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Blog Post | December 19, 2022

Biden Can Protect Millions Of Vulnerable Tenants With The Stroke Of A Pen

Consumer ProtectionDepartment of JusticeExecutive BranchFTCHousingTreasury Department
Biden Can Protect Millions Of Vulnerable Tenants With The Stroke Of A Pen

Last month, over 100 tenant leaders from the People’s Action Homes Guarantee campaign descended on Washington D.C. with a simple message for President Biden and Congress: it’s time to regulate the rents and stand up for tenants. 

Millions of working families across the country are struggling to cope with the soaring cost of rental housing, which in October saw its largest increase in four decades. According to an economic analysis by People’s Action and the Groundwork Collaborative, sky-high rents are a core driver of overall inflation – making up a third of CPI. Rent is also the single-biggest line item in the average American family’s monthly budget – something they are unable to cut back on without being thrown out of their homes. 

Homes Guarantee tenant leaders are aware of this stark reality: they live it every day. At last month’s “tenant reckoning” summit – which included a White House rally, Congressional briefing, and meeting with White House officials – they shared their heartbreaking stories and called on President Biden to regulate rents via executive order. This is a matter of urgency for many tenants, who do not have time to wait for the Biden administration’s housing supply reforms that will take upwards of a decade to roll out. Massachusetts tenant leader Nancy Lopez – who lives with her daughter and seven grandchildren – broke down in tears at the Congressional briefing when describing the seven-day eviction notice she was served after her landlord hiked her rent to $2200 per month: “My grandkids have been asking where is the Christmas tree? How am I supposed to break it to them?”

Tenant organizers have had enough. With the support of over 250 legal partners, housing justice groups, and tenant-led organizations, the Homes Guarantee campaign has written and presented to the Biden White House a draft executive order to regulate rents and protect tenants. If signed by the President, the order would directly combat predatory rent-gouging by corporate landlords and give millions of tenants the key legal protections they need to stay in their homes.

What’s Driving The Rental Housing Crisis?

Tenant leaders on the campaign have correctly pointed to corporate greed as a core driver of astronomical rent hikes. In recent years, private equity firms like Blackstone Group and Pretium Partners have been increasingly gobbling up rental properties and hiking rents to maximize shareholder profits without a single care for tenants (indeed, Blackstone CEO Steve Schwarzman has openly boasted about profiting from rent hikes, even as millions of tenants face eviction). The Federal Reserve’s disastrous interest rate hikes have compounded the problem, forcing millions of aspiring homeowners to stay in the rental market and compete for limited housing units. So too have federal financing deals and public subsidies to corporate landlords. Combined with lax government oversight of the private equity industry (itself the result of a well-financed industry lobbying push), the status quo is a world where predatory corporate landlords get rich off throwing millions of predominantly black and brown tenants into the streets. 

As tenant Tasha Price from Indiana put it, “My life is in the hands of a corporation. Investors have consolidated the rental market, driving up rents to maximize profits. Price gouging. An ugly truth: The government supports this business- financing their mortgages, subsidizing their profits.”

What’s In The Executive Order On Protecting Tenants? 

The seven-page draft executive order calls on the Biden administration to adopt a “whole-of-government” approach to the rental housing crisis by creating a permanent interagency council on tenants’ rights. Its members are to include the heads of 15 executive branch agencies and 3 tenant representatives. The Council would be tasked with “protecting tenants from unreasonable rent hikes and unfair and deceptive practices”, and would engage regularly with tenant unions and civil rights organizations to develop policy solutions to the crisis. 

The order includes immediate policy recommendations for six major executive branch agencies: the Federal Trade Commission (FTC), Consumer Financial Protection Bureau (CFPB), Department of Housing and Urban Development (HUD), Federal Housing Finance Agency (FHFA), Department of Justice (DOJ), and Treasury Department. The draft executive order invokes several well-established legal authorities to back up its policy recommendations for these agencies, including the Fair Housing Act, Fair Debt Collection Practices Act (FDCPA), Fair Credit Reporting Act (FCRA), and Dodd-Frank Act.  

  • FHFA: The executive order includes a sizeable list of reforms for the FHFA, which has enabled private equity’s rental property buying spree through loans issued by Freddie Mac (a government-sponsored enterprise under the agency’s conservatorship). The order calls on FHFA to ensure that landlords with Fannie Mae or Freddie-sponsored loans are following eviction protections established under the CARES Act, and orders Fannie and Freddie to stop loan sales with landlords who repeatedly violate the CARES act’s 30-day minimum eviction notice. It also directs FHFA to publish rules establishing tenant protections – including good cause eviction and strict caps on annual rent increases – for all rental properties financed by government-backed mortgages. Under the order, FHFA would also shed much-needed transparency on corporate landlords who hide behind LLCs to mask the true extent of their property portfolios by creating a public-facing national database of property ownership for every rental property in the United States.
  • FTC: The executive order tasks the FTC with cracking down on predatory rent-gouging and anti-competitive practices by corporate landlords. The FTC’s fellow antitrust regulator, the DOJ Antitrust Division, is currently investigating antitrust concerns around rental price-setting company RealPage, which was recently exposed for helping private equity firms collude to hike rents. The FTC, however, has the power to initiate a market investigation into rental price setting by corporations at large, power the agency can use  to identify which corporate actions constitute unfair and deceptive practices or anticompetitive practices that inhibit market power.

