Tag Archives: ACORN Home Savers Campaign

Rental Rip-offs, Big, Small, and Dangerous

New Orleans      The rental market in the USA is the wild west.  Not the west where the “deer and the buffalo roam” and “the skies are never cloudy.”  That’s long gone.  The rental mark in America is now the wild west of HBO’s “Deadwood” and the Massacre at Wounded Knee.

On the high end, Blackstone Group, the giant Wall Street private equity outfit, has just cashed out of its last remaining stake in its rental home business created from the 2008 foreclosure crisis, reaping about $7 billion from start to finish.  They caught a whooper by bottom fishing on family misery.  The ACORN Home Savers Campaign was recently in Memphis documenting for the Hooks Institute how they and others had hijacked the rental housing market in the city.

The rental crisis is everywhere.  Twenty-three million people — overwhelmingly children, working adults, seniors, and people with disabilities — live in a low-income household that pays more than half of its income for rent. Roughly one in three renters in Los Angeles reports spending more than half of their income on housing, census data shows.  The gap between median renter income and median rent widened in 2018, new Census data show, with median rent rising 2.1 percent in inflation-adjusted terms but median renter household income rising just 1.6 percent, to $40,500.

Let’s agree.  It’s bad out there for renters.  Worse for some than others.

Take for example on the low end, the recent horror stories reported in Little Rock in an almost 5000-word piece in the Arkansas Democrat-Gazette about the 1000-units there owned and operated with impunity by the Chicago-based AMG Rental Group.

How bad?  Well, this bad:

Since 2018, AMG properties in Pulaski County have racked up more than 1,000 code enforcement violations, although the company did not own all of the properties for all of that period, records show.  As of November, AMG owned or managed at least six properties with 935 apartments in Little Rock and one property with 92 apartments in North Little Rock, according to public records. In the past year, code inspectors found as many as 16 violations in one apartment. They cited the company’s apartments for 1,162 violations.  About 35% of the total violations — more than 400 — were for life-safety issues, such as exposed wiring or faulty smoke alarms that could endanger a tenant’s life. Those violations are supposed to be addressed more quickly than other types of code violations.

AMG’s website says their investment strategy:

…focuses on acquiring overlooked and undervalued multi-family assets, with the potential to add value via a repositioning of the property, including operationally, structurally or financially. AMG seeks neglected assets that combine a strategic location and low cost basis. Once we acquire a property, we manage the property “in house”, which results in a clear alignment of interest between ourselves, our investors and our residents.

In other words, they’re bottom fishing with a vengeance.

Little Rock inspectors say they are getting better and making progress.  Little Rock police barred the reporter from the property despite having an invitation to visit by a tenant.  The record elsewhere indicates, that their disregard and manipulation of tenants and violations of habitability codes is not an anomaly, but a business model.  As the Arkansas Democrat-Gazette reported:

Concerns over tenant safety led Ohio officials to sue AMG, the Hot Springs Housing Authority to stop sending housing voucher business to one of its complexes and Tulsa officials to close an entire complex.  In Columbus, Ohio, city attorney Zach Klein filed what his office touted as the “largest public nuisance lawsuit” in the city’s history.  Before Klein filed suit in September 2018, the city had imposed $1,000 daily fines, allowed under a 2014 law that penalizes “negligent property owners.”  AMG, the first company to receive such a sanction, racked up at least $75,000 in fines. “Filing a lawsuit of this size and scope became necessary, because of the property owner’s troubling pattern of ignoring the city’s orders to fix a series of code violations,” Klein said in the news release.  “We already have evidence of harm and injury to our residents, so it’s imperative for us to get every one of AMG’s apartments under court order to force them to take their tenants’ safety seriously,” the city attorney said.

The underbelly of escalating rents, callous evictions at record levels, and costs that suck the life blood out of family budgets is more than financial.  The real price is in human suffering and personal, permanent harm.  AMG Realty Group is one of many.  They and others must be stopped.  Tenants are starting to organize.  They need our support.  Their lives depend on it!

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Plundering Black Wealth with Predatory Land Installment Contracts

Columbus        An analyst for the Federal Reserve Bank in St. Louis on a panel with us at the Benjamin Hooks Institute at the University of Memphis listened to our remarks about the devastating impact of hedge funds and land installment contract companies in Memphis, and asked me if I had seen the study by the Samuel Dubois Cook Center on Social Equity at Duke University entitled, “The Plunder of Black Wealth in Chicago:  New Findings on the Lasting Toll of Predatory Housing Contracts.”  I hadn’t then, but I have now, and it’s a punch in the gut and a slap against the head for anyone who needs a wakeup about the devastating impact of these predatory rip-offs more than fifty years later which are making a comeback now.

Before I knock you out of your socks too, let me brace you a bit so that you’re sitting down when it comes.  This report is not a rhetorical polemic.  It is based on the Center and its collaborators going through 50,000 land records in Chicago in minute detail including court records and the whole shebang.  The report authors are careful to point out that there conclusions, even after this Herculean effort, are conservative.  In short, what I’m going to share is no back of the envelope baloney to make you hoot and holler with ACORN’s Home Savers’ Campaign for more reform, but hard, cold facts that cannot be contested, but must be addressed.

Here’s what the found in a nutshell:

  • Between 75 and 95% of the homes sold to black families in Chicago in the 1950s and 1960s were sold on contract.
  • On average, the price markup on homes sold on contract was 84%.
  • On average, African-American families paid an additional $587 (in 2019 dollars) more each month than they would have paid with a fair price and an FHA backed mortgage.
  • The average buyer paid several more points of interest on their loan compared to the average white buyer.
  • Over the two decades studied, the amount of wealth land installment contracts expropriated from Chicago’s black community was between $3.2 and $4 billion.

And, don’t forget, these were installment contracts where a missed payment could – and often did – lead to eviction, so that many of these families, paying a premium and being fleeced from start to finish, never ended up with the wealth that home ownership might have brought them even as they paid the price!  Oh, and this is just the numbers on Chicago, multiply that in urban areas across the Midwest and anywhere in the South and the rest of the country until the FHA stopped redlining in the mid-1970s.

Any doubts about the impact and injustice left or the need still to make families whole to start to close the wealth gap between black and white families in the United States?

I hope not, but here’s one more Gold Seal of approval supporting the truth of these numbers:  one of the collaborators was Jack Macnamara.  They list his name as being connected with Loyola University in Chicago, but that’s window dressing.  Macnamara was the lead organizer of the Contract Buyers’ League in Chicago which turned Chicago upside down around this issue in the late 60s and early 70s.

If Jack says these numbers are right, that’s enough for me.  You can put them on a picket sign and go to the bank with them!

 

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