Generation Rent Unable to Break the Grip of Unregulated Financing

UK rent signs

New Orleans  A headline in the papers claimed that the level of homeownership inched forward enough to hit the 2014 mark for the highest percentage since the 2008 Great Recession. Funny how a figure like that has so quickly become almost meaningless in this continuing period of housing shortage and soaring home prices in what seems an almost endless credit desert.

In Britain, we worked closely with an organization called Generation Rent. When I first heard the name of the group several years ago, it seemed strange to me, but it didn’t long in organizing all around the United Kingdom for me to get it. The notion of potential homeownership in the United Kingdom was virtually unthinkable for a whole generation of low and moderate income families, so their generation would be renting for sure. The United States seems to be knocking on the same housing door with our own generation rent these days.

A former Ohio-based tenant organizer, Spencer Wells, has come to the same conclusion in a recent column in Non-Profit Quarterly, saying,

There’s an emerging social movement in US cities that’s sometimes characterized as the Renter Nation. This movement brings together young urban renters, childless boomers choosing an urban lifestyle, and former homeowners who have been displaced into single-family rentals by the Great Recession. These “new renters” are adding fuel (and political power) to the struggle of low-income households in inner-city subsidized developments.

Renter Nation, Generation Rent, six of one, half-dozen of another, this speaks to the building housing crisis already holding much of the nation in its grip. The social movement isn’t here yet, as Wells says, but the demand is huge.

Squeezing renters even more is the inability to access conventional mortgage loans to move into homeownership. Admittedly, the housing market in New York City is sui generis, one of a kind, but a recent report by the Association for Neighborhood and Housing Development (ANHD) nails the growing power of non-bank lenders, unregulated by the Community Reinvestment Act:

…non-bank lenders are taking over an increasing portion of lending on 1-4 family homes, particularly to borrowers of color and low- and moderate-income (LMI) borrowers. Lenders in HMDA are categorized as banks, credit unions, and non-bank lenders, which are mortgage companies that do not take deposits from customers or businesses. We define non-bank lenders as non-depository lenders that are not owned by or affiliated with a bank or credit union.


  • In 2016, 30% of all home purchase loans were originated by non-bank lenders, up from 23% in 2012. The percentage of non-bank lenders was 50% for refinance loans in 2016, up from 23% in 2012.
  • Non-bank lenders made 30% of home purchase loans to LMI borrowers and 58% of refinance loans to LMI borrowers. They also accounted for 31% of home purchase loans and 61% of refinance loans in LMI neighborhoods.
  • 25% of home purchase loans to White borrowers were made by non-bank lenders versus 59% and 50% of the loans to Black and Hispanic borrows, respectively. Similar disparities appear for refinance loans.

Much of the disparities to LMI borrowers and borrowers of color relates to the higher concentration of Federal Housing Administration (FHA) loans to these populations and the decline in FHA lending by the largest banks. There certainly remain questions about qualified borrowers possibly being steered to FHA loans, which are more expensive than conventional loans. But, the overall concern this trend raises is that non-bank lenders are far less regulated than their bank-chartered peers, nor are they covered by the Community Reinvestment Act (CRA). In the run up to the 2007 economic crisis, the majority of dangerous sub-prime loans were made by non-bank lenders chasing relatively high rates of return for their investors and basing their businesses on relatively costly sources of capital.

Am I worried? Oh yeah, totally!


Please enjoy

Buffy Sainte-Marie’s You Got to Run

Remington with Amy Jack’s Dallas till I Die

Wild Belle’s Hurricane

Thanks to KABF.


The Coming and Current Crisis: Rising Rents and Evictions

Little Rock   Cause and effect. Truth and consequences. What goes around, comes around. Pick your favorite, but it was virtually inevitable that when you have a residential housing bubble explode, a recession, massive foreclosures, wipe out 30-years of home ownership gains among African-Americans and Latinos, and tighten credit markets and standards for low-and-moderate income families, locking the door on home acquisition, duh, we are going to have more tenants. Declining construction also triggered by the Great Recession and a market tilted towards the younger and higher income, means there is going to be a housing shortage for these same tenants with low vacancy rates and even worse situations where there is gentrification. Put all of that together and start hitting the doors, as we have been doing with the ACORN Home Savers Campaign, and everywhere the word and worry on the street is going to be about rising rents and soaring eviction rates.

A survey of 40,000 tenants by Apartment List confirms all of what we have been hearing in spades. Their survey found that almost 20% of apartment dwellers could not pay their full rent at some point over the last three months. Income matters, but the problem seems almost universal. They reported that,

Among households earning up to $30,000 a year, 27.5 percent failed to pay the rent in full in at least one of the past three months. Among those earning $30,000 to $60,000, it was 14.8 percent. Even of those making more than $60,000 a year, it was 8.8 percent.

On their survey in 2016 the number of respondents who volunteered the information that they had been evicted during the last year rose from 2.8% in 2015 to 3.3% in 2016. And, that’s the ones who volunteered the information, essentially making it harder for them to rent from the next landlords, so I hesitate to even guess what the real eviction experience might have been.

It takes no guesswork to know that the eviction rates are rising, given the trouble making rent. If the national average is 3.3% from this survey, cities that are in metropolitan areas hammered by the foreclosure crisis are firmly planted in the downward cycle of foreclosure to rent stress to eviction. Leading cities on evictions are Memphis 6.1%, Phoenix 5.9%, Atlanta 5.7%, and Indianapolis at 5.6%. Remember as well the Federal Reserve research report that in markets increasingly dominated by corporate landlords, Atlanta leads the way with 21% evictions in those situations.

Is there any relief in sight? Not really, since landlords hold the whip hand and are putting more pressure on tenants who are spread all over the west hell of our cities with the thinnest of organizational support, capacity, and representation. For example, Bloomberg reports that, “Forty-one percent of renters … said it was hard to find affordable housing near their jobs, according to data from an August survey published by Freddie Mac.”

This is a fast growing crisis in city after city. The cries of pain are being ignored, but it is also a siren call for a major movement and organizational response.