An Update on Elizabeth Warren's Housing Plan

By Pete Harrison (@PeteHarrisonNYC)

Yesterday, Elizabeth Warren reintroduced her expansive housing bill, including several notable additions that reflect some of the recommendations of our analysis. We are not above humblebragging that it incorporates some of our suggestions. Though it still doesn’t include everything we think is necessary for a transformative progressive housing agenda, her willingness to take feedback and improve her proposal is a testament to how seriously Warren is taking housing.  So far, no other candidate can claim that. Here’s what’s new.

Limits institutional investors’ ability to buy single-family homes

By far the most interesting change is a subtle but extensive crackdown on real-estate owned (REO) mortgages. One of the worst developments since the Great Recession has been the explosion of institutional investors in the so-called Single Family Rental (SFR) market. Over the last 10 years, the Federal Housing Administration has helped massive private equity firms like Blackstone buy up over 200,000 single-family homes with the purpose of renting them. This has caused rents (and evictions) to increase in markets like Atlanta, Nashville, and elsewhere.

Warren’s new bill intends to curtail this behavior dramatically. The bill calls for the FHA to sell no less than 75 percent of single-family properties that it acquires through foreclosure to owner-occupant buyers or to community groups that will rehab and sell to owner-occupants. It also prioritizes selling mortgages covered by FHA to community groups and affordable housing developers, going as far as giving these types of entities right of first refusal at any auction. Another key section guarantees new assistance to keeping families in distressed homes.

This update goes the farthest we’ve seen to curb the predatory creep of Wall Street into the single-family market. It may not be targeted enough to bring relief to hot markets like Atlanta and Nashville, but given that this flies in the face of every purported aim of federal housing policy, cracking down on REO practices is a progressive priority and a political winner.

Outlines more targeted homeownership assistance

One of the distinguishing aspects of Warren’s plan (compared to Senator Booker’s and Senator Harris’s) is how it acknowledges the horrific legacy of racial discrimination in federal homeownership policy and how it attempts to close the racial wealth gap caused by it. There is no credible solution to solving generations of racism in America without fixing housing policy and homeownership specifically.  

The primary policy vehicle to achieve this remains the same in both versions of the bill. It calls for a targeted homeownership assistance program in minority communities that have historically been denied federally-backed mortgages and outlines new lending requirements to do so.

However, we thought the details of the initial plan fell short in two ways. First, because eligibility started after 4 years of residency in an impacted neighborhood, it was possible that newer homeowners that didn’t experience racial discrimination could benefit from the program. Second, it didn’t target residents of color that had already been displaced by gentrification.

Warren’s new bill doesn’t entirely solve both problems, but it does outline new categories of eligibility for assistance that more explicitly target homeowners of color who experienced contemporary racial discrimination. They now include victims of subprime mortgages, residents displaced through natural disasters, and HUD-defined areas of high poverty, high-minority populations.

These are clever legal work-arounds for outright racially based restitution (that have struggled in the courts) that still target assistance for historically marginalized and abused communities of color.

Provides at least some funding for public housing

The lack of public housing proposals was one of the biggest oversights in the original Warren bill (and Booker’s and Harris’s). There is no solution to the housing crisis that does not involve - at a bare minimum - massive infusions of federal funding to preserve and restore the existing 1.2 million publicly owned homes in America.

The new bill doesn’t reach the funding levels we’d like to see, but it does add $3.6 billion in new capital funding for public housing authorities – an amount intended to fully fund public housing preservation for one year. Given that the New York City Housing Authority (the largest public housing authority in the US, with over 178,000 homes) alone needs over $30 billion (and faces a dire crisis of lead paint poisoning among other urgent needs) this number needs to be ramped up quickly. It also puts a spotlight on the absurdity of NYCHA’s recent court settlement that outlined new federal oversight without requiring any new federal funding.

Despite the modest total, we give credit to Warren for including public housing after initially overlooking it. We hope this shows more willingness to consider - then champion - the expansion of public housing as a central federal solution to the crisis. The original exclusion and limited inclusion here still give us pause.

Encourages communities to adopt renter relief and protections

One of our core focuses is getting federal policy to recognize the legitimacy of renters on their own merit and not just as aspiring homeowners. Solving the housing crisis means making life easier for renters - who on the whole are younger, less white, and more likely to be foreign-born than homeowners. Indeed, helping make rent cheaper and stabler should help renters save money, thus making it more likely they can eventually afford a downpayment on a house and become homeowners.

Warren’s original bill had no direct rental relief assistance and the new one still does not (as opposed to Harris’s and Booker’s which both do). However, the updated version has several additional steps to ending exclusionary zoning practices that communities can take to receive federal funding through Community Development Block Grants. It now includes strong renter protections like rent control/stabilization, eviction prevention, and right-to-counsel as ways to receive the additional funding.

These are all key protections for renters that have the added benefit of being an easier lift for communities to enact. Given that many cities and states are fighting (and winning) rent control battles, this type of federal support will be beneficial for renters and for cities concerned about enacting immediate solutions to the house crisis. We further suggest that Warren include directions for equitable zoning and renter protections to be understood as mutually beneficial rather than mutually exclusive – making communities with renter protections and equitable zoning better qualified for CDBGs than those with only one or the other.

Though the new bill is still missing some key progressive priorities, it shows that Warren is serious about tackling the housing crisis. It is by far the most detailed policy proposal of any 2020 contender and should drive the policy debate ahead. Additionally, the updates in the new bill show a willingness to respond to pressure from the left and openness to making big, new ideas work at the federal level. We hope other candidates follow suit.

Pete Harrison (@PeteHarrisonNYC) is a senior adviser to Data for Progress, focused on housing. He is a co-founder of homeBody.

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