[Senate Hearing 117-696]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 117-696


      HOW INSTITUTIONAL LANDLORDS ARE CHANGING THE HOUSING MARKET

=======================================================================

                                HEARING

                               BEFORE THE

                              COMMITTEE ON
                   BANKING,HOUSING,AND URBAN AFFAIRS
                          UNITED STATES SENATE

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             SECOND SESSION

                                   ON

     EXAMINING HOW WE STRENGTHEN OUR HOMES AND NEIGHBORHOODS WITH 
INVESTMENTS AND PROTECTIONS TO MAKE IT EASIER FOR PEOPLE TO FIND SAFE, 
                      DECENT, AND AFFORDABLE HOMES
                               __________

                           FEBRUARY 10, 2022
                               __________

  Printed for the use of the Committee on Banking, Housing, and Urban 
                                Affairs
                                
                                
                  [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                                
                                
                Available at: https: //www.govinfo.gov /

                               __________

                    U.S. GOVERNMENT PUBLISHING OFFICE
                    
52-881 PDF                 WASHINGTON : 2023 


            COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

                     SHERROD BROWN, Ohio, Chairman

JACK REED, Rhode Island              PATRICK J. TOOMEY, Pennsylvania
ROBERT MENENDEZ, New Jersey          RICHARD C. SHELBY, Alabama
JON TESTER, Montana                  MIKE CRAPO, Idaho
MARK R. WARNER, Virginia             TIM SCOTT, South Carolina
ELIZABETH WARREN, Massachusetts      MIKE ROUNDS, South Dakota
CHRIS VAN HOLLEN, Maryland           THOM TILLIS, North Carolina
CATHERINE CORTEZ MASTO, Nevada       JOHN KENNEDY, Louisiana
TINA SMITH, Minnesota                BILL HAGERTY, Tennessee
KYRSTEN SINEMA, Arizona              CYNTHIA LUMMIS, Wyoming
JON OSSOFF, Georgia                  JERRY MORAN, Kansas
RAPHAEL WARNOCK, Georgia             KEVIN CRAMER, North Dakota
                                     STEVE DAINES, Montana

                     Laura Swanson, Staff Director

                 Brad Grantz, Republican Staff Director

                       Elisha Tuku, Chief Counsel

                 Dan Sullivan, Republican Chief Counsel

                      Cameron Ricker, Chief Clerk

                      Shelvin Simmons, IT Director

                        Pat Lally, Hearing Clerk

                                  (ii)
?

                            C O N T E N T S

                              ----------                              

                      THURSDAY, FEBRUARY 10, 2022

                                                                   Page
Opening statement of Chairman Brown..............................     1
        Prepared statement.......................................    37
Opening statements, comments, or prepared statements of:
    Senator Toomey...............................................     3
        Prepared statement.......................................    38

                               WITNESSES

R. Michael Waller, Executive Director, Georgia Appleseed Center 
  for Law and Justice............................................     6
    Prepared statement...........................................    39
    Responses to written questions of:
        Senator Reed.............................................    83
Aneta Molenda, Tenant............................................     8
    Prepared statement...........................................    43
    Responses to written questions of:
        Senator Reed.............................................    84
Tobias Peter, Research Fellow and Assistant Director, AEI Housing 
  Center.........................................................     9
    Prepared statement...........................................    45
Joel Griffith, Research Fellow, Institute for Economic Freedom 
  and Opportunity, Heritage Foundation...........................    11
    Prepared statement...........................................    73
Sally Martin, Director of Building and Housing, City of 
  Cleveland, Ohio................................................    13
    Prepared statement...........................................    77
    Responses to written questions of:
        Senator Reed.............................................    84

              Additional Material Supplied for the Record

Letter submitted by Wesley Edmo, MSW, Indigenous Peoples Advocacy 
  Director, MHAction.............................................    85
Statement submitted by Private Equity Stakeholder Project........    87
Statement submitted by Cindy Newman, The Highwood's..............    93

                                 (iii)

 
      HOW INSTITUTIONAL LANDLORDS ARE CHANGING THE HOUSING MARKET

                              ----------                              


                      THURSDAY, FEBRUARY 10, 2022

                                       U.S. Senate,
          Committee on Banking, Housing, and Urban Affairs,
                                                    Washington, DC.
    The Committee met at 10:01 a.m., via Webex and in room 538, 
Dirksen Senate Office Building, Hon. Sherrod Brown, Chairman of 
the Committee, presiding.

          OPENING STATEMENT OF CHAIRMAN SHERROD BROWN

    Chairman Brown. The Senate Committee on Banking, Housing, 
and Urban Affairs will come to order.
    Today's hearing is a hybrid format as many of our hearings 
are. Mr. Waller, Mr. Peter, Mr. Griffith are here in person and 
sitting here. Thank you for joining us. Ms. Molenda and Ms. 
Martin are appearing virtually. Members have the option to 
appear either in person or virtually.
    Those witnesses joining remotely, once you start speaking, 
there will be a slight delay. To minimize background noise, 
please click the mute button when you are not speaking until it 
is your turn to speak.
    And you should all have a box on your screens labeled 
``clock'' that will show how much time is remaining. Please try 
to respect those times as we ask our Senators on the dais to do 
the same. For those of you joining virtually, you will have a 
bell ring when you have 30 seconds remaining.
    If there is a technology issue, we will move to the next 
witness or Senator, whatever we need to do until it is 
resolved.
    Whenever there is a problem in the economy that is hurting 
families and driving prices, there is a pretty good chance you 
will find a Wall Street scheme either causing it or taking 
advantage of it and making it worse. One of the reasons housing 
prices have gotten so out of control is that corporate America 
sensed an opportunity. Private equity firms, corporate 
landlords, and investors saw a shortage. They saw a captive 
market. They bought up properties. They raised rents. They cut 
services. They priced out family homebuyers. They forced, all 
too often, renters out of their homes.
    Our failure to invest into affordable housing has left 
these renters with few options. Before the pandemic, nearly one 
in four renters was paying more than half their income for 
housing. That was before the pandemic. One thing happens in 
their lives, one thing goes wrong, and they face immediate 
eviction almost, in many cases.
    Across the country, we see headlines about the skyrocketing 
cost of housing, the squeeze it is putting on our families. 
Potential homebuyers looking for a home in the communities 
where they grew up or where they work are outbid by out-of-
town, all cash buyers. Rents in communities from Atlanta to 
Boise to Cleveland to Denver are growing far out of reach for 
families and workers.
    While most of us see high rents and a lack of housing 
choices as a problem to solve, deep-pocket investors see them 
as an opportunity for profit. Investment firms have been 
touting rising rents and renters' lack of options to attract 
investors. One large landlord proudly advertises under their 
``market strategy'' that ``The recent mortgage meltdown has 
raised the bar for those who can qualify for a mortgage, 
thereby increasing the pool of people who must rent for the 
foreseeable future.'' But rather than providing the essential 
affordable housing that families need, many of these firms are 
just exploiting people.
    Tuesday, our Committee held a listening session to hear 
directly from renters about what happens when investors put 
profits over people's lives. One renter was told when she asked 
why her rent suddenly increased by hundreds of dollars, ``We 
have to please the investors.'' Think about that. ``We have to 
please the investors.''
    Renters in apartment buildings, single-family homes, 
manufactured housing, from Las Vegas to Great Falls to 
Hyattsville, shared their stories. Over and over, no matter 
where they lived, no matter what type of home they had, renters 
told us how they were overlooked and overcharged by the big 
investors that owned their homes. Longtime residents described 
double-digit rent increases and new fees for everything from 
water and trash to family pets.
    One resident of a manufactured home community in Senator 
Tester's home State said the increases amounted ``to about an 
86 percent increase in the dirt our homes sit on.'' She was in 
manufactured housing. Seniors on fixed incomes and working 
families cannot afford that.
    Renters in Maryland and Nevada and Texas and California had 
their homes, they told us repeatedly, flooded with wastewater, 
lived with pests and rodents, went long periods without hot 
water, without working showers.
    In Senator Smith's home State of Minnesota, a working 
mother's complaints, repeated complaints, about her home's 
flooded basement and dangerous garage went unanswered. The city 
itself was forced to step in because of code violations.
    Another renter in Senator Van Hollen's State told us that 
``The owners think that because we are immigrants we are not 
important. For them, they want the money to arrive every month 
without doing anything for us. We have this need to live in an 
apartment but not live like this.''
    No one argues that landlords--whether a teacher renting out 
the home her parents raised her in or a professional company, 
no one argues that landlords should not be able to make a 
living. Of course, rental housing is a business. You provide a 
decent place to live but in exchange for collecting people's 
hard earned money and rent each month. But if your building is 
full of mold and mice and does not have working showers or a 
working stove, you are not holding up your end of the deal. 
That is not a real business, and families are paying a very 
high price for it.
    Investors increasingly structure their purchases through 
LLCs and real estate investment trusts with different names for 
each property or fund. When owners hide behind LLCs, it makes 
it impossible to track down the neglected properties they own 
and the tenants they force out. This leaves local leaders, like 
Ms. Martin, with only two options, let investors continue to 
run down neighborhoods and run out residents or use time and 
money they do not have to connect with other local leaders to 
track down bad owners one by one.
    For investors, home and rent increases are distilled down 
as returns to shareholders, code violations and eviction 
filings simply the cost of doing business. But for Ms. Martin 
from Ohio and the residents of Cleveland and South Euclid, 
these are their homes; these are their neighborhoods. No one 
seems to be tracking their returns.
    When Matthew Desmond, the author of the book Evicted, signs 
copies of his book, he signs it with the words ``Home = Life.'' 
Desmond is lucky enough--and I assume everybody in this room 
enough--to go home each night to a safe home in a decent 
neighborhood with an affordable place and may not think about 
it as much, but it is a simple truth. Where we live matters. It 
determines so much about our lives and our children's lives.
    I look forward to hearing from our witnesses today about 
how we strengthen our homes and our neighborhoods with 
investments and protections that will make it easier for people 
to find safe and decent and affordable homes, how we can give 
local leaders, like Ms. Martin and Mr. Waller, the tools they 
need to improve the homes of all families in Cleveland, in 
Atlanta, in Pittsburgh, and across the country.
    Senator Toomey.

         OPENING STATEMENT OF SENATOR PATRICK J. TOOMEY

    Senator Toomey. Thank you, Mr. Chairman, and welcome to our 
witnesses. In October, this Committee held a hearing 
criticizing people who invest and even build rental housing. 
Looks like that is on the agenda for today's hearing as well. 
Maybe part of the reason is a desire to change the subject from 
the failing Biden economy.
    This morning, we got a new inflation number. Inflation came 
in at 7.5 percent, the worst inflation in 40 years. And housing 
costs are skyrocketing even faster than the general rate of 
inflation. Rents increased around 12 percent last year. Home 
prices jumped an astounding 17 percent. And whether you are a 
renter or a homebuyer, housing is taking up more and more of 
your paycheck, with inflation quickly eroding most of the rest.
    Now wages are rising, but inflation is rising faster, and 
that means workers are falling further and further behind in 
the Biden economy. This is a direct result of the 
Administration's massive overspending, and the Administration 
is desperate to find someone else to blame.
    There is actually nothing wrong with people renting houses 
instead of, or before, they become homeowners. And there is 
also nothing wrong with investors, whether institutions or 
individuals, putting their own money to work to meet the need 
of these renters. It is a simple issue of supply and demand. 
Institutional investors happen to be the ones with the deepest 
pockets, the ones with the most capital available to invest in 
building the new housing stock that America needs.
    Just imagine how expensive housing stock would be if some 
of my colleagues got their wish and most institutional 
investors were driven out of the housing market. Instead of 
blaming those who actually build housing stock, we should 
probably take a look at the role that Democratic policies have 
contributed to the high cost of housing.
    Housing is expensive and getting more expensive in part 
because the Administration has doubled down on 50 years of 
failed big Government housing policies. Its illegal eviction 
moratorium, for instance, deterred landlords from investing in 
new housing stock and almost certainly contributed to rent 
increases. Its March 2021 wasteful $1.9 trillion spending bill 
included almost $22 billion in rental assistance even though 
$25 billion in rental assistance Congress provided the year 
before was not even close to being spent. And this reckless tax 
and spend Build Back Better plan seeks yet another $35 billion 
in rental and downpayment subsidies that will further increase 
the demand and push up prices in housing. The Administration 
has also broken from decades of bipartisan efforts to reform 
the failed GSE model that now subsidizes the purchases of even 
million-dollar homes, and it has pushed the GSEs to take on 
more loans to risky borrowers.
    Today, we will hear from two witnesses, Tobias Peter and 
Joel Griffith, about the negative effects that these failed 
policies have had. They will testify to the role of monetary 
policy in contributing to rapid house price inflation, and they 
will testify to the increase in risky mortgage lending at the 
GSEs. Their testimony will make it clear that we need a 
different direction.
    To improve housing affordability for all Americans, whether 
renters or owners, we should pursue reforms that leverage the 
power of free enterprise to increase housing supply and make 
markets more competitive. To that end, we need to scale back 
the role of Government and increase the role of private 
capital. We need to phaseout demand-side subsidies that just 
drive increases in housing prices and rents. And we need to end 
the failed GSE model that fosters excessive risk taking and 
risks more taxpayer bailouts. We also need to end the GSE 
conservatorship that confers on the Government far-reaching 
powers to replace market forces with executive fiat.
    The state of the housing market affirms the urgency of the 
reform. The housing market is cyclical. It is really a question 
of when, not if, there will be a housing downturn, and the 
housing finance system is not prepared.
    The system is still dominated by the very same GSEs that 
did so much to cause the 2008 financial crisis. The $7 trillion 
behemoths actually have an even bigger market share today than 
they had before the crisis, and they certainly remain too big 
to fail. And just as before the financial crisis, these flaws 
in the system continue to encourage excessive risk taking and 
risk future taxpayer bailouts. They undermine market forces and 
threaten financial stabilities. And they do very little to make 
housing more affordable.
    So 50 years, 50 years, and many hundreds of billions of 
dollars in Federal housing assistance have been spent, and they 
have had no meaningful impact on home ownership rates. It was 
64 percent in 1970. It was 65 percent in 2021.
    Now last month, the Chairman reiterated the housing finance 
reform principles that he had released in 2019. I would observe 
that his principles significantly overlap with the reform 
principles that I have released. I look forward to continuing 
to work with the Chairman to see if we can get to a consensus 
on how to move forward on this really important issue.
    And I hope the Administration will finally engage on this 
reform. Treasury has still not met its obligation to deliver 
its reform plan to Congress. It is now 4 months overdue.
    So instead of shifting blame for the reckless mismanagement 
of the economy, the Administration should be looking for 
opportunities for bipartisan legislation, like housing finance 
reform, that relies more on free enterprise and less on 
Government to make housing affordable for all Americans, 
whether they own or rent.
    Thank you, Mr. Chairman.
    Chairman Brown. Thank you, Senator Toomey. And I am 
hopeful, too. I think you will probably agree with this. The 
first step to GSE reform is that we move as quickly as we can 
to confirm the nominee to FHFA, Sandra Thompson, and then I am 
hopeful the Administration--and expect the Administration to 
engage in this, but we can talk more about that.
    Let me introduce the five witnesses. Michael Waller is the 
Executive Director of Georgia Appleseed, which is dedicated to 
providing strong, nurturing schools and a healthy home for all 
of Georgia's children. He served previously as an attorney with 
the FTC, as a staff attorney with Atlanta Legal Aid, and as an 
attorney at WilmerHale.
    Welcome, Mr. Waller.
    Aneta Molenda, who is here remotely, is a New York City 
tenant in a building owned by a private equity firm. She has 
been organizing with her neighbors in respond to her landlord's 
actions.
    Ms. Molenda, welcome.
    Tobias Peter is a research fellow and assistant director at 
the American Enterprise Institute Housing Center. He previously 
served as a director of research with the Housing Center.
    Welcome, Mr. Peter.
    Joel Griffith, who was in committee yesterday, actually a 
subcommittee yesterday, is a research fellow at the Institute 
for Economic Freedom and Opportunity at the Heritage 
Foundation.
    As a native of Ohio, welcome, Mr. Griffith.
    Sally Martin is the Director of Building and Housing for 
the city of Cleveland. She joined Mayor Bibb, the new mayor's 
cabinet, just this week. So earlier this month, she served as 
the Housing Manager and Director of Housing for the city of 
South Euclid, a Cleveland southeast side suburb, where she had 
worked since 2008. She served on the executive committee of the 
Vacant and Abandoned Property Action Council in Cleveland.
    We will now hear from the witnesses. Mr. Waller, start with 
you. Welcome.

