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Incentivize the market (e.g., LIHTC) don't punish investors in affordable housing (e.g., RENT CONTROL).
It's pretty simple really. Just have the local, state, and/or federal government pay for the subsidies they wish to grant to the American People instead of off the budget subsidies paid for by those who own property.
Would you give up a 30 year prepayable at anytime Fixed Rate Mortgage of below 4% to put your home on the market and buy a new one at over 7%?
Isn't it better to pay back your Fixed Rate Mortgage with dollars that are worth less each year?
Some of these below 2% 30 year Fixed Rate Mortgages from the pandemic era are sitting on banks assets books at 50%-70% of principal.
Basic Economics tells us if you want more of something like affordable housing, then don't artificially through a government mandate disincentivize the market by capping rents below market rents.
It's like Nationalizing Private Corporations, the Government gets a short term gain for society but the long term losses are substantially greater.
With 'rent stabilization' or rent control, the fairness issues seem to focus on (1) these mostly mom and pop rental housing operators being deprived of excluding others from their property and (2) not being able to receive rents at full fair market value and providing a public good (below market rents, a subsidy) for ZERO Compensation.
There's plenty of examples besides those below. So a majority of people on a City Council can choose to ignore the 5th Amendment Takings Clause and provide Social Welfare for free at little or no expense to the City, State, or Federal Government?
Here's some examples:
Petitioners in the Pinehurst case—the
Panagoulias family—have twice been unable to
recover their own property for personal use due to the
RSL. In 1974, Dimos and Vasiliki Panagoulias bought
a 10-unit apartment building in Long Island City after
moving to the United States from Greece. Pinehurst
Pet.App. 170a-171a. They raised their family in the
building and own it today. Id. Their son, Dino, lives
there with his family and manages the apartment in
his spare time. Id. Dino knows the tenants well and
considers them his extended family. Id. Around 2011,
Dino applied to New York housing regulators for
permission to recover a two-bedroom rent-stabilized
apartment for use as his family’s home. Id. at 187a.
But the regulators rejected his application, concluding
that, if Dino needed an apartment, he could have
taken possession of a different, one-bedroom
apartment that had previously been available, even
though that smaller apartment would not have suited
his family’s needs. Id. The family ran into a similar
problem when Dino’s sister, Maria, attempted to move
back into the apartment building in 2019. Id. at 187a-
188a. Due to the RSL’s restrictions on recovering rent-
stabilized apartments, the Panagouliases have not
been able to set one aside for her. Id.
The burdens imposed by the RSL, and rent control
generally, inevitably fall most heavily on smaller
“mom and pop” property owners. See Alabama Ass’n
of Realtors, 141 S. Ct. at 2489 (noting that “many
landlords have modest means”). Individuals, as
opposed to businesses, own the vast majority of the
nation’s rental properties."
"Petitioner Constance Nugent-Miller
was unable to reclaim possession of her first-floor
apartment despite severe leg pain that makes it
difficult to walk up to her second-floor apartment. Id.
at 167a-169a. Another petitioner has housed three
generations of a tenant family in a rent-stabilized unit
since 1975 at what is now half the market rental value.
Id. at 159a-160a. A family purchased a building with
the intent of combining several units into their new
home, only to have the 2019 Amendments thwart
their plan and tank the value of their investment. Id.
at 169a-170a. Another property owner has housed a
tenant for four decades at a rent far below market
levels and has been unable to evict the tenant despite
numerous complaints about the foul odors emitting
from the dogs kept in her apartment. Id. at 131a-132a.
When the unit becomes vacant, it will be more
economical to keep the unit vacant rather than make the necessary repairs and rent it out again at a rent-
stabilized level. Id. at 132a."
"The Federal Housing Finance Agency (FHFA) instructed Fannie Mae and Freddie
Mac to consider potential policies to further regulate
the rental housing market. 18 These steps evince a
concerning expansion of the federal government’s
efforts to infringe property rights. And if implemented,
these policies threaten to further undermine
pathways to home ownership—a proven and significant source of generational wealth—by
incentivizing and effectively subsidizing renting."
