Living humans don’t stand a chance when a giant hedge fund is bidding on all the foreclosed houses in a poor neighborhood — but that’s OK, because rapacious investors make great landlords.
Wall Street investors have bought more than 200,000 foreclosed houses in the past two years, bundling together the rents they generate into bonds that are just like subprime mortgage bonds, only without the pretense that the poor people who generate their payments have a hope of ever getting out from under their obligation to enrich the richest people in the world.
Blackstone — owner of Seaworld, Hilton Hotels, and the Weather Channel — is the biggest player here, and when they come into town to buy up all the single-family properties, they price actual families out of the market. Their securitized rent payment bonds are backed by some of the biggest subprime criminals, including Credit Suisse, Deutsche Bank, and JPMorgan.
Hedge funds really epitomize compassionate landlording, too. When Blackstone buys in, it jacks up tenants’ rents by as much as a third and immediately begins eviction proceedings against renters who can’t pay. If there are any troubles with your payments, they assess fines against you and make you miss work to pay the rent and penalties in person.
CaDonna Porter moved into an Invitation Homes property outside Atlanta with her children in September. When part of her monthly payment was rejected because she tried to use a debit card, the company demanded that she deliver the remaining amount in person, via certified funds, by 5 p.m. the following day or incur a $200 fee and face eviction. Porter took time off from work to deliver a money order in person, only to be informed that the payment had been rejected because it didn’t include the late fee and an additional $75 insufficient funds fee.
In a maddening string of emails, Invitation Homes repeatedly reminded Porter that it could file to evict her unless she paid the penalties. When she finally said that she would seek legal counsel, Invitation Homes agreed to accept her payment as “a one-time courtesy.” Andrew Gallina, Invitation Homes’ vice president for marketing, says it treats all of its renters equally: “Under the law, we’re not allowed to make changes or exceptions. That’s just basic fair housing.”
Invitation Homes has described its strategy as “a bet on America.”
Image and article via BoingBoing