  STATEMENT OF R. MICHAEL WALLER, EXECUTIVE DIRECTOR, GEORGIA 
              APPLESEED CENTER FOR LAW AND JUSTICE

    Mr. Waller. Thank you, Chairman Brown, Ranking Member 
Toomey, and other Members of the Committee. My name is Michael 
Waller. I serve as the Executive Director of the Georgia 
Appleseed Center for Law and Justice.
    Georgia Appleseed is a nonpartisan, nonprofit law center. 
We are dedicated to advancing justice and equity for all of 
Georgia's children through law and policy reform, community 
engagement, and legal representation of children. We focus our 
efforts on removing barriers and injustices that are faced by 
Black and Brown children, children experiencing poverty, LGBTQ+ 
children, children with disabilities, and children in foster 
care. And Georgia Appleseed believes that justice requires that 
every child has access to strong, nurturing schools and a 
stable, healthy home.
    This morning, I will provide information on the impact of 
institutional landlords on the lives of low-income Georgians, 
and I am going to begin by sharing a story, the story of April. 
She lives in Albany, Georgia, in an apartment complex owned by 
an out-of-State institutional investor.
    And this morning, I am going to use the term 
``institutional landlord'' and ``institutional investor'' 
somewhat interchangeably, and what I am referring to is a 
corporate owner that is usually out of State, owns multiple 
properties, is primarily in the business of investing money, 
not managing rental homes, and has little to no direct contact 
with the communities where the properties are located.
    So Georgia Appleseed and our other community partners have 
identified a common business model among some institutional 
investors in low-income housing, and it goes something like 
this. The investor comes into the community, purchases the 
property. They quickly drive up rents. They impose novel and 
unwarranted fees. They refuse to provide upkeep and basic 
maintenance. They abuse our eviction systems, and they hide 
from accountability. These institutional investors concentrate 
these practices in Black and Brown communities and low-income 
communities, and so they are perpetuating historic injustices 
there.
    Now April is a single mom to a teenage daughter, and she is 
also the primary caretaker for her mother who has multiple 
sclerosis and needs a wheelchair. April rents her home, like 
most Albany residents and millions of other Georgians. Well, 
soon after she moved in, sewage began regularly coming up 
through the bathroom drains and also pooling in the yard 
outside where the children played. Bees came out of her HVAC 
vents. Mold grew on the walls. Shooting and criminal activity 
were common in the complex. In fact, after one of these events, 
there were bullet holes in her windows. Other residents had 
very similar problems and complaints.
    Neither the property management firm, who was her direct 
contact with the landlord, nor the out-of-State landlord would 
make the needed repairs. The local housing code enforcement 
office and other local government offices and officials claimed 
that they were powerless to force the absentee landlord to make 
the property safe for habitation.
    So April contacted SOWEGA Rising, which is a local 
nonprofit. Together they began to work to organize their 
neighbors, talk to their neighbors, and also contact the media. 
In response, the landlord sent a letter threatening the 
residents with eviction, and this threat worked. The residents 
ceased their campaign for better living conditions. April's 
landlord recently gave her 30 days to get out, and she feels 
like she does not have anywhere to go because in Albany, like 
many places, there are very few affordable places to live for 
someone in a wheelchair.
    So residents across Georgia suffer similar injustices every 
single day. But here is what we at Georgia Appleseed and our 
partner organizations have found, and this is listed in more 
detail in my written testimony. In Georgia, institutional 
investors are particularly known for instituting aggressive, 
year-on-year rent increases and novel fees.
    And here are some examples of these fees: one-time activity 
fees, pest control fees, utility service fees, a renter's 
insurance fee, valet trash fees, package locker fees, common 
area electric fees, early termination fees that can be three 
times a month's rent. I can go on and on with these fees. These 
are just a few.
    Institutional landlords increase their profits and reduce 
costs by refusing to perform needed repairs, just basic 
maintenance, security or needed health and safety measures, and 
this leaves tenants living in miserable living conditions. 
Miserable. And it is often virtually impossible to hold these 
landlords accountable. Out-of-State shell companies hide the 
owners, and tenant advocates and Governments simply cannot 
identify them.
    Institutional landlords are well positioned to abuse 
Georgia's eviction and housing safety laws and ordinances. 
Eviction costs are very low. Court procedures favor landlord 
attorneys and maximize the efficient disposition of evictions, 
not the preservation of tenancies and healthy homes. In 
addition, our local housing safety enforcement is chronically 
underresourced. Moreover, Georgia law prohibits local 
communities from registering and inspecting properties without 
probable cause.
    So I will conclude by saying we have found that this is 
profit mongering at the expense of families and communities. It 
is not investment in affordable housing. This unsafe, unstable 
housing exacts real long-term and devastating costs on the 
physical and mental health of children and families and 
threatens their educational achievement and employment 
potential. It increases criminal justice involvement and 
reduces overall community wealth and well-being.
    Chairman Brown, Ranking Member Toomey, other Members of the 
Committee, thank you again for the opportunity to share my 
experience and the experience of fellow Georgians with you 
today. I look forward to answering any questions.
    Chairman Brown. Mr. Waller, thank you.
    Ms. Molenda is recognized for 5 minutes. She is remote from 
New York.
    Ms. Molenda, welcome.

               STATEMENT OF ANETA MOLENDA, TENANT

    Ms. Molenda. Chairman Brown and Members of the Committee, 
thank you for the opportunity to testify before you today.
    My name is Aneta Molenda, and I am a New York tenant in a 
building owned by private equity and a member of the Greenbrook 
Tenants Coalition.
    I have lived in Brooklyn, New York, for 6 years. I moved 
into my current apartment last winter in the middle of the 
pandemic. I signed a 1-year lease for just over $2,500 a month. 
It was pricey for an apartment measuring just over 400 square 
feet but not out of the ordinary for Brooklyn.
    In just a few months, my building was bought by a private 
equity firm called Greenbrook Partners through a joint venture 
with the Carlyle Group, the third largest private equity firm 
in the world. When my lease expired in November, my new 
landlord told me they needed to reevaluate my rent based on the 
market bouncing back. They suggested nearly a 50 percent 
increase from what I had been paying. That is right; that is a 
5-0, 50 percent increase, which would put my rent at about 
$3,800 per month. There was no way I could afford it. This was 
all happening when Omicron was surging.
    I tried to negotiate. I sent them listings of other 
apartments in the neighborhood, some even on my block, to show 
that the increase was unreasonable for what was available in 
the area. Eventually, they were willing to come down on the 
rent, but when they sent me the lease renewal there was a 
section that gave the landlord the right to terminate my lease 
at any point and double my rent with only 30 days' notice. It 
was clear they wanted me out.
    I have continued to pay my rent on time every month, but 
the landlord has stopped cashing my checks. I suspect they are 
getting ready to start eviction proceedings against me. The 
eviction moratorium in New York ended just last month. My sense 
of security is gone.
    This is not an isolated incident. In talking to my 
neighbors and tenants in other buildings by the same landlord, 
we noticed similar patterns: massive rent increases, evictions, 
hazardous violations, and harassment. The confusing ownership 
structure makes it hard for tenants to know who truly owns 
their buildings.
    My neighborhood of Bedford Stuyvesant is considered to have 
one of the highest concentrations of Black residents in the 
United States according to census data. In New York City, 
eviction rates in zip codes in which a majority of residents 
are people of color are three times as high as the rates in zip 
codes that are predominantly White. I am not surprised that 
these predatory firms are targeting predominantly Black and 
Brown neighborhoods. Many of these companies go to pensions for 
capital to expand their portfolios, in some cases, pricing out 
union members and the retirees that they are acting on behalf 
of.
    Greenbrook Partners and the Carlyle Group are just two of 
the many predatory real estate firms that are fundamentally 
changing housing across the country. These companies treat 
housing as an investment vehicle rather than a shelter. But 
this is my home, and it serves the purpose of keeping me safe, 
warm, and out of the elements. This is a basic human right.
    Institutional landlords want us to believe that private 
equity is a tiny player in housing. It is just not true. 
According to the Financial Times, private equity has had its 
busiest month in the last 6 months in the last 40 years, and 
the industry shows no signs of stopping its expansion into our 
homes. In just 2 years, my landlord purchased at least 137 
properties in Brooklyn, all during the pandemic. These firms 
promise their investors returns while obscuring the devastating 
consequences on everyday people and their families. They buy up 
homes all across the country that would have otherwise been 
affordable.
    As our communities face the trauma and grief from mourning 
loved ones, losing jobs, following guidelines to stay home to 
mitigate the spread of the virus, these predatory firms made it 
impossible to feel any sense of safety in our homes. We saw our 
communities come together to support each other. Meanwhile, 
Wall Street took the opportunity to rake in unfathomable 
profits.
    This tangled web of high finance is incredibly difficult to 
navigate for tenants like myself. The ruthless business model 
is entirely reliant on disaster capitalism and systemic 
displacement of working-class people. A basic human right to 
housing is being exploited. As a tenant directly impacted by 
these predatory practices, I am asking that you consider 
establishing comprehensive, nationwide tenant protections like 
rent control, prohibition on excessive fines and fees, just 
cause evictions, and a tenant right to counsel.
    The housing market is rapidly consolidating. As the largest 
landlords, builders, and investors increasingly partner with 
one another, our neighbors all across the U.S. will continue to 
feel the consequences. But I can promise we will continue to 
grow a strong tenants' movement to demand a more just housing 
system.
    Senators, you have a choice to make. You can either allow 
institutional landlords to use our homes as investment vehicles 
in an effort to generate endless profit or support housing as a 
human right. Thank you.
    Chairman Brown. Thank you very much, Ms. Molenda.
    Mr. Peter is recognized for 5 minutes. He is in the room.
    Thank you, Mr. Peter, for joining us.

   STATEMENT OF TOBIAS PETER, RESEARCH FELLOW AND ASSISTANT 
                  DIRECTOR, AEI HOUSING CENTER

    Mr. Peter. Chairman Brown and Ranking Member Toomey and 
distinguished Members of the Committee, thank you for the 
opportunity to testify today.
    The housing market is changing, and the real culprit is the 
massive house price boom fueled by Federal housing and monetary 
policies which is increasingly crowding out low-income 
Americans out of the housing market. Institutional landlords, 
particularly on the multifamily side, are taking advantage of 
more liberal credit terms provided by Fannie Mae and Freddie 
Mac, the GSEs, than the private sector, which is in violation 
of their charters. They use the taxpayer guarantee and other 
advantages to greatly expand their businesses while crowding 
out multifamily private investors. Since 2014, outstanding 
multifamily mortgage debt has doubled with the GSEs accounting 
for most of the growth. At the same time, they tout that they 
are supporting affordable rental housing, but in reality they 
have created Government profit seeking.
    The current single-family housing boom, which began in 2012 
was entirely foreseeable and was noted by the AEI Housing 
Center beginning in 2013. Since then, the housing market has 
been marked by too much demand chasing too little supply. Yet, 
the policy response was to boost demand even more. Federal 
housing agencies have loosened underwriting, and the Fed has 
pursued multiple rounds of quantitative easing, continuing even 
when the housing market was already appreciating over 10 
percent per year. In 2021, home price gains were at 16 percent 
and in 2022 are expected to come in at around 12 percent, a 
third year of breakneck growth.
    As a result, home ownership has gotten further out of reach 
for many lower-income, minority Americans. Consider that since 
2012 wages have grown 40 percent, but the entry-level home 
prices have increased over 100 percent. This out-of-control 
price spiral means increased competition for fewer and fewer 
affordable homes. Potential entry-level buyers are increasingly 
pushed to the sidelines as they cannot compete with more deep 
pocketed individuals who experience the same competition only 
higher up the price spectrum.
    This is creating knock-off effects for people downstream. 
Left unable to buy a home, people remain in the rental pool, 
helping to drive up rents, which are now increasing at 12 
percent nationwide. Many who cannot afford these rent hikes 
will be pushed into homelessness.
    If that were not enough, inflation is now running at 7.5 
percent. A Gallup survey from last month finds 49 percent of 
Americans saying rising prices have caused hardship for their 
family. Lower-income Americans are suffering the most. Two 
thirds of U.S. adults with an annual household income of less 
than $40,000 say they have experienced hardship, with 20 
percent describing it as severe.
    Inflation is a regressive tax, and getting by, not to 
mention building savings to buy a home, is becoming increasing 
difficult. Thus, these misguided policies have severely 
hamstrung lower-income Americans, in particular, minorities 
which severely lag White Americans in home ownership and 
intergenerational wealth. If they can no longer reach the first 
rung of the housing ladder, how will they ever catch up?
    The solutions are straightforward. First and foremost, we 
need more supply. However, Federal mandates are not the answer. 
Zoning and land use policies are fundamentally a State and 
local issue and should be addressed at those levels. We are 
already seeing promise across the country, even in California 
where the legislature has recently passed laws which could 
meaningfully encourage new construction activity.
    At the same time, demand boosters have shown 
counterproductive. The Fed has belatedly realized that it needs 
to tighten the monetary spigot, but its policies have already 
done a lot of damage, and they will continue to harm lower 
income Americans in the form of higher home prices, inflation, 
and rents.
    The signals from Federal agencies and regulators are less 
than encouraging. Rather than shrinking the Government's 
footprint and reducing risk, Fannie Mae is again increasing its 
share of risk-layered loans, where one risky loan product 
feature is layered on top to ultimately create a very risky 
loan.
    More could be in store. FHFA recently made policy changes 
that increased GSE competition with the private sector and will 
lead to greater risk layering. The GSE affordable housing goals 
may also be increased, and other policies are being discussed. 
The FHA is also considering changes that will increase its 
competition with the GSEs, which does not bode well.
    Equally worrisome are increases to the GSEs' appraisal 
waiver practices, particularly purchase loans. In the past, 
human appraisals have successfully alerted lower-income and 
minority borrowers when they were overpaying. An appraisal 
waiver may simply confirm the negotiated sale price while the 
competition between Fannie and Freddie for market share may 
create a race to the bottom on standards, not to mention that 
these processes can be gamed, which was commonplace with 
respect to the GSEs' automated underwriting systems in the 
lead-up to the financial crisis.
    The compounding effect of these changes will mean less 
resiliency for borrowers and neighborhoods, many of which are 
lower-income and minority, to withstand an economic stress 
event. We have seen this movie before, and we know how it ends. 
It should not be allowed to happen again.
    Thank you.
    Chairman Brown. Thank you, Mr. Peter.
    Mr. Griffith, welcome.

  STATEMENT OF JOEL GRIFFITH, RESEARCH FELLOW, INSTITUTE FOR 
   ECONOMIC FREEDOM AND OPPORTUNITY, THE HERITAGE FOUNDATION

    Mr. Griffith. Thank you, Chair Brown, Ranking Member 
Toomey, and Members of the Committee. My name is Joel Griffith. 
I am a research fellow at The Heritage Foundation. The views I 
express are my own and should not be construed as representing 
any official position of Heritage.
    Families are feeling the impact of the steep rise in home 
prices and rental costs. Spanning the pandemic era, from 
February 2020 through this fall, home prices soared more than 
27 percent. Over the past year alone, home prices are up close 
to 20 percent. Residential property prices in the United 
States, adjusted for inflation, are now just 2 percent below 
the all time record levels in 2006.
    Home prices are increasing far faster than family income 
growth. The home-price-to-median-income ratio is now near the 
prior record set in 2005. And despite new record low interest 
rates, the mortgage-payment-to-income ratio hit 32.7 percent 
this fall, the highest level since 2008.
    Imagine this. A return of mortgage rates even close to the 
historical average would increase a mortgage payment for a new 
borrower by 50 percent even with no additional increase in home 
prices.
    And of course, renters have not been spared. Median 
apartment rental costs have jumped more than 15 percent 
nationwide this past year. And numerous cities, not just on the 
coast, have experienced rent increases well in excess of 30 
percent.
    So why are housing prices and rental costs rising faster 
than usual? Well, institutional owners of rental properties are 
being scapegoated for the rise in home prices and rental costs. 
Institutional investors own fewer than 2 in 1,000 of all single 
family homes and just 1 in 100 of all rental homes. In fact, in 
no single State does an institutional investor, as a whole, own 
more than 1 in 100 of all available housing units in the State. 
The bottom line is that institutional single-family residence 
ownership is not measurable impacting local home price dynamics 
on the upside.
    Here is the reality. The primary driver of rising prices 
nationally are Government subsidies. This is increasing 
mortgage borrowing and demand for housing, leading once again 
to higher home prices and increased taxpayer risk. Government 
sponsored enterprises, namely, Fannie Mae and Freddie Mac, 
continue to dominate the mortgage market. Investors who 
purchase these GSE bonds and these mortgage-backed securities 
know that taxpayers will make good on the promised cash-flows 
from the mortgages underlining these Fannie and Freddie MBS 
products. This leads to riskier lending because it allows 
investors to ignore the true financial risks of the underlying 
mortgages and securities.
    And of course, we have our own Federal Reserve continuing 
to purchase MBSs en masse. Since March 2020, the Federal 
Reserve has driven down mortgage interest rates and fueled a 
rise in housing costs by purchasing more than $1 trillion worth 
of mortgage-backed securities from Fannie Mae and Freddie Mac 
and Ginnie Mae. The nearly $3 trillion of these mortgage 
products owned by the Federal Reserve is 88 percent higher than 
levels of just 2 years ago. This decline in long-term interest 
rates has induced and enabled borrowers to take on bigger 
loans, and this has fed the rise in prices that is pricing 
families out of the marketplace.
    Of course, State and local governments bear responsibility 
as well. On the local level, stringent zoning regulations, 
density limitations, and aggressive environmental regulation 
are limiting the supply in housing while increasing the cost of 
construction. These local regulations can account for more than 
30 percent of the cost of new affordable rental housing 
construction.
    And rent control is further compounding the problem. 
Capping rent increases does nothing to make housing cost less 
to build, but it does shrink the future supply by deterring new 
construction while incentivizes landlords to spend less money 
on upkeep and remodeling. Just talk to any number of residents 
of public housing projects across New York City.
    So what can be done to address these housing prices? First, 
policymakers should consider severing the special status given 
to the GSEs. Second, we should raise Fannie Mae and Freddie Mac 
mortgage guarantee fees immediately while the GSEs remain in 
conservatorship. This would make interest rates on 
nongovernment-guaranteed mortgage loans more competitive.
    We should eliminate the geographic price differential for 
conforming loan limits. Consider that just this past year the 
conforming loan limits for Fannie Mae, Freddie Mac increased 18 
percent. You can get a loan guaranteed for up to $642,000, and 
that is the standard in these high-cost areas. The loan limits 
guarantees are approaching $1 million.
    And we should also reject eviction moratoria on the State 
level and on the Federal level. Initially, that decrease in 
cash-flow from an eviction moratorium affects the landlord 
only, but landlords will increase rents to mitigate this 
heightened risk of future moratoria and to recoup the revenue 
that they lost over this past year. Ultimately, eviction 
moratoria result in fewer affordable housing units that will be 
constructed.
    The economy will benefit if Congress will work to make 
housing more affordable by gradually removing these Federal 
guarantees and subsidies and by eliminating these Federal 
mandates. And of course, State and local governments continue 
to bear a responsibility to eliminate their own artificial 
barriers to housing affordability.
    Thank you for the invitation. I look forward to your 
questions.
    Chairman Brown. Thank you, Mr. Griffith.
    Ms. Martin, calling from Cleveland, welcome.