Footnote 18: FHFA to Request Input on Multifamily Tenant Protections,
FHFA, https://perma.cc/P3LZ-8GER.
"Yet governments up and down our federalist system
are continually finding ways to encroach upon
private-property rights. Rather than protect private
property, governments have conscripted property
owners into serving the state without compensation. These intrusive and unconstitutional actions include
eviction moratoria and draconian rent-control
regimes that purport to divest property owners of
long-recognized property interests. Adoption of such
laws has accelerated in recent years. See, e.g.,
Alabama Ass’n of Realtors v. Dep’t of Health & Hum.
Servs., 141 S. Ct. 2485 (2021). In light of this trend, it
is critical that the Court intervene to provide guidance
to lower courts assessing challenges to burgeoning
restrictions on private property."
"Governments at the federal, state, and local
levels have moved aggressively over the past several
years to encroach on private property rights without
even a thought of the Takings Clause. "
What does the MBA, NAR, NAHB, and the National Apartment Association think about NY's 'rent stabilization' or rent control law? Today the SCOTUS considered a Petition for a Writ of Certerrori on the issue, we should know shortly if they will grant the Petition (Is it a Taking or permissable Gubmint regulation? could be 'yuge'!):
TABLE OF CONTENTS
Page
TABLE OF AUTHORITIES ....................................... ii
INTEREST OF AMICI CURIAE ............................... 1
SUMMARY OF ARGUMENT .................................... 3
ARGUMENT .............................................................. 5
I. GOVERNMENT RESTRICTIONS ON PRIVATE
PROPERTY ARE EXPLODING NATIONWIDE. ......... 5
II. RENT-CONTROL LAWS UNDERMINE THEIR
PURPORTED GOAL OF PROMOTING
HOUSING AFFORDABILITY AND HAVE A
SIGNIFICANT NEGATIVE IMPACT ON
HOUSING MARKETS. ........................................ 11
A. Rent Control Reduces the
Quantity of Available Housing. .......... 11
B. Rent Control Reduces the Quality
of Available Housing. .......................... 15
C. Rent Control Reduces Consumer
Mobility and Entry. ............................ 18
D. Rent Control Is Not an Equitable
Solution to the Housing
Affordability Problem. ........................ 20
III. NEW YORK’S RSL HAS HAD A
DEVASTATING IMPACT ON PROPERTY
OWNERS. ......................................................... 23
CONCLUSION ......................................................... 27
They quote Richard A. Epstein, Rent Control and
the Theory of Efficient Regulation,
54 Brook. L. Rev. 741 (1988).............................. 7, 8
James Fanelli, Rent-Stabilized Apartments
Are Being Occupied by Millionaires,
Records Show, DNAInfo (Apr. 30, 2014) ............. 21
FHFA to Request Input on Multifamily
Tenant Protections, FHFA ................................... 10
Letter from Senator Elizabeth Warren,
Representative Jamaal Bowman,
and 48 other members of Congress to
Joseph R. Biden, President of the
United States (Jan. 9, 2023) ................................ 10
Frederick Melo, Apartment construction
slows by more than 80 percent in St.
Paul, Pioneer Press (Apr. 4, 2022) ...................... 13
The White House Blueprint for a Renters
Bill of Rights (Jan. 2023) ..................................... 10
Mihir Zaveri, Oregon to Become First
State to Impose Statewide Rent
Control, N.Y. Times (Feb. 26, 2019) ...................... 8
http://www.supremecourt.gov/DocketPDF/22/22-1095/268811/20230609174513115_22-1095%20cert%20tsac%20NAA.pdf
"Buying a home or car right now is "completely unaffordable for the typical American household because you're mixing the higher borrowing costs with the high prices," said Mark Zandi, chief economist at Moody's Analytics.
He estimates that the typical American household would need to use 42 weeks of income to buy a new car, as of August, up from 33 weeks three years ago. The National Association of Realtors calculates that the typical American family can't afford to buy a median-priced home."
