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Congressional report finds Invitation Homes downplayed evictions to Fannie Mae

Imagine obtaining a $1 billion, interest-only loan and later lying to your creditor. Thats just what a congressional subcommittee said happened between Fannie Mae and Invitation Homes, the single-family rental landlord that in 2017 got a $1 billion interest-only 10-year loan from the government-sponsored enterprise.

The Select Subcommittee on the Coronavirus Crisis discovered that from March 2020 to July 2021, as much as 29% of the companys eviction cases led to the tenant ultimately losing their housing an interest rate a lot more than four times greater than the rate it represented to Fannie Mae.

Officials from Fannie Mae asked Invitation Homes about its eviction practices in March 2021, the report alleges, following news reports that Invitation Homes was disregarding federal guidance to curb evictions.

Via email, an Invitation Homes representative told Fannie Mae that only 6% of the companys eviction filings in the last six months led to residents losing their housing, the report alleged.

However the congressional report found the companys internal data for October 2020 through March 2021 painted another picture. That data showed approximately 27% of tenants Invitation Homes filed to evict for the reason that period lost their housing either formally, through court-ordered eviction, or informally.

Recent research by Ashley Gromis and Matthew Desmond of Princeton University has discovered that informal evictions outnumber formal evictions five to 1. Informal evictions are instances where landlords incentivize or coerce tenants to vacate rental properties without counting on the courts. There’s little data to track the prevalence of such strategies.

Invitation Homes also told the congressional subcommittee in-may 2022 that it didn’t maintain centralized, detailed eviction proceeding data, and an organization executive told congressional staff that it might not give a good rough estimate just how many tenants moved out, since it did not keep an eye on this data for several its eviction filings.

A spokesperson for Fannie Mae said it really is reviewing the report and evaluating its findings.

Kristi DesJarlais, a spokesperson for Invitation Homes, called the subcommittees report a fault-finding mission.

We’ve always caused our residents to help keep them within their homes, and we’ll continue to achieve this, DesJarlais said.

The report, which centered on four large single-family rental landlords, discovered that they collectively filed 3 x as much eviction cases as previously reported, totaling almost 15,000 eviction filings.

The findings specific to Invitation Homes reveal Fannie Maes powerlessness with regards to influencing the partnership between a landlord and a renter, even though Fannie Mae financed the house. In sharp contrast, a home loan backed by Fannie Mae includes a comprehensive selection of borrower protections.

In 2017, Fannie Mae facilitated a $1 billion loan to Invitation Homes which allowed the business at that time backed by private equity giant Blackstone Inc. to lessen its debt costs across its single family rental properties.

The offer generated pushback from 25 affordable housing groups, mortgage and property trade associations who criticized the offer as running counter to Fannie Maes mission.

The next year, Federal Housing Finance Agency director Melvin Watt ended the government-sponsored enterprises foray into large-scale investment in the single-family rental market.

What we learned because of the pilots is that the bigger single-family rental investor market continues to execute successfully minus the liquidity supplied by the Enterprises, said Watt at that time.

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