 STATEMENT OF SALLY MARTIN, DIRECTOR OF BUILDING AND HOUSING, 
                    CITY OF CLEVELAND, OHIO

    Ms. Martin. Good morning, Chairman Brown, Ranking Member 
Toomey, and Members of the Committee. My name is Sally Accorti 
Martin. For almost 14 years, I served as the Housing Director 
for the city of South Euclid, Ohio, an inner ring suburb on the 
east side of Cleveland. Currently, I am the Director of 
Building and Housing for the city of Cleveland.
    One of the aftereffects of the decline in the housing 
market has been the dramatic rise of business buyers of single 
family homes. The bargain basement prices of the past decade 
and a half led to an unprecedented rise in the number of 
investors flooding the housing market. Even now, with 
rebounding home sale prices, we have not seen that trend 
diminish.
    Last month, I assisted an elderly resident with a housing 
choice voucher who was being evicted from her home of 19 years. 
The recent rebound in housing prices has enticed many local 
landlords to sell their occupied homes to out-of-State 
investors. In this case, as in many others I have seen 
recently, the tenant was on a month-to-month lease and the new 
landlord chose not to renew her tenancy and provided a 30-day 
notice to vacate. The woman was unable to secure other housing 
for herself, her sister with dementia, her granddaughter. They 
were all evicted from the home, with many of their possessions 
and medications left inside.
    It is not uncommon for these new landlords to introduce 
themselves to their tenants with notices of large rent 
increases, making remaining in the home completely unworkable. 
In this case, the new landlord was the SFR3 Fund, an LLC from 
Mill Valley, California, with the mission statement of 
``acquiring, renovating, and renting thousands of single-family 
homes.''
    Unlike mom-and-pop landlords, large out-of-State investors 
typically do not have much empathy for their tenants. Residents 
can be a day late in paying rent and face an eviction notice. 
In this case, the tenant had never been late on rent, but the 
landlord refused to allow her to remain in the home as he 
realized that he could get a higher rent from a nonsubsidized 
tenant.
    For the past couple of years, my office has received many 
calls from tenants in similar circumstances. Prospective 
homebuyers are finding the market nearly impossible to 
navigate. In South Euclid, a community with traditionally 
modest home prices, cash offers and bidding wars have become 
the norm. Buyers requiring mortgages are unable to compete. 
Desperate homebuyers are borrowing from 401(k) funds, 
relatives, or even hard money lenders in order to compete with 
investors.
    For a subsidized tenant, the market realities are sobering. 
When I began my position in 2008, South Euclid had 
approximately 300 housing choice vouchers in force. When I left 
this month, there were less than 200. Those with public 
assistance cannot compete with market rate tenants able to pay 
the higher rents being charged. South Euclid, unlike many 
cities, has taken a proactive approach to protecting tenants by 
enacting pay-to-stay legislation and by passing a comprehensive 
antidiscrimination ordinance, including source of income 
protection.
    Even so, we cannot stop many of the predator behaviors we 
are seeing in the market. Currently, the majority of the 1,600 
or so rental units in South Euclid are owned by out-of-State 
and international investors. Even with the higher sale prices, 
investors are insatiable in their demand for more and more 
houses. Residents are bombarded with postcards, text messages, 
and other marketing materials offering to buy their homes for 
cash.
    South Euclid has passed a number of ordinances designed to 
hold rental property owners accountable, including having a 
registration and inspection requirement, requiring owners 
living outside the area to name a local agent in charge, and 
not allowing the registration of rental properties with 
delinquent property tax balances. By taking these actions, we 
have successfully driven out many predatory landlords from the 
community, but it feels like an uphill battle.
    Not surprisingly, research conducted by city of Cleveland 
data analyst Dr. Tim Kobie shows a dramatic and alarming 
increase of business buyers, especially in communities of 
color, on Cleveland east side and in the racially diverse 
inner-ring suburbs of Cleveland. For Cuyahoga County as a 
whole, business buyers nearly tripled from 2004 to 2020. A 
white paper on these findings will be published this month by 
the Vacant and Abandoned Property Action Council, an ad hoc 
group of community development professionals in northeast Ohio 
that is chaired by housing researcher Frank Ford of Western 
Reserve Land Conservancy.
    For several years, Frank Ford has published an annual study 
on bank lending by Greater Cleveland neighborhood that has 
shown that on the east side of Cleveland only 18 percent of 
home purchases are associated with a home purchase loan. The 
entire east side of Cleveland, a majority minority area, has 
become a cash market dominated by investors.
    In order to rectify these issues, the public and private 
sectors must collaborate. Middle neighborhoods and low- and 
moderate-income areas continue to lose ground in home 
ownership, and tenants are subject to increasing rents, making 
attaining the dream of home ownership nearly impossible for 
many and leading to housing instability on an unprecedented 
scale.
    Thank you.
    Chairman Brown. Thank you very much, Ms. Martin.
    I will begin the questions and start with Mr. Waller. On 
Tuesday, we heard from tenants whose ceilings had fallen in, 
who lived with pests and rodents, who had seen rent go up 50 
percent in a single year. A lot of people might ask, why don't 
they just move? You gave a good example of a renter in Albany. 
You know renters in Georgia who face conditions like this. Do 
they have the option to just move?
    Mr. Waller. Thank you, Chairman Brown. No. Moving is 
difficult for anyone, under any circumstance. In this case, 
folks find that they do not have other options. There just 
simply are not places to move to that they can afford.
    So I have spoken with tenants who live in mobile homes 
where their children have fallen through the floor, where there 
are mobile homes that do not have electricity, and they are 
still paying monthly rent because they have no place to go. On 
top of that, there are direct and measurable costs. There are 
early termination fees in some cases, sometimes as much as 
three times the monthly rent.
    You have a child in school. You would have to remove them 
from that school. And if your child has a disability, you would 
have to transfer their Individualized Education Plan. This is 
difficult.
    You have to consider your job. You have got a job perhaps, 
and you have figured out a way to get there. And moving to a 
new place in a new community because you will not necessarily 
find another home in your neighborhood is going to produce 
additional challenges.
    And then there are moving costs, security deposits. It just 
goes on and on. They just do not have that option.
    Chairman Brown. Thank you.
    Ms. Martin, a question for you. And congratulations on 
joining the mayor's cabinet. I am a resident of Cleveland, and 
I look forward to working with you for that reason and for so 
many others.
    When you were with the city of South Euclid, you helped 
start the Vacant and Abandoned Property Action Council. Why did 
you start this council in the first place? How did the council 
help you and other local leaders address the problems that you 
point out?
    Ms. Martin. Well, I should say first off that I did not 
start the Vacant and Abandoned Property Action Council. That 
actually started in 2005 as a response to a study done by Joe 
Schilling out of Virginia Tech called ``Cleveland at the 
Crossroads''. So since 2005, this group has been meeting 
monthly, pulling together stakeholders from educational 
institutions, all different cities, and county government to 
discuss a collective response to the issues that were plaguing 
neighborhoods with vacant properties. So the research that 
continues today through the organization has proven invaluable 
to us working on the ground in neighborhoods, to try to address 
the challenges we were seeing.
    And I am very much looking forward to working with you as 
well.
    Chairman Brown. Thank you.
    Ms. Molenda, you have experience bringing people together 
around a common cause in Bedford Stuyvesant and beyond, and you 
still face significant challenges finding and communicating 
with other tenants in your situation. What were some of the 
practices that your landlord engaged in that led residents from 
your building and other buildings and across the city to 
organize, come together, and advocate for improvements?
    Ms. Molenda. Thank you for the question. You know, when you 
lose your home, you lose so many important things in your life, 
from stability, community, neighbors, friends, you know, 
potentially a job change, school change for your children.
    And our organizing really started with the 30-unit 
apartment in Park Slope, where Greenbrook bought the building 
and immediately sent notices to vacate to the tenants there 
with 90 days' notice. Many of those tenants left, and very few 
stayed and fought back. When we started to do research around 
who this landlord was, we realized that, you know, first, they 
bought a dozen buildings. Then it was 40. Then it was 100. Last 
I checked it was 138 buildings.
    And I think what really stood out here is that Greenbrook 
has particularly egregious practices, in particular around 
evictions and the massive rent hikes that many of us were 
experiencing for the very first time ever. And that is what 
really pushed me over the edge, when I got my 50 percent 
increase, to start to connect with other neighbors and start 
asking questions.
    And I do have experience in the labor movement, and so I 
knew that bringing people together and starting conversations 
and building power would create space for us to start asking 
questions like, is this legal, and what can we do about this?
    Chairman Brown. Thank you, Ms. Molenda.
    Ms. Martin, back to you. We heard from the panel that only 
1 percent of homes in this country, or rental homes, are owned 
by institutional investors, but we also know that trends in the 
last few years, that 30 percent of purchases are institutional 
investors, which tells you where we are going to end up. How do 
these investors affect the communities and the cities when they 
buy up homes?
    Ms. Martin. What I have seen in my practice as being in 
charge of code enforcement is that maintenance tends to go 
down, rents tend to go up, and tenants become displaced. Many 
tenants with month-to-month rents are just receiving huge 
increases, in some cases 50 percent more per month, and they 
cannot sustain it. So we see fewer opportunities for those with 
housing choice vouchers to find housing as well. So as I 
described in my testimony, we lost a large proportion of 
residents who have housing choice vouchers. So it is 
detrimental, especially to lower- and moderate-income 
residents. They are having very little luck finding houses to 
purchase or finding houses to rent.
    Chairman Brown. Thank you.
    Senator Toomey.
    Senator Toomey. Thank you, Mr. Chairman.
    Mr. Peter, we have discussed how much rents have increased. 
I think it was something like 12 percent across the country 
last year alone. Some of this hearing seems to be an attempt to 
blame institutional landlords for these, but it has been 
pointed out by Mr. Griffith what a very, very small percentage 
institutional owners own in the housing market.
    But it is also important, I think, to note that rent has 
gone up a lot; housing prices have gone up even more. Right? I 
think as of November year-over-year prices according to FHFA 
are up about 17 percent nationally, much higher in some 
markets, lower in others, but 17 percent.
    And so I guess my question is I would tend to expect that 
renting a house, which is, let us face it, that is a substitute 
for owning house, that they are going to move together. So let 
me ask you, Mr. Peter, over the medium term, let us say, should 
we expect housing prices and rental rates to generally move 
roughly together and in the same direction?
    Mr. Peter. Yes, Ranking Member Toomey, you are absolutely 
correct. Over the medium term, we would expect to see home 
prices and rents to move in lock-step. And for the same--for 
the reason that you pointed out, those are indeed substitutes.
    However, over the short term, there can be discrepancies 
that arise, and those discrepancies can arise because there are 
many investors, landlords, and mom-and-pop shops who generally 
only tend to raise rents when there is a turnover.
    Senator Toomey. Right.
    Mr. Peter. And there is generally about a lag of about a 
year between rents and home prices. So we are going to see a 
lot more rent raises in the future.
    Senator Toomey. Right. So there is a sticky element because 
people are not locked in, in a given lease.
    So you know, there is a very old economic truism that the 
solution for higher prices is higher prices. And of course, 
what is meant by that is that when people see the opportunity 
to make more money because the price of something has gone up 
it brings new entrants into the market, they create more 
supply, that tends to reduce the prices, and thereby you have a 
solution.
    So we have also heard that a lot of folks have no place to 
move, which sounds like a supply problem, and high prices 
normally call for an increase in supply. So could you talk a 
little bit about why we are not seeing a huge surge in supply 
in the face of these rising prices, and specifically, are local 
governments partly to blame for this?
    Mr. Peter. Yes, absolutely. I mean, there is a common 
saying that, demand responds quickly, supply responds slowly. 
And in particular on the housing front, the reason why supply 
responds so slowly is because we have artificially limited what 
and where we can build. And this comes down to the mistaken 
notion by elites that they can produce better outcomes than the 
market.
    And so they have used zoning. They have used environmental 
review processes. They have urban growth boundaries in some 
instances. They have used rent control in some cities, to 
really slow down what the market has been doing. And this has 
resulted in this massive housing shortage and massive 
unaffordability that we have been seeing, and this is very much 
more pronounced in these high, high regulation States.
    Senator Toomey. Right. Let me go to Mr. Griffith for a 
quick thought here. So the GSEs clearly led us into the 2008 
financial crisis through excessive risk taking. Congress 
established FHFA to be a tough regulator, to make sure that 
never happened again.
    But rather than being the cop on the beat, it seems the 
Biden administration's intent is to turn FHFA into a co 
conspirator with the GSEs. And what we are seeing is all kinds 
of policies that undermine, I think seem to undermine, the 
GSEs' financial condition, whether it is reductions in GSEs' 
capital requirements, lowering g-fees, suspended restrictions 
on risk layering, and on and on.
    Here is my question for you. Does it ever feel like they 
could be setting up for repeating the mistakes that led us into 
the 2008 financial crisis?
    Mr. Griffith. Thank you, Ranking Member Toomey. Well, 
regardless of whether or not the current state of the housing 
market completely mimics what happened in 2006, with the 
collapse of home prices of 30 and 40 percent across the 
country, even if that does not happen, the pain that the GSEs 
are inflicting on the American families, it is undeniable. And 
by that, I am referencing the home prices that are at all-time 
record levels right now. Whether those prices collapse or 
whether they stay elevated, American families are severely 
impacted. And the only way to have a way out of this without an 
even more prolonged period of sharp contraction would be to 
gradually remove their footprint, to allow prices to gradually 
return to something that is more affordable.
    Senator Toomey. Thank you.
    Chairman Brown. Thank you, Senator Toomey.
    Joining us from his office is Senator Menendez, and after 
Senator Menendez I believe will be Senator Tester, so if you 
can line up that way.
    Senator Menendez from New Jersey.
    Senator Menendez. Thank you, Mr. Chairman. You know, there 
is a massive racial home ownership gap in this country, which 
is a serious problem because owning a home is a key to building 
intergenerational wealth and reduce racial wealth inequality 
overall. According to the Census Bureau data, the White home 
ownership rate is about 74.4 percent compared to about 43.1 
percent for African Americans and 48.4 percent for Hispanics.
    So, Ms. Martin and Mr. Waller, what are some of the 
barriers to minority home ownership, and how do large 
commercial landlords mitigate or exacerbate those obstacles?
    Ms. Martin. Yes. Hello. I could respond to that. What we 
have discovered in northeastern Ohio through the analysis done 
by Frank Ford of Western Reserve Land Conservancy, who is the 
Chair of VAPAC, is that lending disparities are very real, and 
we are finding that majority minority neighborhoods do not have 
equal access to credit. So essentially, we still see redlining 
going on in those neighborhoods.
    We also see very disturbing trends where Black borrowers, 
even high-income Black borrowers, are having less of an 
opportunity of getting mortgage capital than even moderate 
income White borrowers. So Frank's research is very startling 
in that.
    It is very clear, as stated, you know, in some of our low 
mod areas there is almost no opportunity for home ownership as 
it has become a completely investor-dominated market. There are 
essentially few to no mortgages being written in some parts of 
our community.
    Mr. Waller. And if I could add, Senator, these practices 
and these types of landlords are often concentrated in low 
income and Black and Brown communities. The effect is that they 
are extracting wealth from these communities. And to buy a home 
you need wealth. You need to buildup money to pay for your 
downpayment, also have a stable income.
    And so these practices, because they put so much pressure 
on the families that live in these homes, that are renting 
these homes, they are often feeling like they are in a constant 
state of fiscal emergency. And it is very difficult under those 
situations to have the kind of stability that lends itself to 
the purchase of a home. Thank you.
    Senator Menendez. Well, thank you. Well, I am concerned, 
the fact that institutional investors in real estate are 
potentially squeezing minority first-time homebuyers out of the 
market. According to the National Association of Hispanic Real 
Estate Professionals, one of the critical barriers Latino 
homebuyers face is that Latinos are overwhelmingly concentrated 
in areas of the country with acute housing shortages. So what 
can we do to ensure that first-time minority homebuyers have a 
fair chance at competing with deep-pocketed institutional 
investors?
    Ms. Martin. I think first and foremost we need to make 
mortgage capital available. I think we need to provide some 
backstops to keep the investor behavior curbed in some of these 
areas where they are just essentially raiding neighborhoods.
    Mr. Waller. And I would add that, you know, it is a 
multifaceted problem. So there is a lot of different solutions 
that need to be employed. So I think some, you know, direct 
spending to State and local governments, mission-driven 
nonprofits, to help actually increase supply, which is not 
increasing. It is not increasing fast enough. There simply is 
not enough affordable housing in Georgia.
    Also, local governments need better information about these 
types of investors and institutions in order to make decisions 
at the local level to help increase supply.
    Senator Menendez. OK. Now as more and more housing is 
bought up by institutional investors, I am concerned about the 
lack of transparency this is creating in real estate ownership. 
Imagine a scenario when an unoccupied house needs maintenance 
or the neighbors cannot notify the owner because the house is 
owned by an anonymous LLC.
    Ms. Molenda, how does the difficulty to determine and 
communicate with the true owner of a property negatively impact 
neighborhoods? I am thinking about the 2019 Harvard study of 
rental properties in Milwaukee that found that properties 
bought by LLCs became more likely over time to receive code 
violations, fall into disrepair, particularly in high-poverty 
neighborhoods. In other words, corporate ownership can degrade 
the quality of housing, and that could have negative impacts 
not only for the tenants of those properties but for the 
surrounding neighborhood.
    Ms. Molenda. That is exactly right, Senator. We see this 
all the time around--you know, the paperwork that I got when my 
building was owned lists a different name than what I was told 
I should be sending my rental checks to. It is a very 
convoluted system of trying to investigate for folks like 
tenants, right, who do not have the skills and the research 
time and capacity to investigate this kind of really tangled 
web of who is in a relationship with whom.
    And the violations that you mentioned, I mean, these have 
included dangerous, unpermitted work and careless construction. 
We have had--you know, one of my neighbors in a different 
building had to get sent to the hospital for asthma from 
unmanaged dust and debris from construction that was 
unpermitted that was happening. And the entire Greenbrook 
portfolio, according to the New York City Department of 
Housing, Preservation, and Development, has received just over 
3,000 total violations across their portfolio of just, you 
know, 130 plus buildings.
    Senator Menendez. That is pretty amazing. Thank you, Mr. 
Chairman.
    Chairman Brown. Thank you, Senator Menendez.
    Senator Tester from Montana is recognized from his office.
    Senator Tester. Yeah, thank you, Mr. Chairman and Ranking 
Member, for having this hearing. You know, we all have--all the 
Senators on this--in this group have offices all around our 
States. And I have heard with previous representatives that 
institutional investors are 1, 2, maybe 3 percent. The 
interesting thing is, you are right, that is pretty small, the 
overall buy.
    But I will also tell you--and I do not think I am alone in 
this--damn near every call I get that is a problem with housing 
is with institutional investors. And the points that are made 
by the people who are in these homes, who cannot move easily, 
are: These folks see an opportunity to take advantage of us, 
and they are, and it is wiping us out.
    And so it is not about blaming institutional investors. It 
is about getting people to do the right thing and have a little 
bit of compassion, just a little bit of compassion for your 
common man.
    But, yeah, housing has been an issue. Montana struggled 
with a lack of housing before the pandemic. And you know, folks 
want to move to Montana. I do not blame them. It is the 
greatest State in the Union. A little biased on that, but it is 
the truth. But the fact is, is that the pandemic has made these 
challenges more difficult.
    So this is a question for you, Ms. Martin. During your time 
in South Euclid following the last economic crisis, you all 
worked to preserve local involvement in control of affordable 
housing so that it did not get monopolized by big out-of-State 
investors. What did you learn from that experience?
    Ms. Martin. What I have learned as a code enforcement 
official is it is almost impossible to track down these 
investors. So as you said, they hide. Many of them are not 
registered with our Secretary of State. It is very hard to 
untangle who is responsible. We have gone to the lengths of 
actually questioning tenants about who they are paying their 
rent to because we could not service on anyone.
    And as you might be aware, most code violations are 
criminal offenses. So for us to prosecute that, we have to 
perfect service on whoever the owner is, which can be very, 
very difficult.
    So again, you know, in Cleveland through our collaboration, 
by working together through the Vacant and Abandoned Property 
Action Council, we have helped make that a little bit of an 
easier process, but there are no legal safeguards that allow 
transparency in that way for cities to see who is really behind 
it. So for us to try to get control of dilapidated properties--
you will find a property with no heat, a property where the 
water has been cut off--it makes it very, very difficult. And 
also, the environment of code enforcement having declining 
resources, so fewer code enforcement people in the nation, 
makes it even harder still.
    Senator Tester. You know, it is interesting. In Montana, 
the state of the population is just over a million people. We 
have some mobile home parks that have been bought by 
institutional investors, and we have had some other properties 
bought by institutional investors. And the kind of complaints 
that are brought forth and called into my office, with pictures 
I might add, are unbelievable. I mean, the Billings properties, 
for example, sent us pictures of what the water looked like 
coming out of their taps, and I guarantee if you drank it you 
were going to be sick because it was not clear. It was not even 
close to clear. It was primarily brown.
    And a mobile home park in Great Falls talked about the fact 
that over the time since the institutional investor bought this 
property they did nothing but jack the rent and add fee after 
fee after fee, making it impossible for folks to be able to 
live there. And as has already been pointed out, it is not like 
folks can just pop up and move somewhere else. It is their 
home, number one. And number two, a lot of these folks do not 
have the resources to be able to move at the drop of a hat.
    Mr. Waller, we have seen success in Montana from 
manufactured housing communities converting to resident-owned 
cooperatives. Hopefully, you know about these ROCs. Are there 
other opportunities to improve communities by giving options 
like the first right of refusal or providing programs so the 
properties can stay affordable and stay in local hands?
    Mr. Waller. Thank you for the question. Yes, I think in 
general providing options to homeowners, or potential 
homeowners, or tenants and families that live in rental homes 
is exactly the right way to go. And that is part of the issue 
we are talking about today, that folks do not have choices. So 
our State laws in Georgia are not set up to support tenant 
choice. In fact, it is quite the opposite. So those kinds of 
programs, I think, would have a beneficial effect.
    Senator Tester. Appreciate that. Once again, thank you, Mr. 
Chairman and Ranking Member, for having the hearing. Appreciate 
all the participants.
    Chairman Brown. Thank you, Senator Tester.
    Senator Van Hollen from Maryland is recognized.
    Senator Van Hollen. Thank you, Mr. Chairman and Ranking 
Member Toomey. Thank all of you for your testimony here today.
    A few days ago, we heard testimony from a number of 
individuals who were impacted by absentee owners who were not 
taking care of the apartments that were owned. One of them was 
Juan Cuellar. He is a tenant at the Bedford and Victoria 
Station Apartment Buildings in Langley Park, Maryland. It is 
owned by an out-of-State, publically traded company. This 
community is about 84 percent Latino. Many recent immigrants 
often do not know their rights, and there is a huge sort of 
information disparity.
    Mr. Waller, this issue of information asymmetry obviously 
puts this kind of tenants at a disadvantage. Do you have 
thoughts on how we can address this so that those tenants can 
have a better ability to navigate these systems and protect 
their rights?
    Mr. Waller. Thank you, Senator. Information is really 
important. So there are some basic low-hanging fruit that court 
systems and local governments could do, like providing things 
in languages that people can read and also providing navigators 
so people understand the law and what their rights are.
    But I would say that even so, even with knowledge, in many 
cases tenants simply cannot exercise their rights even when 
they know what they are because there is a lack of legal 
representation for low-income tenants. In fact, it is virtually 
nonexistent despite the heroic efforts of our legal services 
attorneys across the country.
    And so local communities and States need to think about the 
benefits that they would receive if they would provide legal 
support to tenants. These are very complex litigation. I mean, 
a legal--a landlord in an eviction case may move really 
quickly, as quickly as 3 weeks in Georgia, but it is a very 
complex proceeding and tenants simply do not have a chance.
    Senator Van Hollen. So we also have an issue where, you 
know, tenants are engaged in making complaints and they often 
go unheard and neglected and problems buildup. Sometimes it is 
pest infestation. Sometimes it can be deadly situations. We had 
back in 2016 in Silver Spring, Maryland, which is not too far 
from the Langley Park area I just described, an explosion that 
demolished 2 buildings and took 7 lives, injured 30 people, 
displaced 100.
    And there was an investigation that determined there were 
lots of problems and missing things that had happened here. 
There was finally a settlement that was not disclosed. But the 
NTSB did look into it, the National Transportation Safety 
Board, and they concluded that a number of tenants in the 
building had reported smelling gas in the lead-up to this 
deadly explosion and that those reports went unheeded. Nobody 
reported the smell of gas to the gas company, and as a result, 
7 people died and 30 were injured.
    Can you talk, and others, just in my remaining time about 
how we can change the systems and incentives in a way to 
prevent that kind of deadly tragedy? This was again a building 
primarily populated by recent immigrants, and people were just 
not listening to their complaints.
    Mr. Waller. That is an extraordinarily tragic event, and 
those kinds of tragedies do happen in Georgia as well. One of 
the challenges that we face is that there is lack of investment 
in the enforcement of local housing safety laws, and so the 
housing code enforcement staff is often chronically 
underresourced. In some places like Georgia, in fact, their 
power or their authority to actually inspect homes is limited 
by State law.
    So in Georgia, it is unlawful for a community to inspect a 
property at all or even have a rental registry without probable 
cause. So they cannot go in and inspect unless there is someone 
there to invite them in. And so if the landlord does not do 
that or tenants are afraid to reach out, then the property will 
simply just not be inspected.
    So looking at those kinds of laws and the resources that we 
provide these communities and the role that Federal Government 
might have in terms of oversight when it, you know, supports 
investments by out-of-State investors I think is really 
important.
    Senator Van Hollen. I appreciate that. Thank you.
    Thank you, Mr. Chairman.
    Chairman Brown. Thank you, Senator Van Hollen.
    Senator Smith from Minnesota is recognized from her office.
    Senator Smith. Thank you, Mr. Chair and Ranking Member 
Toomey, and thanks to all of our panelists today.
    So I start from the place that if you do not have a safe, 
decent, affordable place to live nothing else in your life 
works, not your job, not your education, not your health, 
nothing. And as Molenda said so well, when you lose your home, 
you lose more than just that; you lose your community. And that 
is why this hearing is so important.
    Seems to me, Mr. Chair, our system is failing way too many 
people who are being victimized by these big corporate and 
institutional private equity landlords. And on Tuesday, as you 
said, we heard some stories about what this really means in the 
lives of people, including Rachel, who is a single mother in 
north Minneapolis, who had to sign her lease as she was leaving 
an abusive relationship. And Rachel shared her own experience 
with this institutional landlord: flooded basement with an 
unsafe electrical hazard in it, a garage torn down because it 
was unsafe, and other significant problems. And she told us how 
it was impossible, nearly impossible, to get anyone to pay 
attention to what she needed to have happen.
    Now Rachel is not alone. In the city of Minneapolis, we 
have found dozens of violations of city ordinances in homes 
owned by this large landlord. By one estimate, 58 percent of 
homes have code violations. In nearby Columbia Heights, the 
problems were so bad that the City revoked the landlord's 
rental license.
    Now Rachel's rental is owned by a firm called Pretium, a 
large private equity fund which acquired this portfolio last 
year. Pretium tells me that they are committed to fixing these 
problems and they are going to do away with some of these 
onerous lease terms. And they need to meet their commitments to 
me, and I am going to make sure that there is accountability 
here.
    But in the meantime, this speaks of course to a larger 
problem that we have in our nation. We are seeing increased 
corporate consolidation in a lot of sectors of our economy, in 
food, and we are seeing it driving up food prices, heating 
prices, and now rent prices. And this is happening because this 
big out-of-State firms, out-of-town firms, driven by Wall 
Street expectations, are buying homes by the thousand, with the 
single minded goal of driving up profits and turning these 
properties into cash cows.
    Now I went to business school, and I know what ``cash cow'' 
means. It means that you maximize cash spin-off while you 
minimize investment and maintenance. And we know who wins and 
loses in this deal when it comes to tenants.
    So I want to ask a question along this topic to Mr. Waller 
and also to Ms. Martin. You both have been involved in the 
housing sector for a lot of years. Can you help us understand a 
little bit how these big institutional investors are turning 
these properties into cash cows and what impact that has on 
tenants? For example, what do you see in terms of the different 
experiences between tenants who are tenants of this big out-of-
State, cash cow investors versus local landlords? What do you 
see as some of the differences?
    Ms. Martin. What I have seen in my work is that these 
landlords tend to not have a lot of empathy for tenants. So 
things will break in the house. Things will start to--the 
basement will flood, for instance. The tenant will need a 
plumbing repair. It will not be done, or it will take months 
and months for the tenant to get relief.
    So again, this speaks to the need for code enforcement as 
being a critical tool, and code prosecution, but again, it is 
very hard to find them. They typically employ local property 
managers that are very hard to pin down, and they hide behind 
the corporate veil, making it very, very difficult.
    But they do milk the properties, as you stated. That is 
what is going on. They buy them for the lowest possible price. 
They try to put nothing into them and milk them for all the 
rent they can get.
    Senator Smith. And let me just ask, following up on this, 
Mr. Waller, large institutional investors in housing, do you 
think that that has a downward trend on rents or do you think 
it has an upward trend on rents? What is your----
    Mr. Waller. What we have observed in Georgia is that these 
institutional landlords are well known for driving up rents, 
the cost of rent, in fact, year-on and year-on. But it is not 
just the rents. I also think it is important to note that there 
are fee schemes that are imposed that, you know, we have not 
seen and we do not see with other types of landlords. These are 
very creative fees that can cost tenants a tremendous amount of 
money.
    There is one example. An Atlanta Legal Aid Society lawyer 
reported that her client had--her lease payment was 1,300, I 
think, and 73 dollars under the lease. But when--with the 
accumulated fees, it was $2,157 per month. That is a 60 percent 
increase. And so you can imagine what kind of--what that does 
to tenants over time.
    Senator Smith. This is the kind of predatory behavior that 
I think is so damaging to a housing market that is already 
struggling because we have a shortage of supply, as we all 
acknowledge. So thank you, Mr. Chair, for this hearing, and I 
look forward to our continued work on this issue.
    Chairman Brown. Thank you, Senator Smith.
    Senator Toomey has one question he wants to ask, and then I 
will turn to Senator Warnock, remote.
    Senator Toomey.
    Senator Toomey. Yeah, thanks, Mr. Chairman.
    Mr. Peter, in your written testimony, you speak about the 
extraordinary growth in the GSEs' footprint in the multifamily 
market. You also state that many of the institutional 
landlords, including many that have been subject to criticism 
this morning, have actually been funded by the GSEs. So here is 
my question. Does the GSEs' role in subsidizing multifamily 
loans really do much to increase affordable housing or even the 
supply of rental units?
    Mr. Peter. Senator Toomey, that is a great question, and 
the answer is precious little. And the way it works I have 
documented in my written testimony on page four. As you pointed 
out, there has been this massive increase in multifamily 
mortgage debts guaranteed by Fannie and Freddie.
    However, when an investor comes in, they find a property 
where renters are already making below 80 percent of AMI, Area 
Median Income, and then the GSE requires that the tenants in 
this building continue to earn incomes below 80 percent AMI. So 
due to the liberal GSE lending terms, the buyer or the investor 
is able to load the property with a lot of debt. And as long as 
the buyer can then make some renovations or not and typically 
tends to then raise rents. But as long as the occupants are 
just still generally earning incomes below of 80 percent of 
Area Median Income, Freddie then gets to tout that they 
preserving success in maintaining affordable rental units while 
the owner can brag about financial returns.
    So as long as there is--so this is--I think you need to 
follow the bouncing ball here. So long as the system is all 
underwritten by Fannie and Freddie, I think we need to get to 
the root causes of this problem. The root causes are really the 
financing which is done by the Government, which is then 
raising these rents on these low-income rental units. And I 
think that is something that we should have a close look at 
because if it is underwritten by the Government it is creating 
also distortions in the marketplace, which should not happen.
    Chairman Brown. Thank you, Mr. Peter.
    Senator Warnock is next, and then he will be followed by 
Senator Cortez Masto. Both are calling from their office.
    Senator Warnock from Georgia.
    Senator Warnock. Thank you so very much, Chairman Brown. We 
are in the middle of a housing crisis, and this is true 
obviously all across the country, but it is especially true in 
Georgia. We are certainly feeling it all across my State, where 
constituents are facing difficulties finding affordable 
housing, in the Atlanta area and all across the State.
    In this time of difficulty, some corporate landlords have 
been aggressively issuing eviction notices. Between January and 
April of 2021, in the middle of a pandemic, Pretium Partners 
and its subsidiaries filed 155 evictions in DeKalb County 
alone. Ventron Management has filed for eviction against the 
tenants of Brooks Crossing Apartments a total of 427 times 
since April of 2020.
    I am happy to see Mr. Waller here, a fellow Georgian who 
has been on the front lines of this problem in helping these 
families who are facing eviction. When we think about housing, 
you are talking about health care also. People are more likely 
to be able to maintain a health care regimen. Kids will be 
better able to study. We are talking about education and a 
whole range of issues. Stability in housing is dignity.
    Mr. Waller, based on your experience working directly with 
communities, are these companies targeting evictions to 