Todays WSJ.
I believe that long-term rates, e.g, 30-year rates, will rise further from here. As such, we remain short bonds through the ownership of swaptions.
— Bill Ackman (@BillAckman) September 22, 2023
The world is a structurally different place than it was. The peace dividend is no more. The long-term deflationary effects of… https://t.co/0YOPaQuOdR
Do you think DeMarco Nationalized the GSE'S for self-gain? He's making TRIPLE what he made as FHFA Director, isn't he?
It's important for our posterity to live in a country where Property Rights are respected by the federal, state, and local Gubmint's and not viewed as a potential off the budget money grab for politicians and administrators.
Why work hard for something if the government is going to take it from you?
IF rent control is found Unconstitutional by the US Supreme Court then it would increase Multifamily and Residential property values which would increase the Safety and Soundness of the GSES $7.6T Book of Business.
Thanks again Clarence, George Will in his piece in the Washington Post today, mentions the Supreme Court case Cedar Point Nursery:
"The city says this thicket of restrictions on apartment owners' property rights constitutes mere "regulation" of, not a physical "taking" of, property. The Supreme Court, echoing two luminaries of jurisprudence, has already said otherwise.
William Blackstone (1723-1780), the British jurist whose thinking informed that of America's Founders, said "the right of property" is "the right to exclude." It is the "dominion" that an individual exercises "in total exclusion of the right of any other individual." Thomas Merrill, a professor at Columbia Law School, says, "Exclusion lies at the root of property because the institution of property is dependent on possession, and exclusion lies at the root of possession."
In an amicus brief challenging the RSL, the Manhattan Institute and Cato Institute note that New York City's micromanaging of rental property degrades owners' rights "to a far greater degree" than did a 1975 California "emergency" law that the court struck down in 2021. This law compelled owners of agricultural properties to permit labor unions, four times a year, 30-day periods of access, for up to three hours a day, for the purpose of soliciting the support of employees. The court affirmed the owner's property right to exclude.
With policies like those under RSL, politicians can effect indirect wealth transfers without directly voting for them. As Justice Antonin Scalia said of many such transfers, they are "achieved 'off budget,' with relative invisibility and thus relative immunity from normal democratic processes." Such "off budget" financing of public policy is disguised taxation. And it is the taking of private property, which constitutionally requires "just compensation."
An Institute for Justice amicus brief in the New York City case notes an unsurprising fact: "Rent-control laws have been shown to reduce a city's housing supply by double-digit percentages." Artificially suppressing monetary demands for something, and thereby decreasing the incentive to provide that something, is a recipe for getting less of it.
The economic illiteracy of politicians who defend New York City's RSL regime is an affliction that city voters should correct. Stopping the regime's gross violation of property rights - affirming the Constitution's taking clause - is the Supreme Court's duty."
Will SCOTUS grant Cert this Tuesday on the Constitutionality of NY's Rent Control Law that has been in effect since WWI?
"To normal people, "emergency" implies "temporary." In government's parlance, a declared "emergency" can be renewed in perpetuity - exacerbating the problem that supposedly justified the declaration."
George Will on why the US Supreme Court should take up a challenge to NY's 'rent stabilization' law.
https://www.scotusblog.com/case-files/cases/community-housing-improvement-program-v-city-of-new-york-new-york/
Edward J Demarco apparently is pulling down approximately $750,000/yr in Annual Salary.
How many Kilos of Gold Bars is THAT?
https://www.salary.com/research/company/housing-policy-council/president-salary?cjid=19085678
Fact is, Edward J Demarco and his fellow Travelers believed it was up to them to decide the future of the US Housing Finance Market under HERA.
Sorry Edward, that's the Job of our ELECTED Representatives in Congress not you and your 'fellow travelers'.
"To their credit, the investors recommend retaining some of the reforms that have taken place in conservatorship, such as limits on what Fannie and Freddie can invest in, and higher capital levels. But they would leave untouched the fundamental structural flaw that was the system’s ultimate undoing: the dominance of a duopoly that is too big and too important for the nation ever to let fail.
