Reuters investigates the big, deep-pocketed corporate landlords with property portfolios spanning multiple states that have been the most aggressive in filing eviction cases, even as they have thrived in the pandemic.
Since the pandemic began, large corporate landlords have filed nearly 70,000 eviction cases in just 27 counties in seven states analyzed by the Private Equity Stakeholder Project. PESP Executive Director Jim Baker told Reuters that the data “just scratches the surface. Giant corporate landlords … are driving the eviction crisis, advancing evictions even after residents have sought relief under the CDC eviction moratorium.”
Reuters explained how corporate America’s advance into the U.S. rental market began in the aftermath of the 2008 financial crisis – a cataclysm that resulted from a superheated housing market fueled by shaky mortgages packaged into securities sold to investors. When homeowners began to default on their loans and the market for mortgage-backed securities collapsed, 10 million American homeowners lost their properties in a tidal wave of foreclosures.
Investment bank Goldman Sachs had been a player in the mortgage-backed securities market. At the same time – and unknown to investors – the firm had bet against securitized mortgages. That trade, subsequently dubbed “The Big Short,” ensured that Goldman profited when the market tanked.
Among the Goldman Sachs executives who engineered that bet against the U.S. housing market was Donald Mullen Jr. In 2012, he left Goldman, created Progress Residential and joined a rush by Invitation Homes and other private equity-backed landlords to snap up cheap foreclosed homes in bulk. These firms figured that rents in suburbs with good schools would continue to rise, while their own home purchases would buoy the value of their real estate assets. They could then sell bonds backed by rental income to finance even more home purchases.
This led to one of the human tragedies spotlighted by Reuters. Despite Invitation Homes having its best year ever in 2020, with profits climbing to a record $200 million as occupancy rates neared 100% and its share price nearly doubling since March 2020, it still evicted Marvia Robinson, a Greyhound bus driver whose pay decreased dramatically when Covid impacted travel last year. Ranking fifth among companies seeking evictions in the seven states examined by the Private Equity Stakeholder Project, Invitation Homes ignored Robinson’s pleas that she qualified for protection under the CDC’s eviction moratorium and announced it didn’t accept funds from a county program that gives landlords $4,000 in back rent, Reuters reported.
Two weeks after Invitation evicted Robinson from her Orlando home, the company sent her a bill for $12,768.82. That included $8,854.30 in past rent, plus late fees, legal costs and a long list of charges to cover expenses typically shouldered by landlords to prepare a rental for new tenants, including landscaping, a battery for the smoke detector, garden mulch, plumbing work, new window blinds, pressure washing and painting.
“If payment in full is not made within 30 days,” the letter accompanying the bill said, “your account will be referred to a collection agency and your credit may be negatively impacted. Thank you for your attention to this matter.” The letter ended: “We wish you well in your future endeavors. Sincerely, Your Invitation Homes Team.”
Several days after Robinson moved out, a family of seven in a maroon minivan pulled up to see the house. It was now listed for $1,915 a month – 5.5% more than the $1,814 under Robinson’s lease.
Robinson continues to work overnight shifts, and her hours and pay are rebounding. But she worries that debt collectors will come after her for the $12,768.82 bill Invitation Homes sent her, and she remains homeless.
Photo credit: LA Times