specific areas, or is this just, you know, part of the 
marketplace?
    Mr. Waller. Thank you, Senator. It is a pleasure to see 
you. So, yes, they are targeting. Their activity, we observe, 
is concentrated in communities of color and low-income 
communities. And as a result, although there might be a smaller 
or, you know, larger part of the marketplace, in those 
communities, the threat of this type of institutional landlord 
is very real.
    And it causes additional destabilization. Again, it 
extracts wealth from these communities, reduces their ability 
to improve their circumstances or find new places for their 
children to live. It also reduces the ability of communities to 
support the education of kids and support the employment 
potential of their families.
    Senator Warnock. Well, you describe well the impact of all 
this. But what is motivating these companies to file so many 
eviction notices during a public health crisis?
    Mr. Waller. The eviction system in Georgia is set up to 
support the needs of landlords, and so when you look at why 
landlords use evictions it is not necessarily to remove a 
tenant. Eviction in Georgia is a very inexpensive process for a 
landlord. It can be very quick. And landlords have attorneys 
that are at their disposal, of course, but also the way the 
courts are set up it is very inexpensive to use a landlord 
attorney.
    And so they use eviction filings not just to push people 
out and bring new people in. They also use them to threaten, 
intimidate, and coerce tenants into paying often unlawful fees 
as well as paying up-rent when tenants complain about miserable 
living conditions.
    And I should point out that tenants have zero leverage in 
Georgia. Regardless of the conditions of the home, the tenant 
is still obligated to pay, and so if they do not pay they can 
be evicted. And so landlords know this, and they use it to 
their advantage.
    Senator Warnock. Right. And you talked already about the 
effects of this on families. Can you talk a little bit more 
specifically about the impact of this on children?
    Mr. Waller. Yes, sir. That is very near and dear to my 
heart, of course, at Georgia Appleseed. And the impact is 
really profound and cannot be overstated. So first of all, 
these evictions and threatens--you know, the threat of 
eviction, eviction filings has a tremendous psychological 
effect on the parents and puts them in sort of state--feel like 
they are in a state of constant emergency. So there is a lot of 
stress associated with that.
    But involuntary moves caused by eviction have measurable, 
well-studied, and negative impacts on children. And there is 
learning loss every time there is a move. There are behavior 
challenges that appear after several moves.
    These impacts also affect their classmates. There is 
something called ``school mobility,'' which has been measured a 
great deal. And the more school mobility that a school 
experiences, in other words, the more children move in and out 
of the classroom during the year, the worse the effect on their 
classmates as well as on teacher morale and teacher retention. 
So the communities end up paying the costs and not--you know, 
when the landlords act in this way.
    Senator Warnock. So all of us have a reason to want to curb 
the activities of these bad actors. We all have something at 
stake here, whether it impacts us directly or not. Think about 
Dr. King saying, whatever affects one directly affects all 
indirectly.
    And so I have introduced legislation to make downpayments 
more affordable for first-time, first-generation homebuyers and 
support affordable housing construction and transparency on 
restrictions for building new homes. But at the same time, we 
have got to do something to address these bad actors, 
particularly in the middle of a pandemic.
    Thank you so much.
    Chairman Brown. Thank you, Senator Warnock.
    Senator Cortez Masto from Nevada is calling from her 
office.
    Senator Cortez Masto. Thank you. Thank you, Mr. Chairman, 
and thank you to the panelists. This is a great conversation 
and so appreciate you being here.
    Ms. Martin, let me start with you. In your written 
testimony, you noted that cities that want to take a proactive 
approach to code enforcement have a difficult time ensuring 
their compliance. So let me ask you, Ms. Martin and Mr. Waller, 
if you have any thoughts on strategies to improve municipal 
efforts and what we can do here at a Federal level to support 
those local government efforts.
    Ms. Martin. Thank you for asking the question. Code 
enforcement departments universally are stressed. It is very 
hard to find applicants. It is very hard to afford to have 
adequate staffing at the code enforcement level. And as you can 
see from the testimony today, it is imperative. It is the way 
we protect the life, health, and safety of these tenants. So 
any assistance that local governments could have to augment and 
support code enforcement as a function would be very helpful, 
for sure, and also certainly anything we can do to help 
increase the transparency of these investors so they can be 
held accountable for their behavior.
    Senator Cortez Masto. Right. And so I am curious if you 
have any thoughts, what we can do at a Federal level. And this 
is--I think many of us have the same challenges. We understand 
a lot of this enforcement is at the local level, where it 
should be, and there are challenges at the local level for 
municipalities and counties. Is there some thought at a Federal 
level, what we can do at a Federal level to support them?
    Ms. Martin. Perhaps creating some sort of regulatory 
environment where they have to be more transparent in the 
reporting of what they own and what the addresses are of the 
properties. They tend to be hidden in individual LLCs. We also 
find, you know, many of them are not paying their property 
taxes until--you know, they are very delinquent. So, milking 
properties. So anything where information and data can be 
collected and shared would be helpful.
    Senator Cortez Masto. And you touched on it. This, to me, 
is my biggest challenge right now is the data. There is a lack 
of it. There is a lack of accurate information. It is not 
easily transparent, I think for many of us, to even understand 
who the true property owners are. And to me, I think that is 
the first step here moving forward, if we are even looking 
Federal legislation, is to capture that data.
    And I do not know of anybody who really has accurate data. 
I am still putting it together in the State of Nevada.
    And so how do we ensure that we have the most up-to-date 
information to really address the tenants' needs and address 
the issues and help our local municipalities? I am curious, Mr. 
Waller, any thoughts on that?
    Mr. Waller. Yes, Senator. Thank you for the question. I 
would underline Ms. Martin's testimony and also say, you know, 
there may be some basic corporate accountability measures that 
could be helpful. So, requiring investors in this kind of 
situation to identify an ultimate owner, some kind that could 
be held accountable when there are violations of the law and 
costs pushed on the communities in this way, that would be 
really helpful.
    I think also thinking about housing code enforcement and 
housing safety enforcement as part of the necessary--a 
necessary part of the tapestry of Government supervision and 
encouragement of investment in affordable housing and so 
perhaps even direct grants to housing code enforcement offices. 
I think the conditions are often forgotten.
    And historically, one way that we have had some idea of 
what was going on in homes and had some Federal investment in 
improving the conditions of homes was by funding voucher 
programs and funding local housing authorities so they could 
provide inspections of these properties because in a State like 
Georgia that is the only regime in which there are inspections. 
Again, it is unlawful for Georgia for local communities to 
have, for example, an annual registry or inspection of rental 
properties.
    Thank you.
    Senator Cortez Masto. Thank you. I appreciate that. One 
final question, at Tuesday's listening session, which was a 
great conversation, really so informative, there was a Nevadan 
there by the name of Kathleen Hernandez, and she discussed her 
horrible experience with renting a property with malfunctioning 
sewage pipes. And one thing she and other witnesses mentioned 
was being charged hundreds of dollars for service calls to 
address malfunctioning sewage pipes.
    And so, Ms. Martin, my question to you is: What can local 
governments do to prevent these additional fees for basic 
landlord services? I mean, what else can we be doing to address 
this, the concerns that we see here with these fees adding up 
and really not achieving a correction or a cure for the 
ultimate problem when they are called out?
    Ms. Martin. I have seen many unconscionable leases that 
tenants have signed in their desperate--desperation to obtain 
housing. So one of the things that is an effort in Cuyahoga 
County is right to counsel so that tenants have a right to 
legal help. The Legal Aid Society is doing tremendous work 
locally, and there is some funding that has come through 
Cuyahoga County and also from the city of Cleveland that 
ensures that, but that is not widespread.
    And one of our agencies--and I am sure this is true 
throughout the country--it was called the Cleveland Tenants 
Organization. They were there to help with questions like that. 
Is this legal that they are putting all this on me? So in some 
cases, I was seeing the landlord put the burden of paying 
property taxes onto the tenant and things that just are simply 
in conflict with Ohio landlord-tenant law, yet it was going on. 
So I think educating tenants and providing some means to fund 
organizations that do that will be very, very helpful.
    Senator Cortez Masto. Thank you. I know--Ms. Molenda, I see 
you nodding your head. You would agree with that, I would 
assume.
    Ms. Molenda. Absolutely. And I think, you know, just the 
lease terms that I have seen from Greenbrook and Carlyle have 
just been awful. And having rented many, many apartments in New 
York City and elsewhere, I have just never seen these kinds of 
lease terms, where they are really building in things like, you 
know, if you have a pet, you forfeit your entire security 
deposit even though I have already lived in my apartment and 
have a pet. And so they are just writing in all of these really 
ridiculous terms into the leases that a lot of folks are 
signing.
    Senator Cortez Masto. Thank you.
    Mr. Chairman, I know I went over my time. Thank you so 
much. Thank you to the panelists again.
    Chairman Brown. Thank you, Senator Cortez Masto.
    Senator Warren from Massachusetts is recognized.
    Senator Warren. Thank you, Mr. Chairman. So last year, 
while families were struggling to make ends meet during a 
pandemic, vulture investors saw a big opportunity. Private 
equity firms and other Wall Street investors were busy scooping 
homes in communities across the country even in the middle of a 
historic housing shortage.
    So I recently wrote a letter to a few of the largest 
investors to get answers about their activities in the housing 
market, and they all told me not to worry. They gave similar 
defenses to what was going on. Part one, they told me that 
institutional investors play a relatively small role in the 
housing market, and part two, they said that by buying homes to 
convert rentals they were increasing the rental supply and 
making rental housing more accessible for those who prefer to 
rent. So I want to see if we can just explore those two 
defenses from the industry.
    Mr. Waller, I would like to start with you. Institutional 
investors are telling us that they are just a small player in 
the housing market. You work closely with families across the 
State of Georgia. Is that what you are seeing on the ground?
    Mr. Waller. The role of institutional investors is growing 
and growing quickly. So you know, if you look at some of the 
research that is available just, I guess, in the last third 
quarter of last year, I think they were responsible for about 
40 percent of single-family home purchases in the Atlanta area.
    Senator Warren. Forty percent?
    Mr. Waller. And in the five-county region, corporate 
landlords were responsible for, I think, 76 percent of the 
eviction filings in the end of last year.
    Senator Warren. Wow. So, thank you. You know, we have 
reached the point where nationwide more than one in every four 
single-family homes in America is purchased by investors, and 
that is a huge increase. And the vast majority of investor 
purchases, more than 75 percent, were made in cash, which is 
really hard for a family to compete with.
    So if investors are buying up more and more homes, and new 
construction is not keeping up, who gets the short end of the 
stick? And I think the answer is pretty clear. Families that 
dream of buying their first home. When investor home purchases 
skyrocketed last year, the share of purchases by first-time 
homebuyers, most of whom cannot compete with those all-cash 
offers, fell to its lowest level since the crash of 2008.
    So, Ms. Martin, let me ask you. You have spent 14 years 
leading South Euclid's housing department. Families are being 
priced out of home ownership across the country, forcing many 
of them to rent even if they would have preferred to buy. Are 
big investors at least making it easier for families to access 
affordable rental housing the way that they claim they are?
    Ms. Martin. Absolutely not. In my experience, that is not 
what is happening at all. I think what we are seeing on the 
ground is more scarcity. We are seeing more of a concentration 
of poverty as the tenants are forced to find substandard 
housing in areas that they did not want to live in because the 
opportunities in areas that they would like to live in are so 
scarce. These units are getting locked up and locked out of 
most--most of the people, you know, who are seeking housing 
just do not have a shot at it.
    Senator Warren. Well, thank you, Ms. Martin, and thank you, 
Mr. Waller. Appreciate your information on this.
    You know, institutional investors like to say that they are 
helping out renters and potential homebuyers across the 
country, but that is just the story they want to tell while 
they just keep raking in the profits. With mountains of cash on 
hand and access to exclusive listing, these Wall Street firms 
are buying up already scarce homes from right under American 
families. And then they jack up rents and exacerbate the 
inflation that is straining family pocketbooks.
    So think about what this means. Big investors are blocking 
the main path that families have traditionally had to build 
wealth and financial security, that is, buy a home. They are 
also standing in the way of opportunities to narrow the racial 
home ownership gap and the racial wealth gap that are a blight 
on our country.
    So there is a lot we need to do to fix the housing crisis, 
and we should start with building more housing, just as Build 
Back Better would do. But we also need to loosen the grip that 
Wall Street investors have on our housing market. This would 
help level the playing field so that every family in America 
has an opportunity to pursue the dream of owning a home.
    Thank you, Mr. Chairman.
    Chairman Brown. Thank you, Senator Warren.
    Senator Ossoff from Georgia is recognized.
    Senator Ossoff. Thank you, Mr. Chairman. And I want to 
particularly welcome Mr. Waller from Georgia. Thanks for making 
the trip. Thanks for your testimony. Thanks for all the work 
you do in the community.
    I want to ask a question of you, Mr. Waller, and I would 
also like to hear from Mr. Peter on this. Why is it that 
institutional investors, private equity firms are so much more 
liquid now or have so much more capital at their disposal to 
allocate toward investments such as buying up housing stock? Do 
you agree that is a fair characterization of shifts in market 
dynamics? Thank you.
    Why don't we begin with you, Mr. Waller.
    Mr. Waller. At Georgia Appleseed, we are focused primarily 
on sort of the tenant experience and protecting the tenant. So 
I do not have the kind of research I think that Mr. Peter could 
provide.
    What I can say is that what we are seeing is that there is 
a lot of money available for these investments, but what we do 
not see when these investments are made are, you know, the 
construction of new properties, or buying a property and 
investing in the property and upgrading the property, the kinds 
of things that you think about when you think about community 
investment. Instead, this is the purchase of a property, the 
extraction of as much money from it as possible, then often in 
the end a derelict building where nothing else can be done. 
There are stories in the newspapers, in the AJC, or in Atlanta, 
just yesterday about properties just like this, that are 
essentially left to communities to pay for. So these investors 
come in, buy the properties, and then push those costs onto the 
community and onto the families living there.
    Senator Ossoff. Thank you.
    Mr. Peter, your perspective, please.
    Mr. Peter. Thank you, Senator. If you refer to the chart in 
page four of my written testimony, you see that multifamily 
mortgage debt outstanding has grown exponentially, and this is 
because of the Federal Government, particularly the GSEs, 
Fannie Mae and Freddie Mac. And so just in 2014, there were 
$400 billion outstanding, and now this is--by the most recent 
quarter that we have, Q3 2021, this has grown to $900 billion.
    And the reason why this is happening because the GSEs are 
offering more liberal credit terms than the private sector, and 
hence, they are able to crowd out the private sector from this 
business. And this is making it attractive for private equity 
firms to come into the market and take advantage of these 
liberal terms that they otherwise would not get from the 
private sector. So I think the solution, if you look at it, is 
to shrink the GSE footprint in this market but also on the 
single family side if you want to solve this problem that you 
have identified.
    Senator Ossoff. Thanks for that input.
    Mr. Waller, how does the tenant experience vary typically 
between a tenant occupying a home or an apartment owned by an 
institutional investor, such as a private equity firm, and a 
tenant who is in a home or apartment that is owned and run by 
someone in the community?
    Mr. Waller. Thank you, Senator. So the way I tend to think 
about this is, you know, the farther that the landlord moves 
from the community and the family the more landlord sees the 
arrangement as a purely business arrangement. And so from the 
out-of-State institutional landlords' perspective, there are 
units that need to be filled, they are fungible, and there are 
customers that fill them.
    From the tenants' perspective, this is a home. It is very 
expensive to move into the home and acquire the home. It is 
very expensive to leave. And so the farther apart--the owner is 
from the tenant and the owner is from the community, the worse 
it gets for the tenant.
    And so what we see is that the landlords that are out-of-
State institutional landlords, it is difficult to hold them 
accountable when there are problems. The tenant has no one to 
speak to. The community has no one to speak to except perhaps a 
property management firm which will come and go. They will 
change often. And so as a result, they are subject to 
increasing and novel types of abuses that we have not seen 
before.
    Senator Ossoff. Thank you, Mr. Waller.
    I want to come back to you, Mr. Peter, and reflect on some 
of the comments Mr. Waller made on the different approach the 
institutional investors will take toward property management 
and their incentives are different. Much has been written about 
how over the last 50 years the incentives in the financial 
services sector, among institutional investors and fund 
managers, have shifted toward short-term returns. That is how 
compensation is structured and rewarded. There has been a 
shift, many have argued, from a long-term approach to capital 
allocation to one focused only on the next month, the next 
quarter, maybe the next year.
    Do you agree with that? Do you think that dynamic prevails 
in our economy? Do you think that impacts how institutional 
investors might manage the housing stock that they are buying?
    Mr. Peter. Yeah, I mean, I think ultimately it comes down 
to market power. And currently, we have this massive shortage 
of housing and rental units that is making it easy for 
landlords, be they large investors, be they mom-and-pops, but 
also on the single-family, to drive up home prices.
    And as long as this is being financed by the GSEs, these 
institutional investors are working within the system, which is 
allowing them, afforded by the GSEs, to take on more debt, load 
up profit off the system that the GSEs provide. So I think you 
want to look at the role of the GSEs and shrink those down, 
yeah.
    And, yeah, I mean, it is all working within the system 
because if you can raise rents, which is allowed by the terms 
that the GSEs can lend, you increase the cap rate which then 
allows you to extract even more equity, which is underwritten 
by the GSEs. So it is kind of a circle.
    Senator Ossoff. Thank you, Mr. Peter.
    And finally, Mr. Waller--and feel free if you want to take 
some time on this and contemplate and get us something for the 
record. I do not want to put you on the spot, but if you have 
any suggestions for Congress as we consider housing policy, of 
what we can do to increase supply. Right? To reduce barriers to 
increase supply and to incentivize investment in supply and 
growth of housing stock. We have shortages across the country, 
driving up rents, driving up prices.
    If you have anything you want to offer now and then we 
would also welcome anything for the record. That is my final 
question. Thank you.
    Mr. Waller. Thank you. And we would be happy to offer 
something for the record later, but I can say that, you know, 
thinking about the fact that there just simply are not enough 
homes for folks to move into. So I had mentioned April earlier, 
who simply cannot find another home in Albany, Georgia, where 
she can live with her mother who is in a wheelchair. There 
needs to be additional housing. The system we have now is not 
providing it. So I do think that there is a role for direct 
spending to State and local governments and mission-driven 
nonprofits to invest in the development of affordable housing. 
I think that would be a big help.
    I also want to again underscore something that has been 
said a couple times, accountability and information. Local 
governments need information to make good policy, and right now 
we have very little information about how these landlords 
operate, who they are. And so measures to increase that would 
be very helpful.
    Senator Ossoff. Thank you, Mr. Waller.
    Chairman Brown. Thank you, Senator Ossoff.
    The Senator from Arizona is recognized, Senator Sinema, 
from her office.
    Senator Sinema. Thank you, Mr. Chairman, and thank you to 
the witnesses for being here today. The rapidly changing costs 
in Arizona's housing market have been a major concern of mine 
for a number of years. Now more than ever, middle-income and 
fixed-housing Arizonans are struggling to afford housing.
    Recently, an out-of-State investor purchased an apartment 
in Tucson that was originally affordable housing for seniors, 
but after purchasing the building the investor doubled the rent 
for residents, forcing many of these seniors to seek 
increasingly difficult to find housing options. According to 
the Arizona Daily Star, Tucson's newspaper, the investor 
described his method as rehab; kick the tenants out and raise 
the rents. He describes the outcome he seeks as, quote, forced 
appreciation, where he tries to raise rents on Arizonans faster 
than market forces would normally permit.
    So let us think about that for a minute. Arizona has an 
affordable housing shortage and some of the fastest rising 
rents in the country, and somehow even that is not enough for 
this investor.
    So my first question is for all of the panelists, and I 
would invite you to feel free to respond or not respond. Would 
anyone like to defend how this investor talks about Arizona 
seniors and, quote, kicking them out of their homes?
    [No audible response.]
    Senator Sinema. Right. I did not think so.
    So my next question is: Does anyone testifying today feel 
like these actions and these words respect our seniors and the 
most vulnerable members of our communities?
    [No audible response.]
    Senator Sinema. Good. We have common ground. Arizonans know 
we have an obligation to take care of and respect our seniors. 
Our seniors have worked hard, and they deserve to enjoy their 
golden years with dignity in the company of friends and loved 
ones.
    But many Arizona seniors live on fixed incomes and cannot 
afford excessive rent increases. In Arizona, there is also an 
affordable housing shortage for everyone, not just for seniors. 
So when out-of-State investors target Arizona seniors and kick 
them out of their homes, they are not left with a lot of great 
options, and some do not have any options at all.
    So, Ms. Martin, I want to thank you for being here. In your 
city, have you seen instances where seniors being priced out of 
their existing homes by practices I just described in Tucson 
have contributed to homelessness among seniors?
    Ms. Martin. Unfortunately, I have, Senator. The seniors in 
our community are some of the most vulnerable residents, and 
they have the most difficulty. In fact, the example that I 
provided in my testimony of the woman who was evicted from her 
home, she was a subsidized tenant who had a housing choice 
voucher. She is a senior. Her sister is a senior who had 
dementia. And they were evicted from their home even though 
they had never missed a rent payment. So I think, you know, we 
need to take note of the impact this is having on seniors and 
on disabled residents, which is, in my experience, very 
commonplace.
    Senator Sinema. I have heard from AARP in Arizona and 
affordable housing advocates about a disturbing rise in senior 
homelessness in Arizona. It is something I previously discussed 
in the Aging Committee and, of course, have talked about here 
in the Banking Committee.
    Now, Ms. Martin, losing your home no matter who you are is 
a life altering event, but I believe that losing your home as a 
senior on a fixed income is uniquely challenging in this 
housing market. So my question is: Do you agree, and if so, can 
you share a few reasons why it is uniquely challenging for 
seniors?
    Ms. Martin. Typically, seniors are not employed. So they 
have no income other than what they are receiving in Social 
Security or small pensions. So they typically cannot afford 
market rate rents.
    And units in affordable buildings such as, you know, our 
low-income housing tax credit project building designed for 
seniors, in Cleveland at least, there is a long waiting list, 
at least a year, maybe more. So in the example I provided in my 
testimony, the woman had put her sister with dementia in a 
house with another family member and her grandchild, and she 
was living in her car. And it is winter in Cleveland.
    So I think it is very real, what is going on, and it is 
absolutely tragic. And, no, they cannot easily find other 
housing.
    Senator Sinema. Yeah, thank you.
    Mr. Chair, I want to thank you for holding this hearing 
today. I want to continue working with my colleagues in a 
bipartisan way to protect our seniors and to expand access to 
true affordable housing in Arizona and across the country. 
Thank you. I yield back.
    Chairman Brown. Thank you, Senator Sinema.
    Senator Reed is recognized from Rhode Island.
    Senator Reed. Thank you, Mr. Chairman. We are in the midst 
of an affordable housing crisis that is exacerbated, in my 
view, by the behavior of these institutional investors. But one 
aspect of this affordable housing crisis is the lack of supply 
of homes.
    And, Ms. Martin, how do local zoning rules and not in my 
backyard mentalities contribute to this phenomenon of limited 
housing or affordable housing?
    Ms. Martin. I have seen that in my experience, especially 
with low-income housing tax credit projects. There typically 
can be a lack of understanding of what that would mean for a 
neighborhood and sort of a not in my backyard mentality does 
come to bear with that.
    In Cleveland and Cuyahoga County, we are taking a very hard 
look at our zoning codes now. In fact, our First Suburbs 
Consortium has been working with our County Planning Commission 
to see if we can increase density and do things that would help 
allow for accessory dwelling units, for instance, where, you 
know, we can create more affordable housing opportunities. So 
that is a project that we are currently working on. So I agree 
with you that it is a true problem.
    Senator Reed. Thank you.
    And, Mr. Waller, from your perspective, this issue of 
zoning reform or at least reevaluation, do you have any 
comments?
    Mr. Waller. It is a conversation that is also going on in 
Georgia, particularly in the larger urban areas, where part of 
the reason for affordable housing, or the lack of affordable 
housing is the property to build it on. The conversation is 
going on, and we could provide more information about that 
afterwards. You know, in the rural areas, that is not as much 
of an issue of course.
    Senator Reed. Thank you. This question is probably in the 
purview of the Finance Committee, but I am curious 
particularly, Mr. Waller, from your experience. Are there 
unique tax advantages to these institutional investors that 
give them even more incentive to buy property and to operate 
the way they do?
    Mr. Waller. I would be happy to provide more information 
about that after the hearing. I will say that it is to me. It 
does seem strange. There must be lots of different types of 
incentives because this is not a type of investment that we 
were seeing a lot of in the recent past. So the idea that you 
would build--you would buy, borrow a lot of money or invest a 
lot of money in an older building with low-income tenants 
paying low rent, that that would be seen as a lucrative 
investment seems strange to me. And so I am sure there are some 
issues there that we could provide more information for.
    Senator Reed. And it was, I think, listening to your 
comments to Senator Warren about the eviction rate that it 
seems to me a business plan, not just a coincidence. Is that 
your view?
    Mr. Waller. That is exactly what we are seeing. And the 
institutional landlords are better positioned than other types 
of landlords to take advantage of the eviction system and to--
you know, like I said, it is very inexpensive and easy in 
Georgia, particularly if you have lots of properties where you 
can run all of your evictions through a single attorney.
    So the way that these court hearings go is that the 
landlord attorney will sit at the front of the court at the 
plaintiff's table and all of the tenants, hundreds of them, 
will sit behind that attorney and that attorney will handle 
many, if not all, of those cases some days. And so it is very 
efficient, very quick, very cheap for these institutional 
landlords.
    Senator Reed. Well, thank you. Again, this is an area where 
we have to look much more closely in terms of the behavior of 
these institutional investors. I share some of the sentiments, 
obviously, with Senator Sinema that the beneficiaries of this 
are far away.
    The people who bear the burden are, many times, seniors, 
poor, immigrants, et cetera. And that is one factor. And then 
the other factor is, as we discussed, we have to get much more 
housing built that is affordable and accessible also to all 
Americans.
    So thank you very much. Keep up the good work, ladies and 
gentlemen.
    Thank you.
    Chairman Brown. Thank you, Senator Reed.
    Thank you all for testifying today.
    It is obvious from our hearings, from reporting by 
journalists in our communities, and from the firsthand 
testimony of renters earlier this week and today that private 
investors and landlords exploit our housing shortage and lack 
of renter protections to exact greater and greater profits for 
themselves. They often do it while hiding behind opaque LLCs 
and ownership structures.
    They add fee after fee, as our Georgia representative 
pointed out. They ignore maintenance. They exploit loopholes 
and tenant protections. They drive out longtime tenants. They 
think they can make a bigger buck from somewhere else. I was 
particularly taken by our witness from Bedford Stuyvesant, 
where she had owned a dog all this time and then they can write 
into the new contract with a new purchase or penalties for 
that.
    We heard the same tired arguments we always hear from 
corporate defenders; let the market sort it out. If you people 
listen to the words of renters from this week, from Minnesota 
and Nevada and Montana, you would know the market is not in 
fact sorting it out.
    We also heard a lot about inflation today. If we are 
serious about bringing down inflation, not just using it as a 
political talking point, let us bring down housing costs. It is 
the biggest item in most families' budgets. Prices have been 
going up for years.
    We have a plan to reduce housing costs for more families by 
increasing the supply of safe, decent housing, and also help 
State and local governments remove barriers in places like 
South Euclid and Cleveland to increase the supply of housing, 
something we have heard bipartisan support from witnesses over 
several hearings. And if my colleagues really want to bring 
down housing prices, I hope they will join us to get that 
legislation passed. I look forward to working with colleagues 
to help increase access to safe, affordable housing through 
these policies.
    I thank the witnesses again.
    Senators who wish to submit questions for the record, those 
questions are due 1 week from today, Thursday, February 17th.
    To the witnesses, you then have 45 days to respond to any 
questions. Thank you again for that.
    With that, the hearing is adjourned. Thank you.
    [Whereupon, at 11:53 a.m., the hearing was adjourned.]
    [Prepared statements, responses to written questions, and 
additional material supplied for the record follow:]
              PREPARED STATEMENT OF CHAIRMAN SHERROD BROWN
    Whenever there's a problem in the economy that's hurting families 
and driving up prices, there's a pretty good chance you'll find a Wall 
Street scheme either causing it, or taking advantage of it and making 
it worse.
    One of the reasons housing prices have gotten so out of control, is 
that corporate America sensed an opportunity.
    Private equity firms and corporate landlords and investors saw a 
shortage, and they saw a captive market. They bought up properties, 
they raised rents, they cut services, they priced out family 
homebuyers, and they forced renters out of their homes.
    Our failure to invest in new, affordable housing has left these 
renters with few options.
    Before the pandemic, nearly one-in-four renters was paying more 
than half their income for housing.
    All across the country, we see headlines about the skyrocketing 
cost of housing, and the squeeze it's putting on our families.
    Potential homebuyers looking for a home in the communities where 
they grew up or where they work are outbid by out-of-town, all-cash 
buyers.
    Rents in communities from Atlanta to Boise to Columbus to Denver 
are growing far out of reach for families and workers.
    While most of us see high rents and a lack of housing choices as a 
problem to solve, deep pocketed investors see an opportunity for 
profit.
    Investment firms have been touting rising rents and renters' lack 
of options to attract investors.
    One large landlord proudly advertises under their, quote, ``market 
strategy'' that the ``recent mortgage meltdown has raised the bar for 
those who can qualify for a mortgage, thereby increasing the pool of 
people who must rent for the foreseeable future.''
    But rather than providing the essential affordable housing that 
families need, many of these firms are just exploiting people.
    On Tuesday, our Committee held a listening session to hear directly 
from renters about what happens when investors put profits over 
people's lives.
    As one renter was told when she asked why her rent suddenly 
increased by hundreds of dollars, ``we have to please the investors.''
    Think about that, ``we have to please the investors.''
    Renters in apartment buildings and single-family homes and 
manufactured housing, from Las Vegas to Great Falls to Hyattsville, 
shared their stories.
    Over and over, no matter where they lived, no matter what type of 
home they had, renters told us how they were overlooked and overcharged 
by the big investors that owned their homes.
    Long-time residents described double-digit rent increases and new 
fees for everything from water and trash to family pets.
    One resident of a manufactured home community in Senator Tester's 
home State said the increases amounted to ``about an 86 percent 
increase for the dirt our homes sit on.''
    Seniors on fixed incomes and working families can't afford that.
    Renters in Nevada and Maryland and Texas and California had their 
homes repeatedly flooded with wastewater, lived with pests and rodents, 
and went long periods without working showers or hot water.
    In Senator Smith's home State of Minnesota, a working mother's 
continual complaints about her home's flooded basement and dangerous 
garage went unanswered, and the city itself was forced to step in 
because of code violations.
    Another renter in Senator Van Hollen's home State of Maryland told 
us that ``[t]he owners think that because we are immigrants, we are not 
important. For them, they want the money to arrive every month without 
doing anything for us. We have the need to live in an apartment, but 
not live like this.''
    No one is arguing that landlords--whether a teacher renting out the 
home her parents raised her in, or a professional company--shouldn't be 
able to make a living.
    Of course rental housing is a business: You provide a decent place 
to live, in exchange for collecting people's hard-earned money in rent 
each month.
    But if your building is full of mold and mice and doesn't have 
working heat or a working stove, you're not holding up your end of the 
deal.
    That's not a real business. And families are paying a very high 
price for it.
    Investors increasingly structure their purchases through LLCs and 
real estate investment trusts, with different names for each property 
or fund.
    And when owners hide behind LLCs, it makes it impossible to track 
down all the neglected properties they own and all the tenants they 
force out.
    This leaves local leaders like Ms. Martin with only two options--
let investors continue to run down neighborhoods and run out residents, 
or use time and money they don't have to connect with other local 
leaders to track down bad owners one-by-one.
    For investors, homes and rent increases are distilled down as 
returns to shareholders. Code violations and eviction filings are the 
cost of doing business.
    But for Ms. Martin and the residents of Cleveland and South Euclid, 
these are their homes. These are their neighborhoods. And no one seems 
to be tracking their returns.
    When Matthew Desmond, the author of the book Evicted signs copies 
of the book, he signs it with the words ``Home = Life''.
    Those of us who are lucky enough to go home each night to a safe 
home we can afford may not think about it much, but it's a simple 
truth.
    Where we live matters. It determines so much about our lives, and 
our children's lives.
    I look forward to hearing from our witnesses today about how we can 
strengthen our homes and our neighborhoods with investments and 
protections that will make it easier for people to find safe, decent, 
affordable homes, and how we can give local leaders like Ms. Martin and 
Mr. Waller the tools they need to improve the homes of all families in 
Cleveland and Atlanta and across the country.
                                 ______
                                 
