Wall Street Investors-Turned-Landlords Profit From Evictions

It’s been more than eight years now since the economic crash of 2008. Now, the big mortgage lenders – the same entities that played a huge role in that crisis, the same companies that received sizable bailouts under the Emergency Economic Stabilization Act – are getting into the rental industry. It may surprise no one to learn these companies are awful landlords. In fact, as a new report by Bloomberg News shows, the companies are driving up the cost of that rent with the goal of evicting people from those homes.house

The Bloomberg report looks closely at a company called HavenBrook Homes, which is controlled by one of the largest money managers on the planet, Pacific Investment Management Co. Bloomberg noted that a study by the Atlanta Federal Reserve showed that in a single county in Georgia, this and other large institutional investors were twice as likely to file for eviction against renters as owners of smaller operations.

Essentially, these big investment, private equity and hedge funds that snapped up a huge portion of the properties left vacant across the country after the 2008 foreclosure crisis have been turning these sites into occupied rentals. They have altered the landscape of an industry that was historically dominated by mom-and-pop owners. With the sole goal of maximizing profits, the conversations about collections that used to take place on the front stoop between landlord and owner are now being funneled into international call centers. Good luck catching a break there.

HavenBrook and another of the large operators, American Homes 4 Rent, reportedly filed eviction notices on more than 25 percent of its properties. That compares with a 15 percent eviction notice rate for all landlords of single-family homes.

Although an industry representative insisted no company wants to see families displaced, the fact is these type of firms certainly aren’t making it any easier. One study released last year by the Harvard Joint Center for Housing Studies revealed that 22 million renters had to fork over more than one-third of their total income to housing costs. Nearly 12 million renters spent more than half of their income on housing.

And while the companies will insist eviction is their last resort and costs them too, the reality is that in many neighborhoods, landlords can get an eviction processed for as cheap as $85 in court fees, plus another $20 to have the resident physically removed. In that scenario, it makes sense that landlords would want to jack up the prices and then simply remove those who can’t pay – which is exactly what they are doing. It’s also likely that these larger corporations are able to negotiate lower legal rates due to the quantity they can provide law firms, plus they have the ability to more quickly replace renters who are kicked out.

Our Miami foreclosure attorneys know that the hardest-hit communities are those where there is a concentrated population of poor and minority residents. Unfortunately, very few residents facing eviction are represented by lawyers. They don’t know their legal rights, much less how to plead it before a court. Many bring their children, and are forced to take off work to be there.

As home ownership has fallen to the lowest it’s ever been in five decades, owing largely to the burst of the housing bubble, these situations are sadly not unique.

If you’re battling debt collection in Miami or the surrounding areas contact Jacobs|Keeley for a confidential appointment to discuss your rights. Call (305) 358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday at 5 p.m. on “Debt Warriors with Bruce Jacobs and Court Keeley,” discussing foreclosure topics that matter to YOU.

Additional Resources:

Wall Street, America’s New Landlord, Kicks Tenants to the Curb, Jan. 3, 2016, By Prashant Gopal, Bloomberg

More Blog Entries:

Obama’s Failure to Mitigate the U.S. Foreclosure Crisis, Dec. 17, 2016, Miami Foreclosure Defense Attorney Blog