In a classic federal government agency overreach, the twice-determined-as-unconstitutional CFPB has ignored history and the 10^th Amendment in order to weigh-in on an area of housing contracts reserved for the states and private contracts.

Contracts-for-deed, or land installment contracts, are common in many parts of the U.S., especially among the unbanked.  They are very common among the urban core and very rural residents.  In the early 20^th century this was the primary venue for many minorities, especially in the black community, to purchase a house as the federal government opposed minority housing financing – until the Supreme Court, which the CFPB ignores, put a stop to it repeatedly.

U.S. citizens would be far better served by a CFPB that performed actual reports and recommendations based upon state law to state-based consumer protection bureaus and legislatures rather than trying to subvert the 10^th amendment and take over private contracts for real estate in every state with one regulation – remember the recent Chevron Deference case?

As to the recommendation that the Truth in Lending Act (TILA) applies, it is interesting to note that CFPB relies on Dodd-Frank and the specifically the ‘systemic risk’ factor as a justification for application of TILA – especially when CFPB has already stated that individual buyers selling their OWN property do not constitute a systemic risk!

Finaly, the use of the term “balloon payment” loan as justification for and denigration of contract-for-deeds is highly misleading.  In fact, almost every commercial loan is a “balloon loan” in that the amortization is longer than the payment window.  For example, a property purchased with a 25-year amortization and a 5-year note – requires the creditor (bank) and debtor (purchaser) to revisit the loan in 5 years for a refinance or even a movement of the loan.  This is how Canada handles residential housing loans.  The denigration of this form of widely used loan speaks to the deceptive practice and effect of the CFPB on this effort.  Shameful.

Charles Tassell, COO, National REIA

Click here to read “CFPB Goes After Contract for Deed Agreements.”

The National Real Estate Investors Association (National REIA) is a 501(c)6 non-profit association that has been representing the real estate investing industry for 35 years.  With over 40,000 members and 120 local Chapters and affiliates, we are housing providers that help to rebuild communities, one house at a time.  We thank our industry partner Home Depot for their support.  To learn more visit www.nationalreia.org

However, perhaps of most concern to real estate investors were her remarks about housing:

“Harris also reiterated her stance on housing, saying she would take on corporate landlords and cap unfair rent increases. This seems to indicate that she is interested in moving forward with the Biden plan to cap the maximum annual rent increase for landlords who own more than 50 properties at 5%. Many housing advocates have come out against this policy. The National Association of Home Builders said it would worsen the current housing problem by discouraging the construction of more homes.”   – as reported by Yahoo!Finance

Stay tuned….

Click here to read the full story at Yahoo! Finance.

We’ve covered the disastrous effects of Rent Control for sometime now. This week various news outlets are reporting that President Joe Biden is proposing a 5% cap on rental increases, in effect implementing a de-facto rent control, nationwide.   According to the Rental Housing Journal, Biden’s plan will cap rent increases to 5% annually for landlords with more than 50 units but, they say, it will face stiff opposition in Congress.

In addition, The Washington Post says the measure would not only apply to landlords who own more than 50 units, which represents roughly half of all rental properties, but it wouldn’t cover units that have not yet been built.

The White House released a fact sheet on the proposal where they said “President Biden is taking action to make renting more affordable for millions of Americans.”

However, the WSJ summed up the proposal quite nicely in a lead editorial on July 17th:

“It’s hard to think of a worse idea than imposing rent control nationwide through the tax code. It would reduce investment in new supply and drive up rents in units not subject to government caps. Look at New York City where nearly half of units are “rent stabilized,” and the average one-bedroom apartment costs $4,300 a month.

As Mr. Biden’s re-election prospects grow more dire, his policy lurches to the left are becoming ever more radical.”

– The Wall Street Journal Editorial Board.

“The Biden Administration is exhibiting financial malfeasance by suggesting a distracting rent cap that would do nothing for rents, nothing for housing costs, and would only expand red-tape for governmental housing programs!”

“The housing supply has been strangled by red-tape and high interest rates.  Government-created problems will not be fixed by additional layers of bureaucracy.  In fact, as we have seen, economists have repeatedly stated that government control of housing prices destroys housing investment.  The U.S. housing market’s problems are widely varied and will require flexible, state-based housing responses.  National REIA members are ready to assist in private redevelopments and are critical to local success stories.  After all, we improve neighborhoods one home at a time.” 

– Said Charles Tassell, COO of National REIA.

Click here to read the full story at the Washington Post

Click here to read the full story at the Rental Housing Journal.

Click here to read the White House Fact sheet

Click here to read the WSJ editorial.

“This is an anti-squatting bill, so that somebody else can’t just walk in and say I now own your property, because you weren’t here last week” – State Representative Tony Bacala (R – Dist. 59)

Click here to read the full story at KALB.

“They enter your property, change the locks. You try to get them out, they then claim you leased it, the sheriff can’t make that decision at the house, so it becomes a civil matter where you have to take them to court. Well, it could literally take months,” said State Rep. Tim Rudd.

“This law will finally give property owners a summary process to remove an authorized person in possession of property ‘squatter’ where the squatter never had any legitimate right to the possession to occupancy of the property.”  Memphis Investors Group Vice President, Joe Kirkland.

Click here to read the full story at WTVC Chattanooga.

Hat tip to Joe!

According to Bill Track 50:

“…The Act defines unlawful squatting as when an individual resides on another’s land or premises without their knowledge or permission. Violators will receive a citation, giving them three business days to present proof such as a lease or rental agreement confirming their authorization to be on the premises. If they cannot provide such proof, they are subject to arrest and could face misdemeanor charges. The bill also extends the jurisdiction of magistrates to include these violations and modifies proceeders against intruders. The reform provides a streamlined process for ejecting squatters, including a submission of property affidavit, setting a time frame for eviction, and provisions for the use of monetary relief…”

“Unfortunately, bad actors have figured out ways to take advantage of this, exploit, really the process that goes through the local government. So we’re passing legislation that I’m going to sign right after this interview to stiffen the penalties, to go after these folks, to also speed up the eviction process. But, also, allow the property owner to go after these squatters for damages,” Said Georgia Governor Brian Kemp.