            PREPARED STATEMENT OF SENATOR PATRICK J. TOOMEY
    Thank you, Mr. Chairman. And welcome to our witnesses.
    In October, this Committee held a hearing criticizing people who 
invest in--and even build--rental housing. It looks like that's again 
the plan for today's hearing. And why is that?
    This morning inflation came in at 7.5 percent, the fastest pace in 
nearly 40 years.
    Housing costs are skyrocketing even faster. Rents increased around 
12 percent in 2021. Home prices jumped an astounding 17 percent.
    Whether you're a renter or a homebuyer, housing is taking up more 
and more of your paycheck, with inflation quickly eroding the rest. 
Wages are rising, but inflation is increasing faster. And that means 
workers are falling farther and farther behind.
    This is a direct result of the Administration's massive 
overspending. The Administration is desperate for someone else to 
blame. But there's nothing wrong with people renting homes instead of, 
or before, becoming homeowners. And there's also nothing wrong with 
investors--whether institutions or individuals--putting their own money 
to work to meet the needs of these renters.
    This is a simple issue of supply and demand. Institutional 
investors are the ones with the deepest pockets, the ones with the most 
capital available to invest in building new housing stock. Just imagine 
how expensive housing would be if some Democrats got their wish and 
most institutional investors were driven out of the housing market.
    Instead of blaming those who actually build housing stock, 
Democrats should take a look at their own role in creating this 
disaster. Housing is expensive and getting more expensive in part 
because this Administration has doubled down on 50 years of failed big 
Government housing policies.
    Its illegal eviction moratorium deterred landlords from investing 
in new housing stock and likely contributed to rent increases. Its 
March 2021 wasteful $1.9 trillion spending bill included almost $22 
billion in rental assistance even though $25 billion in rental 
assistance Congress provided in 2020 was not close to spent. Its 
reckless tax-and-spend Build Back Better plan seeks another $35 billion 
in rental and downpayment subsidies that would further increase the 
demand for housing.
    It has broken from decades of bipartisan efforts to reform the 
failed GSE model that now subsidizes the purchase of even $1 million 
homes. It has pushed the GSEs to take on more loans to risky borrowers.
    Today, we will hear from two witnesses--Tobias Peter and Joel 
Griffith--about the negative effects of these failed policies. They 
will testify to the role of monetary policy in contributing to rapid 
house price inflation. They will testify to the increase in risky 
mortgage lending at the GSEs. Their testimony also will make clear that 
we need a different direction.
    To improve housing affordability for all Americans--whether renters 
or owners--we should pursue reforms that leverage the power of free 
enterprise to increase housing supply and make markets more 
competitive. To that end, we need to scale back the role of Government 
and increase the role of private capital.
    We need to phase-out demand-side subsidies that just drive 
increases in house prices and rents. We need to end the failed GSE 
model that fosters excessive risk taking and risks taxpayer bailouts. 
And we need to end the GSE conservatorships that confer on the 
Government far-reaching power to replace market forces with executive 
fiat.
    The state of the housing market affirms the urgency of reform. The 
housing market is cyclical. It's a question of when--not if--there will 
be a housing downturn.
    The housing finance system is not prepared. The system is still 
dominated by the very same GSEs that did so much to cause the crisis. 
The $7 trillion behemoths actually have an even larger market share 
than they had before the crisis, and they still remain ``too big to 
fail.''
    Just as before the financial crisis, these flaws in the system 
continue to encourage excessive risk taking, risk future taxpayer 
bailouts, undermine market forces, and threaten financial stability. 
They also do little to make housing more affordable. Fifty years and 
many hundreds of billions of dollars in Federal housing assistance have 
had no meaningful impact on home ownership rates--64 percent in 1970 
compared to 65 percent in 2021.
    Last month, the Chairman reiterated the housing finance reform 
principles that he had released in 2019. His principles overlap 
considerably with the reform principles I've released. I look forward 
to continuing to work with the Chairman to develop consensus on this 
critical issue.
    Meanwhile, I hope the Administration will finally engage on reform. 
Treasury has still not met its obligation to deliver a reform plan to 
Congress--it's now 4 months overdue.
    Instead of shifting blame for its reckless mismanagement of the 
economy, the Administration should look to opportunities for bipartisan 
legislation--like housing finance reform--that relies on free 
enterprise--not Government--to make housing affordable for all 
Americans, whether they own or rent.
                                 ______
                                 
