People’s Action’s Homes Guarantee campaign has drafted an executive order for President Biden, with the hopes of addressing the nation’s housing crisis. The executive order draft was signed by over 250 organizations including the Private Equity Stakeholder Project. In a press release from People’s Action, Homes Guarantee Campaign Director Tara Raghuveer said.
“As of now, the Biden administration is dangerously silent on the single biggest line item in Americans’ budgets: their rent. Signing this executive order is the clearest way that the president can fight inflation and take on the corporate landlords who are rent gouging poor and middle-income families.”
The executive order which can be found here, aims to “address the ongoing rent crisis, racial disparities in the impacts of that crisis, inflation, the consolidation of the rental market, and the government-sponsored dominance of institutional investors.”
The proposed order would require rent control and good cause eviction protections for tenants of properties financed by government-backed mortgages, such as from Freddie Mac and Fannie. An article on the investigative journalism site ProPublica titled When Private Equity Becomes Your Landlord found that between 2013 and 2021, private equity firms were behind 85% of Freddie Mac’s biggest apartment complex deals. As the article states “large loans to private equity firms, researchers and advocates fear, are helping drive industry concentration and pushing up the cost of renting.”
An example of one large apartment complex purchased with financing from Freddie Mac is the Southern Towers apartment complex in Alexandria, Virginia. Tenants have experienced increases in rent after private equity firm CIM Group purchased their complex in 2020 for $506 million including $364 million of financial support from Freddie Mac. A report from African Communities Together found that between August 2020 and February 2021, the CIM group led 27% of all eviction proceedings in Alexandria. CIM group continues to file for evictions in Southern Towers, negatively impacting the large community of African immigrants who reside there. In November, national nonprofit African Communities Together (ACT), filed a request with the Federal Housing Finance Agency (FHFA) for an investigation into the CIM group. Citing insufficient 30 day notices (meaning CIM behaved in violation of the CARES Act), and unresolved mold issues, the organization called for a full investigation into what they view as “predatory” behavior.
Another component of People’s Action’s proposed executive order is changes to the duties of the FHFA, which manages Freddie Mae and Fannie Mac. Created by the United States Congress, Fannie Mae and Freddie Mac are federally backed home mortgage companies. Fannie Mae was created during The New Deal to increase the supply of available mortgage funds across the country. In 1970, Freddie Mac split off from Fannie Mae in order to participate in the secondary mortgage market- the market in which financial institutions and investors purchase and sell mortgages. After both Fannie and Freddie almost experienced the government equivalency of bankruptcy, in 2008 both entities were shifted under the conservatorship of the FHFA. This was done in an effort to prevent financial losses and stabilize the housing market.
Some other core components of the Homes Guarantee proposed executive order include the creation of a Federal Interagency Council on Tenant’s Rights, which would include top US officials such as the Secretary of the US Department of Housing and Urban Development (HUD), the Secretary of the US Department of Labor, and the Secretary of the Department of Education. The proposed council would work to protect tenants from unreasonable rent hikes, and also fight back against deceptive housing practices from landlords. The executive order also calls on the Chair of the Federal Trade Commission to initiate a market investigation into rental price setting, and for the Secretary of the US HUD Department to define “good cause,” for eviction purposes, and create more regulations for HUD-supported landlords that attempt to evict households.
In an effort to bring attention to this year’s 7.7% rent inflation rate, and also the proposed executive order, People’s Action brought over 100 tenants who have experienced rent hikes to Washington D.C. to present President Biden with the executive order. The multi-day gathering of tenants was titled the Tenants Reckoning on the Rent in DC. Three Homes Guarantee tenant leaders were in attendance at a stakeholder meeting at the White House two days prior to a large rally demanding a meeting with President Biden along with key advisors. To wrap up the tenant gathering, Homes Guarantee hosted a congressional briefing with Sen. Elizabeth Warren, D-Mass., and U.S. Reps. Cori Bush, D-Mo. Emanuel Cleaver, D-Mo., Jesús (“Chuy”) García, D-Ill., and Jamaal Bowman, D-N.Y.
As the housing crisis continues, the Private Equity Stakeholder Project will continue to support the efforts of partners working to address the housing crisis from all angles. Actions from organizations such as People’s Action and ACT work to raise awareness about private equity’s impact on tenants, and call on officials to hold private equity firms accountable.