Sen. Warren Introduces Bill to Combat Wall Steet’s Housing Takeover

Last weekend, as a blizzard battered the East Coast, local camera crews did what they love to do during major weather events: venture out into frozen wilds to ask the locals how they were feeling. 

One such reporter from NBC 4 came upon Caj Thomasson in New York City’s Washington Heights. When the reporter asked about the frigid temperatures, Thomasson did not see it as a time to discuss sledding or snowmen, but for thinking about housing inequality. 

“There’s still people out in doorways looking for shelter, and I think a lot of people think this is why we shouldn’t allow hedge funds to own residential property,” he said.  

The reporter, who seemed taken aback by the turn the interview had taken, attempted to redirect, asking if the snow gave him any sense of childhood “nostalgia.” 

“Yeah, it was much, much more snow, colder winters,” he replied. “And again, private equity didn’t own so much of the housing stock in America.”

The clip quickly went viral. In a nation crumbling under the price of housing, he was hitting on a point that felt personal to viewers — none more so than Sen. Elizabeth Warren (D-Mass.), who quote-tweeted the exchange with an announcement “Democrats dropped a bill TODAY to stop private equity’s housing takeover. Let’s get this done.” And it’s true: On Tuesday, Warren and a coalition of over a dozen Senate Democrats announced the “American Homeownership Act.” The legislation would seek to remove some of the tax break and enforcement loopholes that make residential properties attractive to investment firms. In an interview with Rolling Stone, Warren expounded on the text of the bill, and explained why it might pass with the help of a very surprising supporter: President Donald Trump. 

“It was a funny video, but also, to me, a very touching video,” Warren says, noting that she reached out to Thomasson personally. “It’s cold, it’s snowing, and he’s telling it like it is. That man brought home that America has housing, but when corporate landlords are in charge of it, those homes won’t be there for the people who need them.”

According to research from the Brookings Institute, “large institutional investors own just over three percent of the rental stock,” in the U.S. The bulk of that ownership is concentrated in major metropolitan areas, where so-called “corporate” landlords own upwards of 20 percent of the city’s single-family rental stock. The markets with the largest concentration include Atlanta, Phoenix, Charlotte, and Indianapolis. 

In a rare instance of foresight, Washington lawmakers are catching onto the problem fairly early. 

“Right now, U.S. taxpayers subsidize private equity to buy up the homes in your neighborhood,” Warren tells Rolling Stone. “In other words, it is more profitable for some Wall Street billionaire investor to buy the house next door than a young family trying to move in.” Essentially, major corporations are taking advantage of tax incentives designed for small “mom-and-pop” investors or landlords. In many cases, the home mortgages are backed by federally funded lenders like Fannie Mae and Freddie Mac.  

“When those investors buy up a big enough chunk of housing, they consolidate and then drive up rents for all the renters,” Warren adds. “So the consequence of what Wall Street is doing is simultaneously to make homeownership harder and renting more expensive.”

The American Homeownership Act proposes to revoke tax breaks given to corporate investors and venture capitalists, and move money into federal efforts to increase the national stock of affordable housing. Even just a few years ago, investment firms buying up large swaths of residential stock with the express purpose of creating perpetual rentals was rare. “Nobody did this,” says Warren. “[It] became attractive as private equity has mowed through one industry after another.” 

“We need to draw a line here,” she adds. “They take away Americans’ homes. It’s not only what that means for families who were hoping to have a place they could live in forever. It also undermines the economic stability of what remains of America’s middle class.” 

Among other things, the legislation would preclude from receiving federally backed mortgages or buying foreclosed homes sold by federal lenders like Fannie Mae, Freddie Mac, or from federal agencies like the Department of Housing and Urban Development. The legislation would also subject corporate landlords to stricter anti-trust laws by defining corporate ownership of more than 30 percent of a housing market as “presumptively illegal.” 

“This bill takes away those tax breaks so that Wall Street is not being subsidized to turn us into a nation of renters,” Warren says. “The groups that get hit particularly hard by private equity are buyers that are smacked in the head when they discover that the home they’re making an offer on has just been snapped up by a billionaire investor who can make an all-cash offer.” 

Tuesday night, President Donald Trump handed Democrats an inadvertent boon by endorsing similar policies during his State of the Union. 

In January, Trump signed an executive order preventing federal lenders like Fannie Mae and Freddie Mac from “approving, insuring, guaranteeing, securitizing, or facilitating sales of single-family homes to institutional investors,” and directed federal reviews of large scale home purchases by private investment firms. During his speech to Congress, he asked lawmakers to “make that ban permanent, because homes for people — really, that’s what we want. We want homes for people, not for corporations.”

Despite the president wandering into the rare venn diagram where he and Democrats are in legislative agreement, it’s now Republicans in Congress who remain skeptical of the president’s demand. 

“I don’t think banning institutional investors is a good idea,” Rep. Troy Downing (R-Mont.) told Politico earlier this month. He, like other lawmakers interviewed by the outlet, hedged about what sort of “language,” would be included in potential legislation before agreeing to support it. 

Warren tells Rolling Stone that Democrats are “in the middle of negotiations” regarding the advancement of the act. On Friday, her office released a video of a conversation between herself and Thomasson. 

“I’ve gotten feedback from all over the country, overwhelmingly positive,” he told the senator. “I will say I’ve gotten surprisingly very little hate about this. To me, that tells me that my statements on air were not actually that controversial.” 

“Sometimes government can do really good things,” Warren replied. “We just kind of have to do what seems sensible under the circumstances.”