                PREPARED STATEMENT OF R. MICHAEL WALLER
    Executive Director, Georgia Appleseed Center for Law and Justice
                           February 10, 2022
    Good morning Chairman Brown, Ranking Member Toomey, and other 
Members of the Committee. My name is Michael Waller, and I serve as 
Executive Director of Georgia Appleseed Center for Law and Justice. 
Georgia Appleseed is a nonpartisan, nonprofit law center that advances 
justice and equity for all Georgia's children through law and policy 
reform, community engagement, and legal representation of children in 
foster care. We focus our efforts on removing barriers to justice 
experienced by Black and Brown children, children experiencing poverty, 
LGBTQ+ children, children with disabilities, and children in foster 
care. Our three priority areas of work are (1) keeping kids in class 
and out of the juvenile justice system by dismantling the school to 
prison pipeline; (2) increasing children's access to needed behavioral 
and academic supports; and (3) ensuring that low-income families have 
stable, healthy housing. Georgia Appleseed believes justice requires 
that every child has access to strong, nurturing schools and a healthy 
home.
    This morning, I will provide information on the impact of 
institutional landlords on the lives of low-income Georgia families and 
the housing market. Georgia Appleseed listens closely to the 
communities we serve and our community partners. I've come to 
Washington and this hearing today to amplify their voices and bring 
their stories to you. I will also relate some of the research and 
findings of Georgia universities and other institutions working to end 
Georgia's low-income housing crisis.
    I will begin by sharing the story of April, who lives in Albany, 
GA, in an apartment complex owned by an out-of-State institutional 
investor. April's struggles are the direct result of callous and 
abusive business practices that are common to some institutional 
landlords and place profit over the well-being of families. In this 
testimony, I will use the terms institutional landlord and 
institutional investor somewhat interchangeably--both meaning a 
corporate owner that is usually out-of-State, often owns multiple 
properties, is generally in the business of investing money (not 
managing rental homes), and with little-to-no direct contact with the 
communities where the properties are located and the families living in 
those properties.
    April's story highlights the harmful business practices of these 
institutional landlords and the impact on children, families, and 
communities. Georgia Appleseed and other community partners have 
identified a common business model among institutional investors in 
low-income housing--Institutional investors purchase properties; 
quickly drive up rents; impose unwarranted fees; refuse to provide 
upkeep or repairs; abuse eviction systems to coerce tenants; and hide 
from accountability. These practices do long-lasting harm to families 
and communities. Institutional investors concentrate these practices in 
Black and Brown communities and low-income communities, perpetuating 
historic and system injustices.
    April is a single mom to a teenage daughter and the primary 
caretaker for her mother, who has multiple sclerosis and needs a 
wheelchair. April rents their home, like most Albany residents and 
millions of other Georgians. When April signed her lease, every 
indication suggested that the handicapped accessible apartment was 
affordable, safe, and a healthy place to live. She was thrilled. Like 
many tenants, April's interaction with property owners was through a 
third-party management firm. An out-of-State company owned the 
apartments, a common occurrence across Georgia. In recent years, 
investors, like the LLC who owns April's complex, buy large swaths of 
property, including single-family rental properties, often in low-
income neighborhoods. In a recent study by the Planning + Property Lab 
at Georgia Tech, researchers found that by summer 2021, large corporate 
investor purchases in Gwinnett and Dekalb Counties (two of Georgia's 
most populous) covered 53 percent of single-family rentals, and 17 
percent of single-family home sales. These purchases were concentrated 
in non-White areas. \1\
---------------------------------------------------------------------------
     \1\ Raymond, Elora, ``Large Corporate Investors Purchase Thousands 
of Atlanta Single-Family Homes During the Pandemic''. ATLS, Emory 
Center for Digital Scholarship, 1/28/2022, https://
www.atlantastudies.org/2022/01/28/large-corporate-investors-purchase-
thousands-ofatlanta-single-family-homes-during-the-pandemic/.
---------------------------------------------------------------------------
    Soon after April moved in, serious health and safety problems 
appeared. Sewage regularly came out of the bathroom drains as well as 
from the ground outside, pooling in the yard. Bees came out of April's 
HVAC vents, and mold grew on the walls. Shootings and criminal activity 
occurred at the complex. One shooting left bullet holes in April's 
windows.
    Neither the property management firm nor owners made the needed 
repairs after April requested them. April complained to the local 
housing code enforcement office and local government. But these 
agencies claimed that they were powerless to force the landlord to 
address the housing conditions and make the property safe.
    April also sought the support of SOWEGA Rising, a local nonprofit. 
SOWEGA Rising and April spoke with around 50 residents, most of whom 
reported similar problems with their rented homes, including a child 
whose congenital heart condition was exacerbated by mold infestation 
and others who suffered from acute respiratory conditions. April's 
landlords continued to charge her rent and added hundreds of dollars in 
late fees. Her daughter experienced mental health issues directly 
related to the housing conditions and moved out of the apartment.
    April eventually reached out to local media and began organizing 
her neighbors to work together. She showed reporters the conditions in 
her apartment and told them how it impacted her family. In response, 
April's landlord mailed apartment residents a letter threatening 
eviction if they persisted in publicizing the complex's treatment of 
the families living there. The threat worked and residents ceased their 
campaign for better housing conditions. April continues to reside in 
her apartment but was recently served a notice that her landlord will 
not be renewing her lease. As of this testimony, April and her family 
have 30 days to vacate the property. In spite of the dangerous 
conditions and mistreatment, April and her family have stayed in the 
apartment. She feels that she has nowhere else to go. In Albany, there 
are very few affordable rental homes that can accommodate her mother's 
wheelchair.
    My testimony about April and the information I provide below draws 
upon Georgia Appleseed's conversations with tenants across Georgia and 
information from our nonprofit organizations that advocate for low-
income families. In addition to SOWEGA Rising, Atlanta Legal Aid 
Society, Georgia Legal Services Program, Atlanta Volunteer Lawyers 
Foundation, GeorgiaACT, Africa's Children's Fund, and Hearts to Nourish 
Hope, among others, have shared information and tenant stories with us. 
April's experience is commonplace in Georgia and likely to become more 
so as long as institutional investors continue to purchase rental 
properties and emphasize short-term profit over family and community 
well-being.
    Here is what we have found.
    Institutional landlords often seek profit through ever-increasing 
rents and abusive or predatory fees. In Georgia, large corporate 
investors are particularly known for instituting aggressive year-on-
year rent increases, making housing increasingly unaffordable for 
families and reducing alternative housing options. A Lending Tree 
survey found the average monthly cost of a one-bedroom apartment in 
Georgia went up more than 20 percent in 2021. \2\
---------------------------------------------------------------------------
     \2\ Cohen, Raime, ``The Cost of Rent Is Skyrocketing in Georgia, 
Putting a Squeeze on Tenants''. 12/27/21. www.wmaz.com.
---------------------------------------------------------------------------
    These investors also seek to make a profit by increasing tenant 
fees, including up-front fees, recurring fees, and hidden fees. 
Community partners reported to Georgia Appleseed that tenants must pay 
one-time activity fees, pest control fees, utility service fees, a 
renter's insurance fee/penalty, valet trash fees, package locker fees, 
common area electric fees, amenity fees, property management fees, 
month-to-month penalties, upfront first and last months' rent, safety 
deposits equal to one month rent, pet deposits, and application fees, 
and early termination fees triple the amount of a month's rent.
    An Atlanta Legal Aid attorney reported an example of a typical fee-
for-profit scheme: my client's ``rent'' is $1,373, according to her 
lease. But with all the fees (late charges, month-to-month fees, 
eviction fees, amenities, utilities), she was being charged $2,157 per 
month (almost 60 percent more!) after falling behind during the 
pandemic.
    Other Atlanta Legal Aid attorneys report seeing eviction fees 
written into the lease that are often four times the cost to file an 
eviction, and large daily accruing late fees in violation of Georgia 
law.
    Institutional landlords increase their profits and reduce costs by 
refusing to perform needed repairs, basic maintenance, security, or 
needed health and safety measures. Investment firms that own rental 
properties can be almost completely unidentifiable to tenants and 
community Governments. Out-of-State shell companies make it impossible 
to hold owners accountable for repairs (or even the demolition of 
abandoned properties). Renting families and communities must cover the 
costs to individual health, wealth, and safety (asthma and other 
respiratory problems, physical injuries, anxiety, depression, criminal 
activity, etc.) as well as the negative community economic, 
educational, and public safety impacts.
    Tenants across Georgia report illness and injury from substandard 
living conditions in homes owned by institutional landlords. For 
example, Georgia Appleseed spoke with a mobile home tenant--about his 
out-of-State landlord in Carroll County, Georgia. The landlord refused 
to repair leaks in the home's roof. The leaks caused the floor to rot, 
and the tenant's child fell through the floor, injuring her leg. Even 
after the injury, the landlord did not make repairs. Instead, the 
landlord moved to evict the family (after 7 years of renting) when the 
child's father was laid off from work as the COVID-19 pandemic closed 
his workplace. In a mobile home next door, the same landlord refused to 
fix electrical problems. That tenant had to get his electricity via an 
extension cord from a neighbor's mobile home. In Columbus, Georgia a 
malfunctioning air conditioning system caused the death of a man when 
temperatures in his room hit one hundred degrees. Local community 
leaders spent years trying unsuccessfully to hold the owners (an out-
of-State corporate landlord with properties in several other States) 
accountable. In Clayton County, a tenant reported to Africa's 
Children's Fund that she was unable to cook food in her home because 
the landlord refused to provide an operable stove. These are just a few 
of the stories that Georgia's tenant advocates hear every day.
    Renting families and communities confront numerous barriers to 
holding institutional landlords accountable for housing conditions. One 
of the most significant and confounding is that it is often practically 
impossible to determine who owns the property. Corporate shells and 
multiple layers of corporate ownership make it difficult for tenants to 
speak to anyone with authority when there is a problem. Tenant 
advocates and communities can find no person or entity to hold 
responsible for violations of leases, laws, or ordinances.
    A lack of continuity in ownership and transparency also make it 
easy for landlords to avoid legal liability. In one case handled by 
Atlanta Legal Aid Society, advocates spent 2 years trying to collect a 
judgment against the landlord. Though the tenant could not collect the 
judgment amount, the landlord continued to collect rent from hundreds 
of tenants over the same 2-year period.
    Atlanta Legal Aid lawyers and a pro bono attorney representing 
multiple tenants challenging illegal and dangerous housing conditions 
report a related, and equally confounding problem--corporate ownership 
changes quickly and often.
    Institutional landlords are well-positioned to abuse Georgia's 
eviction and housing safety laws and ordinances. Georgia's housing laws 
are notoriously landlord friendly. Evictions are inexpensive in 
Georgia. The filing cost for an eviction is typically around 75 
dollars.
    Georgia's over-burdened eviction courts have court procedures and 
practices that prioritize the efficient disposition of evictions 
instead of preserving tenancies and homes. In eviction court on any 
given day, a single landlord attorney may represent many different 
landlords in hundreds of eviction cases, saving attorney fees. If a 
tenant successfully files an answer to an eviction action and appears 
in court at the appointed time (often having to take off work, find 
childcare, arrange transportation, etc.), courts will generally grant 
the landlord's attorney a new trial date to present evidence. In most 
cases, however, tenants are unable to file correctly an answer to the 
lawsuit and they lose their case automatically. Tenants are generally 
on their own to litigate their cases and navigate complex landlord-
tenant law. There are relatively few attorneys available for low-income 
tenants--they are not provided for tenants by communities or courts.
    In terms of housing conditions and safety, the State's housing 
safety laws provide spotty protection. Indeed, State laws preempt local 
communities from enacting ordinances and programs that would create 
registries of rental properties, require inspections, or investigate 
housing conditions complaints without independent probable cause. \3\
---------------------------------------------------------------------------
     \3\ O.C.G.A. 36-74-30 (2010).
---------------------------------------------------------------------------
    While all landlords benefit from the pro-landlord orientation of 
State laws, institutional landlords often abuse the eviction system and 
safety laws to a greater degree than other landlords. A 2017 study 
published by the Federal Reserve Bank of Atlanta found that corporate 
landlords, especially large institutional investors, were far likelier 
than other owners to evict their tenants. \4\
---------------------------------------------------------------------------
     \4\ Raymond, Elora; Duckworth, Richard; Miller, Benjamin; Lucas, 
Michael; Pokharel, Shiraj, ``Corporate Landlords, Institutional 
Investors, and Displacement: Eviction Rates in Single Family Rentals''. 
FRB Atlanta Community and Economic Development Discussion Paper, 2/22/
2018, Paper No. 2016-4.
---------------------------------------------------------------------------
    Other research in Atlanta suggests that such landlords are also 
more likely to use threats of eviction and serial court filings as a 
routine business practice. \5\ In the final quarter of 2021, corporate 
landlords filed 76 percent of all evictions in a five-county sample. 
\6\ Landlords (and the property management firms they employ) favor 
Georgia evictions because the process is so quick. Evictions can happen 
very quickly, in 3 weeks when the tenant files an answer and a the 
court holds a hearing. In an eviction proceeding where the tenant fails 
to file an Answer within 7 days, the process moves at break-neck speed. 
A default Order is granted, and a Writ of Possession is issued 
immediately. Tenants and their families have little or no time to find 
rent assistance or legal advice.
---------------------------------------------------------------------------
     \5\ Immergluck, Dan; Ernsthausen, Jeff; Earl, Stephanie, and 
Powell, Allison, ``Evictions, Large Owners, and Serial Filings: 
Findings From Atlanta''. Housing Studies, 7/14/2019, pp. 923-924.
     \6\ The five Counties studied were Fulton, Gwinnett, DeKalb, 
Clayton, and Chatham. Chang, Melissa, ``Record Acquisitions and High 
Evictions by Corporate Landlords in 2021 Draw Scrutiny From Congress''. 
Private Equity Stakeholder Project, 1/31/2022. www.pestakeholder.org.
---------------------------------------------------------------------------
    In terms of the enforcement of local housing safety codes, local 
housing code enforcement offices lack capacity and are chronically 
understaffed. Even when housing code enforcement officers have capacity 
to pursue investigations, local custom and State law tend to favor 
institutional landlords. In many areas, housing code enforcement 
offices lack the resources to investigate alleged violations if a 
tenant is behind on rent, or a landlord has filed an eviction. 
Moreover, Georgia law preempts local communities from registering and 
inspecting properties and prohibits inspections without probable cause. 
\7\
---------------------------------------------------------------------------
     \7\ O.C.G.A. 36-74-30 (2010) (``[n]o local government is 
authorized to perform investigations or inspections of residential 
rental property unless there is probable cause . . . in no event may a 
local government require the registration of residential rental 
property.'')
---------------------------------------------------------------------------
    Profit-mongering at the expense of family and community well-being 
is not ``investment in affordable housing.'' Families and communities 
are left to repair the damage done when these absentee landlords have 
extracted as much money as possible from the families and communities.
    The impact goes beyond just making families and communities poorer. 
Unsafe, unstable housing has long-term and devastating impacts on the 
physical and mental health of children and families, threaten 
educational achievement and employment potential, increase criminal 
justice system involvement, and reduce overall community wealth and 
well-being.
    Federal policy can support needed reforms that would protect 
families from abuses. I applaud this Committee's study of the impact of 
institutional landlords on affordable housing availability, their 
predatory practices, and the unacceptable housing conditions they are 
responsible for. While there are many reforms to Georgia law and policy 
that would benefit renting families, we support Federal Government 
fiscal and monetary policy reform that discourages abusive investors.
    Moreover, local policy makers and advocates could make better 
policy decisions if they had more information about institutional 
landlords. Federal Government could help by collecting and sharing 
information about these investors with the public, States, and local 
government. In addition, local tenants and landlords have faced 
tremendous financial pressures from economic havoc caused by the COVID-
19 pandemic, and continued support of Emergency Rental Assistance 
Program (ERA) efforts in Georgia will help families stay in their homes 
and provide local landlords with much needed funds. In particular, we 
have found that State and local government need additional (and public) 
guidance on best practices from the Department of Treasury, 
particularly concerning the types of identification and documents and 
attestations that governments should and should not collect from ERA 
applicants.
    Chairman Brown, Ranking Member Toomey, and Members of the 
Committee, thank you again for the opportunity to share the experiences 
of my fellow Georgians with you today. I look forward to answering any 
questions you might have.
                                 ______
                                 
