Investigative reporter Aaron Glantz’s new book, Homewreckers: How a Gang of Wall Street Kingpins, Hedge Fund Magnates, Crooked Banks, and Vulture Capitalists Suckered Millions Out of Their Homes and Demolished the American Dream, gets into some of Treasury Secretary Steven Mnuchin’s legacy in Southern California, demonstrating how he struck it rich while ramping up foreclosures.
Glantz unveils Mnuchin and other Wall Street titans as modern robber barons. He introduces Trump associates, like Colony Capital, Inc. founder Tom Barrack, as a new type of corporate landlord preying upon all of us.
Following the foreclosure crisis after the 2008 housing bust, Wall Street speculators bought up foreclosed properties, seeing an opportunity to make big profits off the suffering of others. Private equity firms like the Blackstone Group and Barrack’s Colony Capital purchased tens of thousands of foreclosed properties that had been previously owned and lived in by families. What were once opportunities for people to own homes and build wealth, have become rental empires for the wealthy to squeeze profits from working families.
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The California Reinvestment Coalition has over 300 organizational members across the state and advocates for public and corporate policy change to advance economic justice and equity. We and other community organizations played a central role in uncovering a troubling housing trend that is still with us: As corporations become your landlord, working families and households of color have been either priced out of the housing market or evicted.
There is a new financialization craze, and it has tipped the scales far in favor of Wall Street.
The volume of these investor purchases of property is unprecedented. Since 2012, large investment companies, mainly private equity firms, have raised and/or invested $25 billion to purchase as many as 150,000 single-family homes throughout the United States.
From 2013 onwards, Wall Street has issued more than $8 billion of securities tied to almost 60,000 homes owned by companies such as Blackstone, Colony and American Homes 4 Rent. These securities are similar to the Wall Street subprime securities that fueled the housing crisis.
Nine large Wall Street firms together are the absentee landlords of more than 200,000 single family homes in 13 states. In Sacramento County, California, Invitation Homes is the single largest private landlord in the county, and the second-largest property owner after the county of Sacramento itself.
It is now more difficult than ever to buy a home as these corporate landlords swoop in, and it follows disturbing trends that disproportionately impact low-income communities and neighborhoods of color. We already know that the scales are tipped against people of color. Redlining is still alive and well, as Aaron Glantz reported in Reveal: Black applicants were denied home loans at significantly higher rates than whites in 48 cities, Latinos were denied at higher rates in 25 cities, Asians in nine cities and Native Americans in three.
Home ownership remains a gateway for the middle class and working people to build wealth over time. To do that, we need to tip the scales back away from favoring corporations, and we need to do more than level the playing field going forward, we need to provide redress to, and tip the scales in favor of, working class Americans and communities of color that have long been unfairly denied access.
We need massive reinvestment into homeownership by the private and public sector, in the form of subsidy programs by banks, financial corporations and the federal government that allow families to buy their first home, as well as those that allow homeowners to re-enter homeownership after losing their homes in the financial crisis, as well as subsidy programs to make communities of color whole after generations of redlining and discrimination.
Lastly, we need to hold Wall Street companies and titans accountable for their actions and to pay their fair share. This includes speculation and vacancy taxes for homes that remain in the hands of corporations, yet sit empty in our neighborhoods. And we need rent control for single family rental properties.
We know it’s unrealistic to expect corrective action coming out of Trump’s Washington. This administration has chosen to go in the other direction — proposing to make it even harder to prove discrimination in housing and lending. As Glantz notes, President Trump’s real estate cronies — from Steve Mnuchin to Secretary of Commerce Wilbur Ross to bank regulator Joseph Otting — occupy important positions in his administration, overseeing much of our economy that’s tilted to benefit the wealthy few responsible for displacing our communities and throwing people out of their homes over the last 15 years.
And yet despite headwinds for positive change, tenant and affordable housing advocates are dogged in the fight to stem the tide of housing displacement. In one form or another, change is coming. Grassroots advocates are winning the right to stay in their homes. Last month in Sacramento, advocates secured a cap on rental surges happening in California. We are successfully urging leading California financial institutions to sign a “code of conduct” agreement and adhere to best practices that don’t displace residents and fuel neighborhood gentrification. Nationwide, our partners are mounting successful state and local campaigns to keep people in their communities.
This year our fair housing complaint against Mnuchin’s former bank, OneWest/CIT led to a recent settlement agreement which will enhance the number of home loans for households living in Southern California neighborhoods of color. In this settlement, OneWest/CIT Bank committed to provide $5 million in subsidies to eligible borrowers and $100 million in home lending to borrowers in majority people of color census tracts. Similarly, our members negotiated a $8 billion Community Benefits Agreement with OneWest/CIT that includes further commitments from the bank to open bank branches in communities of color and homeownership assistance programs for people of color.
Change may be slow, but possible.
California, like the rest of the country, is in the middle of an affordable housing crisis. These modern-day robber barons have tipped the scales in their favor at the expense of working families; it’s time to tip them back. We must halt Wall Street predation on families struggling to keep a roof over their head.