This makes sense from the investors’ point of view, as Fannie and Freddie’s market power will bring them more profits. But it is absurd from the nation’s point of view."
https://thehill.com/opinion/finance/420633-fannie-and-freddie-investors-want-us-to-forget-about-the-housing-crisis/
Is $10,000 per hour appropriate when a law firm wins hundreds of millions for Shareholders?
What would Skepi say? !
https://www.reuters.com/legal/lawyers-who-sued-tesla-board-excess-pay-want-10000-an-hour
So, whatever the political whims of the current administration in power is the appropriate way to control and run 2 of the largest financial intermediaries in the world?
After 15 years of conservatorships, Fannie Mae and Freddie Mac are nothing more than part of the Executive Branch of the Federal Government.
Is that what HERA did?
Shouldn't the federal Judiciary be able to put a check on and stop the Executive Branch from Unconstitutional overreach?
"Offsetting mortgage rate headwinds somewhat is the record high aggregate homeowner equity, which was over $28 trillion as of the first quarter of 2023, with the aggregate ratio of home equity to the value of housing stock at 70%."
https://www.freddiemac.com/research/forecast/20230817-economic-housing-and-mortgage-market-outlook-august-2023
"It should be noted that Fannie Mae’s obligation under this guaranty is solely Fannie Mae’s and is not backed by the full faith and credit
of the U.S. government."
https://capitalmarkets.fanniemae.com
The UST and the Federal Reserve want strongly Capitalized GSES if the game plan has changed from Wind Down to recap and release, as it will be the 1st line of defense when the next inevitable US Housing Market downturn occurs.
Right now it's a 1.0-1.5% Capital Ratio, they probably need at a minimum 2.0-2.5%. The controversial current Capital Ratio Rule is up to 4.5%.
As I recall, when I worked at Fannie Mae (88-93) it was like 55 basis points (0.55%), which is plenty!
She's preparing for the EVENTUAL release (FHFA and UST have to keep up the facade that the 15 year and counting CONservatorships are 'temporary') but as she explains more than once when asked about the release, she says she is "Waiting for the US Congress to decide the future of the Housing Finance Market."
UST uses the same line, Mnuchin and MC said the same thing. So did Watt and Demarco.
Page 97, UST 2022 Report: "The purpose of such actions is to maintain the solvency of the GSEs so they can continue to fulfill their vital roles in the
mortgage market while the Administration and Congress determine what structural changes should be made to the housing
finance system"
The Boss Lady from FHFA says it here in her testimony to Congress in May 2023:
https://www.c-span.org/video/?528262-1/federal-housing-finance-agency-director-testifies-mortgage-fees
Sandra L Thompson is currently unaccountable until the current POTUS is changed or the Judicial Branch does something about her Unconstitutional overreach.
The 4th Branch of Government is often untouchable and unaccountable to the American People and their representatives in the US Congress and this is a good example.
Sandra and Sherrod Browns former right hand man, the General Counsel at the FHFA, can throw the Senators letter into the Garbage and smile, the People's Representatives in Congress are powerless.
"FHFA has weaponized the Enterprises in an effort to finance radical policies that this
administration is unable to achieve legislatively."
A byproduct of the Defacto Nationalized GSES.
They're just getting started!
HeeeeHeeee! MQD is but one tool to rein in Federal Agency Overreach, let's see if the Self-funded into perpetuity, bypassing of Congressional Appropriations and oversight is another.
So much Gubmint overreach, so little time ...... !
Which phrase by the FHFA and UST is more Bogus:
1. "The Net Worth Sweep was necessary and proper because of the impending Death Spiral."
OR
2. "We're waiting for the US Congress to determine what structural changes should be made to the housing finance system."
The $220B obtained in Bad Faith and Unfair Dealing by the US Government?
Did I mention the bogus 'DEATH SPIRAL' Narrative spewed by DOJ at the SCOTUS?