                  PREPARED STATEMENT OF ANETA MOLENDA
                                 Tenant
                           February 10, 2022
    Good morning Chairman and Members of the Committee. I appreciate 
the opportunity to speak with you all today. My name is Aneta Molenda 
and I'm a New York tenant in a building owned by private equity.
    I've lived in Brooklyn, New York, for 6 years. I moved into my 
current apartment last winter in the middle of the pandemic. I signed a 
1-year lease for $2,550 per month. It was pricey for a small apartment 
measuring just over 400 square feet, but not out of the ordinary for 
Brooklyn.
    In just a few months, my building was bought by a private equity 
firm called Greenbrook Partners through a joint venture with the 
Carlyle Group, the third largest private equity firm in the world with 
$276 billion dollars in assets. Just last week, Carlyle announced that 
real estate drove a large jump in their quarterly earnings and that the 
earnings they will return to shareholders is at a record high. \1\
---------------------------------------------------------------------------
     \1\ https://www.wsj.com/articles/carlyles-fourth-quarter-earnings-
jump-11643886001
---------------------------------------------------------------------------
    When my lease expired in November, my new landlord told me they 
needed to reevaluate my rent based on the market bouncing back. They 
suggested nearly a 50 percent rent increase from what I had been 
paying. That's right--that's a 50 percent increase which would put my 
rent at about $3,800 per month. This was happening while Omicron was 
surging. I was shocked.
    I tried to negotiate. I sent them listings of other apartments in 
my neighborhood, some even on my block, to show that the increase was 
unreasonable for what was available in the area. Eventually, they were 
willing to come down on the rent but when they sent me the lease 
renewal there was a section that gave the landlord the right to 
terminate my lease at any point and double my rent to more than five 
thousand dollars with only 30 days notice. It was clear they wanted me 
out.
    I told them I was willing to sign the lease renewal with a more 
reasonable rent increase if they removed the section that could double 
my rent on such short notice. They refused. I've continued to pay my 
rent on time, every month, but the landlord has stopped cashing my 
checks. I suspect they are getting ready to start eviction proceedings 
against me.
    The eviction moratorium in New York ended last month. My sense of 
security is gone. These private equity landlords count on people like 
me to be thrown out of our homes to maximize their profits.
    This is not an isolated incident. I immediately started talking to 
my neighbors and tenants in other buildings owned by the same landlord 
and noticed similar patterns: massive rent increases, evictions, 
hazardous violations and harassment, and confusing ownership structures 
that make it hard for tenants to know who truly owns our buildings.
    According to the New York City Department of Housing, Preservation, 
and Development (HPD), Greenbrook's portfolio has received 3,022 total 
violations--this is about an average of 1.7 open violations per 
residential unit. \2\
---------------------------------------------------------------------------
     \2\ https://whoownswhat.justfix.nyc/en/address/BROOKLYN/70/
PROSPECT%20PARK%20WEST/summary (February 8, 2022)
---------------------------------------------------------------------------
    My neighborhood of Bedford-Stuyvesant is considered to have the 
highest concentration of Black residents in the United States according 
to census data. In New York City, eviction rates in zip codes in which 
a majority of residents are people of color are three times as high as 
rates in zip codes that are predominately White. I'm not surprised that 
these predatory firms are targeting predominantly Black and Brown 
neighborhoods. Many of these companies go to pensions for capital to 
expand their portfolios--in some cases pricing out union members and 
the retirees they are acting on behalf of.
    Greenbrook Partners and the Carlyle Group are just two of the many 
predatory real estate firms that are fundamentally changing housing 
across the country. These companies treat housing as an investment 
vehicle rather than as shelter. But this is my home--and it serves the 
purpose of keeping me safe, warm, and out of the elements. This is a 
basic human right.
    In listening to the previous hearing on private equity in housing 
held by this Committee, I was struck that some senators argue that 
these hearings are misguided because large investment firms, including 
those in private equity, buy just 1 to 2 percent of single family homes 
sold nationally. But what about private equity's role in multifamily 
buildings like mine? They want us to believe that private equity is a 
tiny player in housing.
    It's just not true. According to the Financial Times, private 
equity has just had its busiest 6 months in the last 40 years, and the 
industry shows no signs of stopping its expansion into our homes. In 
just 2 years, my landlord Greenbrook Partners purchased at least 110 
properties in Brooklyn. The vast majority were purchased during COVID-
19.
    They've done this before. In a 2019 report on private equity 
companies, we learned of a similar business model used on mobile homes: 
buying parks, jacking up rents and fees, and counting on it being too 
expensive for residents to move.
    They are perfecting this extractive business model and are taking 
it to new extremes. These firms promise their investors returns while 
obscuring the devastating consequences, leaving tenants like me and my 
neighbors in impossible situations. They buy up homes in New York and 
all across the country that would have otherwise been affordable.
    As our communities faced the trauma and grief from losing loved 
ones, losing jobs, and following guidelines to stay home to mitigate 
the spread of the virus, these predatory firms made it impossible to 
feel any sense of safety in our homes. We saw our communities come 
together to support each other; health care workers working around the 
clock, people bringing their neighbors groceries. We looked out for one 
another. Meanwhile, Wall Street took the opportunity to rake in 
unfathomable profits.
    This tangled web of high finance is incredibly difficult to 
navigate for tenants like myself. This ruthless business model is 
entirely reliant on disaster capitalism and systematic displacement of 
families. Our basic human right to housing is being exploited to make 
these firms slightly wealthier.
    As a tenant directly impacted by these predatory practices, I am 
asking that you consider establishing comprehensive, nationwide tenant 
protections like rent control, prohibition on excessive fines and fees, 
just cause eviction protections, and a tenant right to counsel. This 
would end unreasonable rent increases, unfair fees, and landlord 
refusal to renew leases without a reasonable justification. We need to 
give tenants a fair shot at defending ourselves against evictions and 
unsafe living conditions.
    The housing market is rapidly consolidating. As the largest 
landlords, builders, and investors increasingly partner with one 
another, people like myself and my neighbors all across the U.S. will 
continue to feel the consequences. But I can promise we will continue 
to grow a strong tenants movement to demand a more just housing system. 
The Members of this Committee have a choice to make: you can either 
support housing as a human right or allow investors to use our homes as 
investment vehicles to generate endless profits.
                                 ______
                                 
                   PREPARED STATEMENT OF TOBIAS PETER
       Research Fellow and Assistant Director, AEI Housing Center
                           February 10, 2022