Click here to read more at FOX News.

Click here to read more at WXIA (11 Alive).

“We are putting an end to the squatters scam in Florida,” DeSantis said. “While other states are siding with the squatters, we are protecting property owners and punishing criminals looking to game the system.”

Martin County’s sheriff made national headlines this week after warning of a viral video teaching squatters how to circumvent the laws.  “Crime is a lot like cancer,” Synder said. “It spreads and if you see it somewhere else, let’s be on guard. Let’s get ahead of it.”

Click here to read the full story at WPTV.

We have been encouraging our members to reach out to their Congressmen to ask for their support on this important piece of legislation.  As partner in the SFC, National REIA looks forward to continuing our work with them in helping to move this bipartisan bill forward in both the House and the Senate.

The following is an update from the Seller Finance Coalition (SFC) by Jeff Watson.

I want to share with you an update from the Seller Finance Coalition regarding the progress made last year relative to H.R. 3464, the Affordable Homeownership Access Act. Over the past year, our team has sought to advance H.R. 3464 by:

• Organizing & managing two Congressional fly-ins for Seller Finance Coalition leadership, resulting in meetings with 45 Congressional offices.
• Holding virtual meetings with over 15 Congressional offices to socialize the bill.
• Working with Rep. Andy Barr (R-KY) to re-introduce H.R. 3464 in the 118th Congress.
• Securing new co-sponsors for H.R. 3464, including, but not limited to, the following Members:
  •         Rep. Brendan Boyle (D-PA)
  •         Rep. Bill Posey (R-FL)
  •         Rep. Byron Donalds (R-FL)
  •         Rep. Pete Sessions (R-TX)
  •         Rep. Erin Houchin (R-IN)
• Engaging with Sen. JD Vance (R-OH) and Sen. Katie Britt (R-AL) on the introduction of a Senate companion to H.R. 3464.

2024 Legislative Priorities 

        To build on the momentum we developed last year, our team will prioritize the advancement of the following key workflows:

• Work with Sen. JD Vance (R-OH) to introduce a Senate companion to H.R. 3464 in the 118th Congress.

Sen. Vance’s team has indicated that they would like the support of at least one additional Senate Banking Committee member.

Our team plans to reach out to each Member of the committee to determine who may be willing to join Sen. Vance in this effort.

• Continue to pressure Rep. Andy Barr (R-KY) to hold a swift markup of H.R. 3464 in the House Financial Services Committee.

Based on our latest discussions with Rep. Barr, he is aiming to hold the markup by the end of the first quarter of 2024.

• Organize an SFC Coalition-wide fly-in in the first quarter of 2024 to engage with House Financial Services Committee & Senate Banking Committee Members to support H.R. 3464.

Here’s how you can help SFC in our efforts on behalf of real estate investors across the country:

CLICK HERE to learn more.

 

“The opposition, including Republicans and moderate Democrats, claimed that landlords take on risk in renting out their homes, and that security deposits ensure they have enough money to cover any damage incurred. Reducing how much landlords can charge upfront, those opposed to the bill warned, could mean more rental housing being pulled from the market.”

“Further limiting a property owner’s ability to financially cover property damage or unpaid rent is an unfair imposition for rental housing providers,” the California Apartment Assn. wrote in opposition to the bill.

Click here to read the full story at the LA Times.

Below is an except from the White House’s release:

July 19, 2023

FACT SHEET: Biden-⁠Harris Administration Takes on Junk Fees in Rental Housing to Lower Costs for Renters

Major rental housing platforms and several states join the President’s effort to crack down on rental housing junk fees for consumers and increase transparency

Today, President Biden is announcing a new front in his crackdown on junk fees: rental housing. From repeated rental application fees to surprise “convenience fees,” millions of families incur burdensome costs in the rental application process and throughout the duration of their lease. These fees are often more than the actual cost of providing the service, or are added onto rents to cover services that renters assume are included—or that they don’t even want.

Rental housing fees can be a serious burden on renters. Rental application fees can be up to $100 or more per application, and, importantly, they often exceed the actual cost of conducting the background and credit checks. Given that prospective renters often apply for multiple units over the course of their housing search, these application fees can add up to hundreds of dollars. Even after renters secure housing, they are often surprised to be charged mandatory fees on top of their rent, including “convenience fees” to pay rent online, fees for things like mail sorting and trash collection, and even so-called “January fees” charged for no clear reason at the beginning of a new calendar year. Hidden fees not only take money out of people’s pockets, they also make it more difficult to comparison shop. A prospective renter may choose one apartment over another thinking it is less expensive, only to learn that after fees and other add-ons the actual cost for their chosen apartment is much higher than they expected or can afford.

Today, the President will outline several new, concrete steps in the Administration’s effort to crack down on rental junk fees and lower costs for renters, including:

• New commitments from major rental housing platforms—Zillow, Apartments.com, and AffordableHousing.com—who have answered the President’s call for transparency and will provide consumers with total, upfront cost information on rental properties, which can be hundreds of dollars on top of the advertised rent;
• New research from the Department of Housing and Urban Development (HUD), which provides a blueprint for a nationwide effort to address rental housing junk fees; and
• Legislative action in states across the country—from Connecticut to California—who are joining the Administration in its effort to crack down on rental housing fees and protect consumers.

Click here to read the full release at Whitehouse.gov.