    It also calls on the agency to ban “junk fees” charged by predatory landlords, such as excessive application or screening fees, unusually high security deposits, and hidden utility charges. Tenant screening data – which is riddled with errors and enables widespread racial and disability discrimination – would also be a key target for the FTC under the order, which instructs the agency to issue guidance and take enforcement action against landlords and debt collectors who violate consumer protection laws through discriminatory tenant screening practices. 
  • HUD: The nation’s largest housing agency is a core target of the order, which calls on HUD to enact rules that would tie “good cause” eviction protections and state/local adoption of rent regulation to its billion-dollar grant programs. Under the order, the Department is also urged to ban the use of racially-biased credit scores and misleading eviction court records for tenant screening in HUD-operated rental housing and HUD-subsidized multifamily rentals. Eviction reduction is another key focus for HUD under the order, which calls on the Department to engage in eviction prevention measures for HUD-controlled rental housing and HUD-subsidized landlords to ensure that evictions are a last resort and follow fair housing protocols.
  • CFPB: The executive order calls on the CFPB to exercise its watchdog role over the consumer finance industry by investigating consumer reporting and debt collection companies to uncover potential violations of the Fair Housing Act or FCRA. Under the order, the Bureau would also open a sweeping investigation into pandemic-era rental debt collection to identify unfair or discriminatory practices by debt collectors, and issue guidance to consumer reporting companies to refrain from using sealed or expunged eviction court records to unfairly tarnish tenants’ credit reports. As the Bureau’s statutory authority over housing policy is limited, the order also calls on the CFPB to request that Congress give it specific authority over tenant screening companies to examine their policies, procedures, and scoring models.
  • DOJ: The executive order calls on the nation’s top law enforcement agency to have tenants’ backs by directing more DOJ resources to enforce fair housing laws, crack down on discrimination against low-income tenants, and work with state and local courts on eviction prevention. Under the order, the DOJ is also tasked with increasing public awareness of tenants’ right to organize and working with relevant state and federal agencies to protect that right.
  • Treasury: The executive order directs the Treasury Department to make several reforms to the Low-Income Housing Tax Credit (LIHTC) program, which awards tax credits to private developers in each state to incentivize them to invest in affordable rental housing. The order instructs the Treasury to publish rules defining good cause eviction for the program on a national level, establishing it as a precondition for lease nonrenewal for LIHTC tenants. The order also calls on state-level housing credit agencies to prioritize allocating credits to developers that limit excessive rent increases, and directs the Treasury to publish a report on tax code reforms that would discourage private equity investors from buying up vast swaths of rental housing stock. These reforms would address key flaws with the current LIHTC program, which often lets private equity firms like Blackstone purchase huge portfolios of affordable properties and lets landlords evict tenants for arbitrary reasons

A Long-Overdue Reckoning

Last month’s “Tenant Reckoning” summit comes on the heels of years of policy choices that have directly enabled predatory corporate landlords and left tenants out in the cold. Housing (a core component of monthly inflation and the key driver of the last financial crisis) seems to be on the minds of everyone except the White House. Biden’s Chief of Staff Ron Klain – whose Twitter feed is often a reliable indicator of what does and doesn’t reach the President’s desk – is regularly preoccupied with gas prices, but has not once tweeted about the rental housing crisis. Indeed, Biden himself seems largely disinterested with fighting corporate landlords and protecting tenants in the immediate term – opting instead to focus on housing supply reforms that will only have a measurable impact years from now. 

The Biden administration must change its approach and consider the immediate needs of tenants with equal importance as rising gas prices or the long-term housing supply crunch. As Rights and Democracy New Hampshire tenant leader Mary Osborne put it, “Inflation doesn’t just hurt at the gas pump. We need the White House to take immediate action to address sky-high rents that are costing families their homes. I need to know that the President is fighting for me.”

There are encouraging signs that others in Washington are listening. The Homes Guarantee Congressional briefing was co-sponsored by Senator Elizabeth Warren – a longstanding champion for working families and housing finance reform. Congresswoman Cori Bush, who once lived out of her car with her infant children after being evicted, attended the briefing and delivered stirring remarks calling for “transformative housing justice policies now” . Congressman Jamaal Bowman, who also attended the briefing, has endorsed the Homes Guarantee campaign’s executive order and called on President Biden to sign it. Like student debtors and criminal justice reformers before them, renters are building a powerful movement for executive action that shows no signs of slowing down. 

In the words of the tenants themselves, “ain’t no power like the power of the tenants, ‘cuz the power of the tenant’s don’t stop.”

Photo Credit: Shedrick Pelt and People’s Action.

Consumer ProtectionDepartment of JusticeExecutive BranchFTCHousingTreasury Department

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