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                 ______
                                 
                  PREPARED STATEMENT OF JOEL GRIFFITH
   Research Fellow, Institute for Economic Freedom and Opportunity, 
                          Heritage Foundation
                           February 10, 2022
    Chair Brown, Ranking Member Toomey, Members of the Senate Committee 
on Banking, Housing, and Urban Affairs.
    My name is Joel Griffith. I am a Research Fellow in Financial 
Regulations at The Heritage Foundation. The views I express in this 
testimony are my own and should not be construed as representing any 
official position of The Heritage Foundation.
What Is Happening With Housing Prices?
    Echoing the last housing bubble, Government policies are once again 
artificially driving up housing prices. Spanning the pandemic era from 
February 2020 through September 2021, home prices soared 27.1 percent. 
\1\ Over the past 12 months, home prices are up 19.5 percent, dwarfing 
the prior 12 months jump of 7.1 percent, while residential property 
prices in the United States adjusted for inflation are now just 2.2 
percent below the all-time record levels of the 2006 bubble. \2\ Home 
prices are increasing far greater than family income growth is. The 
home-price-to-median-income ratio now stands at more than 7.2 
(eclipsing the 7.03 peak in late 2005), significantly higher than the 
levels of well under 5.0 experienced from 1980 to 2000. \3\
---------------------------------------------------------------------------
     \1\ Federal Reserve Bank of St. Louis, ``S&P Dow Jones Indices 
LLC, S&P/Case-Shiller U.S. National Home Price Index [CSUSHPINSA]'', 
https://fred.stlouisfed.org/series/CSUSHPINSA (accessed December 13, 
2021). The Case-Shiller Home Price Index tracks home prices given a 
constant level of quality. See S&P Dow Jones Indices, ``Real Estate: 
S&P CoreLogic Case-Shiller Home Price Indices'', https://
us.spindices.com/index-family/real-estate/sp-corelogic-case-shiller 
(accessed January 10, 2022).
     \2\ Federal Reserve Bank of St. Louis, ``Real Residential Property 
Prices for United States Data (QUSR628BIS)'', https://
fred.stlouisfed.org (accessed December 14, 2021).
     \3\ Longtermtrends, ``Home Price to Income Ratio (U.S. and 
U.K.)'', Home Price to Median Household Income Ratio (U.S.) Data, 1980 
to 2005, https://www.longtermtrends.net/home-price-median-annual-
income-ratio/ (accessed December 14, 2021).
---------------------------------------------------------------------------
    Home Mortgages. The decline in long-term interest rates has induced 
and enabled borrowers to take out bigger loans, feeding the rise in 
prices. \4\ The impact of the surge in home prices is now eclipsing the 
cost savings of lower interest rates. The mortgage-payment-to-income 
ratio hit 32.7 percent in September 2021--the highest level since 2008. 
\5\ A return to 6.6 percent 30-year fixed mortgage rates (still below 
the historical average) from current rates of near 3.0 percent would 
increase a mortgage payment for a new borrower by 50 percent even with 
no increase in home prices. \6\
---------------------------------------------------------------------------
     \4\ Interest rates for 30-year fixed mortgages fell from 3.5 
percent prepandemic to just 2.65 percent at the beginning of 2021 and 
now hover near 3.0 percent. Freddie Mac, ``30-Year Fixed Rate Mortgage 
Average in the United States [MORTGAGE30US]'', retrieved from Federal 
Reserve Bank of St. Louis, https://fred.stlouisfed.org/series/
MORTGAGE30US (accessed December 15, 2021).
     \5\ Federal Reserve Bank of Atlanta, ``Metro Area Home Ownership 
Affordability Monitor Index'', September 2021, https://
www.atlantafed.org/center-for-housing-and-policy/data-and-tools/home-
ownership-affordability-monitor.aspx (accessed December 13, 2021).
     \6\ Author calculations using Bankrate, ``Amortization Schedule 
Calculator'', https://www.bankrate.com/calculators/mortgages/
amortization-calculator.aspx (accessed December 10, 2021).
---------------------------------------------------------------------------
    Rental Prices. Median apartment rental costs have jumped more than 
15 percent this past year. \7\ Because leases often roll over annually, 
the Consumer Price Index (CPI) data from the Bureau of Labor Statistics 
(BLS) does not yet fully reflect this surge. Numerous cities 
experienced rent increases well in excess of 30 percent. For the past 
20 years, rental prices have increased at a greater pace than inflation 
has. Nationally, rental prices increased 38 percent in just the past 
decade. \8\ Some urban areas have experienced far steeper jumps in 
rent. For instance, rental prices in the Seattle metro area jumped 58 
percent over the past decade. \9\ And rents in the largely rent-
controlled San Francisco metro area soared 51 percent--both nearly 
triple the overall rate of inflation. \10\
---------------------------------------------------------------------------
     \7\ Chris Salviati, et al., ``December Apartment List National 
Rent Report'', Apartment List, November 29, 2021, https://
www.apartmentlist.com/research/national-rent-data (accessed December 
14, 2021).
     \8\ Federal Reserve Bank of St. Louis, ``Consumer Price Index for 
All Urban Consumers: Rent of Primary Residence in U.S. City Average 
Data (CUSR0000SEHA)'', https://fred.stlouisfed.org/series/CUSR0000SEHA 
(accessed December 13, 2021).
     \9\ Federal Reserve Bank of St. Louis, ``Consumer Price Index for 
All Urban Consumers: Rent of Primary Residence in San Francisco-
Oakland-Hayward, CA (CBSA) Data (CUURA422SEHA)'', https://
fred.stlouisfed.org/series/CUURA422SEHA (accessed December 13, 2021).
     \10\ Ibid.
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Why Are Housing Prices Rising Faster Than Usual?
The Scapegoat: Institutional Single Family Residence (SFR) Investors
    ``Institutional owners'' of rental properties are being scapegoated 
for the rise in home prices and rental costs. But institutional 
investors own fewer than 2 in 1,000 (0.2 percent) of all single-family 
homes (SFR) and just 1 percent of all rental homes. \11\ In fact, not 
in single State do institutional investors own more than 1 in 100 of 
all available housing in the State. Despite the intense media focus, 
institutional investors purchased only 1 in 1,000 (0.1 percent) of 
homes sold in the United States in 2020--a smaller share than in 2006 
just prior to the prior housing market peak. \12\
---------------------------------------------------------------------------
     \11\ National Rental Home Council, Institutional Owners of Single-
Family Rental Homes.
     \12\ National Rental Home Council, Institutional Owners of Single-
Family Rental Homes.
---------------------------------------------------------------------------
    In fact, of the 10 States with no institutional SFR ownership, 7 
rank in the top 10 of recent home price appreciation--with Idaho in the 
lead at 24 percent. \13\
---------------------------------------------------------------------------
     \13\ National Rental Home Council, Institutional Owners of Single-
Family Rental Homes.
---------------------------------------------------------------------------
    The bottom line is that institutional SFR ownership is not 
measurably impacting local home price dynamics to the upside. In fact, 
the opposite may be occurring. RealtyTrac reports, ``On a national 
basis, investors across the country paid an average 29.4 percent less 
than homeowners in Q2 2021.'' \14\
---------------------------------------------------------------------------
     \14\ RealtyTrac Investor Purchase Report, Fall 2021. https://
www.realtytrac.com/blog/realtytrac-investor-purchase-report-fall-2021.
---------------------------------------------------------------------------
The Reality: Primary Drivers of Rising Prices Nationally Are Government 
        Subsidies, the Federal Reserve, and Local Regulations
    Government-sponsored enterprises (GSEs)--namely, Fannie Mae and 
Freddie Mac--continue to dominate the mortgage market. Investors who 
purchased Fannie Mae and Freddie Mac bonds and mortgage-backed 
securities (MBSs) ultimately provide funds for people to finance homes, 
and these bondholders and MBS investors enjoy implicit Government 
backing. Investors in MBSs receive cash flows from interest and 
principal payments on the pool of mortgages comprising the MBSs. With 
the GSEs under continued conservatorship, it is common knowledge that 
taxpayers will make good on promised cash flows if either Fannie or 
Freddie were to ever fail again financially. The moral hazard created 
by Government backing leads to riskier lending, because it allows 
investors to ignore the true financial risks of those underlying 
mortgages and securities. \15\
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     \15\ ``The unpriced implicit guarantee, which reduced interest 
rates for mortgage borrowers, helped cause more of the economy's 
capital to be invested in housing than might otherwise have been the 
case.'' Congressional Budget Office, Transitioning to Alternative 
Structures for Housing Finance: An Update, August 2018, p. 7, https://
www.cbo.gov/system/files?file=2018-08/54218-GSEupdate.pdf (accessed 
January 6, 2022).
---------------------------------------------------------------------------
The Federal Reserve Continues To Purchase MBSs
    Since March 2020, the Federal Reserve has driven down mortgage 
interest rates and fueled a rise in housing costs by purchasing $1.2 
trillion of MBSs from Fannie Mae, Freddie Mac, and Ginnie Mae. The $2.6 
trillion now owned by the Federal Reserve is 88 percent higher than the 
levels of March 2020. \16\
---------------------------------------------------------------------------
     \16\ Board of Governors of the Federal Reserve System (U.S.), 
``Assets: Securities Held Outright: Mortgage-Backed Securities: 
Wednesday Level [WSHOMCB]'', retrieved from Federal Reserve Bank of St. 
Louis, https://fred.stlouisfed.org/series/WSHOMCB, December 14, 2021.
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    Proponents of such intervention often argue that it is necessary to 
increase the rate of home ownership. However, robust home ownership was 
established in the United States long before the Government became 
heavily involved in the housing market. From 1949 to 1968 (the year 
that Fannie Mae was allowed to purchase nongovernment-insured 
mortgages), Government-backed mortgages never accounted for more than 6 
percent of the market in any given year. \17\ Yet the home ownership 
rate was 64 percent in 1968, virtually identical to what it is now.
---------------------------------------------------------------------------
     \17\ Norbert J. Michel and John Ligon, ``GSE Reform: The Economic 
Effects of Eliminating a Government Guarantee in Housing Finance'', 
Heritage Foundation Backgrounder No. 2877, February 7, 2014, p. 6, 
https://www.heritage.org/housing/report/gse-reform-the-economic-
effects-eliminating-government-guarantee-housing-finance.
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    On the local level, stringent zoning restrictions, density 
limitations, and aggressive environmental regulation limit the supply 
of housing while increasing the costs of construction. Regulations 
often account for more than 30 percent of the costs of rental housing 
construction. \18\ Rent control further compounds the problem by 
deterring new construction, giving landlords fewer incentives to spend 
on upkeep and remodeling, and reducing the future supply of housing.
---------------------------------------------------------------------------
     \18\ Paul Emrath and Caitlan Walter, ``Regulation: Over 30 Percent 
of the Cost of a Multifamily Development'', National Association of 
Home Builders and National Multifamily Housing Council, June 2018, 
https://www.nmhc.org/contentassets/60365effa073432a8a168619e0f30895/
nmhc-nahb-cost-of-regulations.pdf (accessed December 15, 2021).
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    Congressional inaction has expanded the Government's role in the 
wake of the prior financial crisis. Government subsidies have increased 
borrowing and demand for housing without increasing supply, leading 
once again to higher home prices and increased taxpayer risk. Subsidies 
and Government guarantees of MBSs will perpetuate inflated prices, 
deprive other sectors of needed financial resources, and place the 
burden of catastrophic risk on the Federal taxpayer. It is difficult to 
argue that these policies improve the status quo for anyone other than 
the lenders, securitizers, and MBS investors who will gain additional 
Federal protections. Optimally, Congress would gradually remove Federal 
mortgage guarantees and subsidies and narrow the scope of business for 
the GSEs.
Policy Recommendations To Address Housing Prices
    Policymakers should:

    Sever the special status given to the GSEs.

    This approach would communicate to the market that this implicit 
guarantee is terminated and allow MBS prices to more fully reflect the 
risk involved. Continuation of these guarantees leads to excessive 
risky debt. Private investors, not Federal taxpayers, should bear the 
financial risks.

    Raise Fannie Mae and Freddie Mac mortgage guarantee fees 
        immediately while the GSEs remain in conservatorship.

    This fee is paid by the lender seeking the Federal guarantee, 
although it is effectively passed along to the borrower in the form of 
a higher interest rate. Raising the fees on defaults would make the 
rates available on nongovernment-guaranteed mortgage loans more 
competitive, scaling back the role of the GSEs. Some potential 
borrowers may choose to forgo home ownership for the time being, 
alleviating some of the artificially induced housing demand.

    Eliminate the geographic price differentials for conforming 
        loan limits for loans purchased by the GSEs.

    Limits in high-cost areas are up to 50 percent higher than the 
baseline. In 2022, the baseline conforming loan limit will jump a 
record 18 percent from $548,250 for a single-family residence to 
$647,200. In high-cost areas, the maximum will rise from $822,375 to 
$970,800. \19\ The GSEs should also gradually reduce the baseline 
conforming loan limits.
---------------------------------------------------------------------------
     \19\ Federal Housing Finance Authority, ``Fannie Mae and Freddie 
Mac Conforming Loan Limits for Mortgages Acquired in Calendar Year 2022 
and Originated After 10/1/2011 or Before 7/1/2007'', November 2021, 
https://www.fhfa.gov/DataTools/Downloads/Documents/Conforming-Loan-
Limits/FullCountyLoanLimitList2022-HERA-BASED-FINAL-FLAT.pdf (accessed 
December 15, 2021).

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    Narrow the GSEs' focus to financing primary home purchases.

    Approximately 90 percent of GSE volume is currently devoted to 
refinances, investor purchases, lower loan-to-value loans, and pricier 
homes purchased by higher-income earners. This support should be 
eliminated. In particular, subsidizing cash-out refinances \20\ impedes 
middle-class families from accumulating net worth.
---------------------------------------------------------------------------
     \20\ To learn more about cash-out refinancing, see, for example, 
Zach Wichter, ``Cash-Out Mortgage Refinancing: How It Works and When 
It's the Right Option'', Bankrate, November 11, 2021, https://
www.bankrate.com/mortgages/cash-out-refinancing/ (accessed January 6, 
2022).

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    Reject eviction moratoria.

    Initially, the decrease in cash flow from an eviction moratorium 
affects the landlord only. However, landlords will increase rents to 
mitigate the heightened risk of future moratoria and to recoup revenue 
already lost. Prospective renters may find themselves subject to 
increased security deposits and tighter credit checks. Ultimately, 
fewer affordable housing units may be constructed.

    Consider the impact of local regulations on housing 
        affordability.

    By reforming land-use laws--in effect, increasing supply--rental 
prices could plateau or even decline. Likewise, repealing rent control 
would incentivize construction of additional housing units.

    Discontinue State and local rent control.

    Rental costs reflect the supply limitations and costs imposed by 
stringent zoning restrictions, density limitations, and aggressive 
environmental regulation. Capping rent increases does nothing to make 
housing less costly to build. But it will have the perverse effect of 
shrinking future supply by deterring new construction and incentivizing 
landlords to spend less money on upkeep and remodeling.
    With rents capped, demand likely will increase further, but with 
supply unable to keep up with demand, housing shortages will likely 
continue.
    Criticism of rent control as bad economics is hardly limited to 
landlords or to free-market conservatives. As far back as 1965, Gunnar 
Myrdal, one of the visionaries behind Sweden's welfare State, warned, 
``Rent control has in certain Western countries constituted, maybe, the 
worst example of poor planning by Governments lacking courage and 
vision.''
    Economics professor Assar Lindbeck, Myrdal's fellow Swede, 
cautioned in 1972, ``In many cases rent control appears to be the most 
efficient technique presently known to destroy a city--except for 
bombing.''
    In 1989, communists running Vietnam linked the abject condition of 
Hanoi's housing directly to rent control. Then-Foreign Minister Nguyen 
Co Thach said, ``The Americans couldn't destroy Hanoi, but we have 
destroyed our city by very low rents. We realized it was stupid and 
that we must change policy.''
    Rent control may score cheap political points, rent control and 
handcuffing property managers does nothing to solve the affordable 
housing problem. Adding new controls will only force renters to live in 
more dilapidated conditions and preclude additional units from being 
built.

    Refrain from offering conforming loan amortization options 
        beyond the traditional 30-year repayment term.

    Fannie Mae and Freddie Mac extending the maximum amortization to 
480 months from the current 360 months will encourage riskier lending 
and incentivize borrowers to overleverage their finances. Although the 
monthly payment may be lower, the borrower accrues substantially higher 
total interest payments. These extended amortization schedules result 
in upward price pressure as borrowers become more willing, and more 
able, to borrow more money.

    Terminate the Federal Reserve's monthly purchases of MBSs 
        and begin diminishing the size of its MBS portfolio.

    Artificially increasing the amount of capital available for the 
residential home mortgage market and distorting interest rates is 
exacerbating home unaffordability.
Conclusion
    Optimally, Congress will work to make housing more affordable by 
gradually removing Federal guarantees and subsidies and eliminating 
Federal mandates. The economy will further benefit as the artificially 
large flow of capital to the housing market is allocated to other 
sectors. State and local governments share a responsibility to 
eliminate artificial barriers to housing affordability.
                                 ______
                                 
                   PREPARED STATEMENT OF SALLY MARTIN
       Director of Building and Housing, City of Cleveland, Ohio
                           February 10, 2022

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         RESPONSES TO WRITTEN QUESTIONS OF SENATOR REED
                     FROM R. MICHAEL WALLER

Q.1. How do local zoning rules and ``not in my backyard'' 
attitudes exacerbate the affordable housing crisis, 
particularly in urban settings?

A.1. Local zoning rules and ``NIMBY'' attitudes can decrease 
access to stable, healthy housing by restricting needed 
development in markets where there is an affordable housing 
shortage. Local zoning and ``NIMBYism'' that decreases 
affordable housing options disproportionately affect children 
and low-income families. The lack of affordable options causes 
some poor families to remain in sub-standard unstable housing 
conditions. One tenant told Appleseed that she had to stay in 
an apartment with an unaddressed rodent infestation because she 
did not earn enough money to move to another apartment complex 
in her community. Lack of affordable options lead other 
families into living ``doubled up'' with family members, 
residing in extended stay motels, seeking refuge in homeless 
shelters, and even the living on the streets.
    The effects of unsafe housing are far reaching. Poor 
housing conditions can cause serious physical health problems 
including increased rates of asthma and skin conditions like 
eczema. Children living in substandard conditions are more 
likely to experience hunger, deteriorated emotional health, and 
chronic absenteeism from school.
    Homelessness and housing instability also lead to high 
student mobility (moving in and out of schools). For a child, 
high school mobility can lead to lower school engagement, poor 
grades, and an increased risk of dropping out of school. 
Student mobility affects teachers and the other students in the 
class as well, because of disruptions in the classroom 
environment.

Q.2. What tax or financing advantages do institutional 
investors receive that give them incentives to buy property, 
but then fail to properly maintain or invest in the properties?

A.2. Georgia Appleseed has not extensively researched these 
incentives and we are not able to respond to this inquiry.

Q.3. Tenants living in buildings owned by institutional 
landlords seem to be evicted at high rates. What factors point 
to those evictions being the result of strategic business 
decisions made by institutional landlords, rather than mere 
coincidence?

A.3. Research conducted by our community partners (bolstered by 
my experience representing clients in eviction proceedings) 
demonstrate that institutional landlords pursue evictions as a 
strategy to coerce tenants into paying disputed or unfair fees, 
charges, and rent and withdrawing complaints about living 
conditions. A December 2017 Federal Reserve Bank of Atlanta 
discussion paper found that corporate landlords, especially 
large institutional investors, were far likelier than other 
owners to evict their tenants. In the final quarter of 2021, 
corporate landlords filed 76 percent of all evictions in a 
five-county sample.
    Georgia's eviction system has structural qualities that 
make it particularly useful for unscrupulous landlords to 
intimidate tenants. Evictions in Georgia are cheap to file, 
expedited in practice, and benefit all landlords, but 
particularly the institutional landlord. Attorneys that 
represent an institutional landlord in eviction proceedings can 
easily schedule dozens of hearings in one day. Continuances to 
benefit the landlord are generously granted by eviction courts 
forcing tenants to return on multiple occasions, possibly 
missing work and/or having to arrange for childcare. As a 
practical matter, there is no appeal for low-income tenants and 
legal services lack capacity to serve tenants in eviction 
proceedings.
                                ------                                


         RESPONSES TO WRITTEN QUESTIONS OF SENATOR REED
                       FROM ANETA MOLENDA

Q.1. Tenants living in buildings owned by institutional 
landlords seem to be evicted at high rates. What factors point 
to those evictions being the result of strategic business 
decisions made by institutional landlords, rather than mere 
coincidence?

A.1. Response not received in time for publication.
                                ------                                


         RESPONSES TO WRITTEN QUESTIONS OF SENATOR REED
                       FROM SALLY MARTIN

Q.1. What tax or financing advantages do institutional 
investors receive that give them incentives to buy property, 
but then fail to properly maintain or invest in the properties?

A.1. Response not received in time for publication.

Q.2. Tenants living in buildings owned by institutional 
landlords seem to be evicted at high rates. What factors point 
to those evictions being the result of strategic business 
decisions made by institutional landlords, rather than mere 
coincidence?

A.2. Response not received in time for publication.
              Additional Material Supplied for the Record
   LETTER SUBMITTED BY WESLEY EDMO, MSW, INDIGENOUS PEOPLES ADVOCACY 
                           DIRECTOR, MHACTION

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       STATEMENT SUBMITTED BY PRIVATE EQUITY STAKEHOLDER PROJECT

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          STATEMENT SUBMITTED BY CINDY NEWMAN, THE HIGHWOOD'S
          
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