Elizabeth Warren and Carroll Fife warn about the potential for the worst housing market outcomes of the real estate and financial crisis of 2008 to repeat without action from federal and state lawmakers.
Elizabeth Warren and Carroll Fife (the former is the Democratic Senate representative of Massachusetts and a former candidate for president, and the latter is the director of the Oakland office of the Alliance of Californians for Community Empowerment) write an opinion piece for The Washington Post calling on lawmakers to prevent private equity firms and other monied Wall Street interests from buying up distressed properties during the coming economic shocks, in a repeat of the Great Recession and financial crisis of 2008.
The Wall Street Journal recently reported that investors are “preparing for what they believe could be a once-in-a generation opportunity to buy distressed real-estate assets at bargain prices.” This profiteering is far from “once-in-a-generation” though: It’s straight out of private equity’s playbook during the 2008 financial crisis. We all know what happened then: Homeowners targeted by predatory mortgages lost their homes to foreclosure, and private equity swept in to buy those homes at depressed prices. Communities of color were hit fastest and hardest. Just a handful of years after Black homeownership hit its highest point, the devastating waves of foreclosures wiped out nearly all of the growth in Black homeownership since the Fair Housing Act repealed Jim Crow redlining in 1968.
To avoid a repeat of the same process in 2020 and the coming years, Warren and Fife provide two clear prescriptions, which could be considered economic emergency actions of top priority in a world, and a year, full of emergency necessities.
"First, pass strong federal legislation to guard against the coming wave of evictions and foreclosures, including emergency rental assistance." According to the opinion piece, Warren has authored federal legislation toward that end. The Protecting Renters from Evictions and Fees Act would establish a federal eviction moratorium for all renters until March 2021 and protect renters from fees or penalties.
"Second, to prevent predatory companies from further destabilizing neighborhoods and profiting off the displacement of families, Congress needs to pass legislation creating new restrictions on the sale of delinquent mortgages." Warren is, again, the author of federal legislation to achieve just such an end. "Sen. Warren’s American Housing and Economic Mobility Act would stop the pipeline of these mortgages being sold to private equity firms, and make sure that communities and homeowners are put ahead of private investors." The opinion piece recommends states follow suit. A law proposed in California, SB 1079, by Nancy Skinner (D-Berkeley) would "bar the bulk sale of auctioned foreclosed properties, give occupants and nonprofits the right of first refusal to buy foreclosed homes, and raise penalties for vacant properties."
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