front lines of the foreclosure crisis, I saw firsthand how corporate special interests take advantage of families to line their pockets," said Congresswoman Porter in a statement. "The Stop Wall Street Landlords Act promotes affordable homeownership, so that our kids can live in the same communities they grew up in. I am proud to work with Representatives Khanna and Takano to hold Wall Street accountable."
Takano said, "Wall Street should not be any family's landlord."
“As the housing crisis continues to plague the country, America's middle class is acutely feeling the constraints of our nation's low housing stock and increasing prices," added Takano. "Meanwhile, wealthy investors drive these costs up by monopolizing ownership of single-family residences. The Stop Wall Street Landlords Act takes the urgent steps needed to keep corporate investors out of the single-family housing market."
According to Khanna, "Low- and middle-income families in my district and across the country are being pushed out because of profiteering and unfair practices by large corporate landlords. This legislation will help level the playing field and put a stop to rent gouging in America."
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