Nothing to hide US Treasury? WHERE'S THE 11,000 Documents you've HIDDEN from Public View through Executive Privilege and National Security Exemptions to Discovery?
Watcha hiding Uncle Suggy?
Great Gubmint actors here, model conduct in a Banana Republic!
"We're going to Salt the Earth with the Shareholders Carcasses, they'll figure this out real quick!"-UST Official
Give us back our Corporations Uncle Suggy!
Here, you'll LOVE this article, I thought YOU wrote it, but I wasn't really sure ! Try not to nod your head up and down in agreement continually while reading it, you may get dizzy!
https://www.google.com/amp/s/www.vox.com/platform/amp/scotus/23845702/supreme-court-fifth-circuit-term-cfpb-guns-voting-chevron
30 year Mortgages are more than 250% pandemic lows, car and house sales should be impacted at some point.
But 'Bidenomics' will save us, right ! ! Tell us why having 20% to 30% of GDP consisting of Gubmint handouts to JB's targeted voting base isn't inflationary.
I think Susan Wachter and the MBA, NAR, and NAHB are concerned that the CFPB Case SCOTUS ruling in June 2024 would POTENTIALLY get rid of the Qualified Mortgage Requirements as promulgated and regulated and I believe required by the Dodd Frank Act by the CFPB.
Recall that the QM Rule basically says that the Mortgagor must be able to be pay back the Mortgage when underwritten, that the Mortgage Originator must document that thoroughly in the loan file, AND the Originating Lender will have to BUY BACK THE LOAN if they don't. This was the primary cause of the Great Financial Crisis.
Just read the Amicus Brief of the MBA, NAR, and NAHB.
http://www.supremecourt.gov/DocketPDF/22/22-448/266839/20230515120807734_230503a%20Amici%20Curiae%20Brief.pdf
TABLE OF CONTENTS
Page
TABLE OF AUTHORITIES ..................................... ii
INTEREST OF AMICI CURIAE.............................. 1
INTRODUCTION AND SUMMARY OF
ARGUMENT....................................................... 2
ARGUMENT ............................................................. 5
I. Ruling In A Manner That Calls Into
Question All Of The CFPB’s Rules Could
Destabilize The Mortgage Market..................... 5
II. If Ruling For Respondents, The Court
Should Take Steps To Limit The Scope
And The Adverse Consequences Of Such A
Ruling................................................................ 16
A. This Court should sever the offending
provisions from the funding statute........... 16
B. This Court also should grant de facto
validity to the CFPB’s past actions not
challenged here. .......................................... 19
CONCLUSION........................................................ 23
What happens to Housing Starts after a 550 basis point increase in Mortgage Rates over 15 months:
"The numbers revealed on Tuesday provided little encouragement. The entire nation is feeling the pinch as home building was down across the country. The NAHB pointed out that compared to last year, single-family and multifamily starts were down nearly 23 percent in the Northeast, about 14 percent in the Midwest, nearly 9 percent in the South and about 16.5 percent in the West."
https://www.newsweek.com/home-building-collapses-market-struggles-1828235
How could you use it in other cases if it could subsequently be overturned on appeal?
Jury decisions are rarely overruled, but a persuasive argument on Procedural grounds might do it right?
https://www.google.com/amp/s/www.cbsnews.com/amp/news/chatgpt-judge-fines-lawyers-who-used-ai/
"Technological advances are commonplace and there is nothing inherently improper about using a reliable artificial intelligence tool for assistance," Castel wrote. "But existing rules impose a gatekeeping role on attorneys to ensure the accuracy of their filings."
TAKE NOTICE SANDRA! Here's how the SCOTUS will rule on the CFPB Case according to ChatGP:
Q: Can a Federal Agency set its own annual budget and receive the money from sources other than the US Treasury and avoid violating the Appropriations Clause of the US Constitution?
A: No, a federal agency cannot set its own annual budget and receive money from sources other than the U.S. Treasury without violating the Appropriations Clause of the U.S. Constitution. The Appropriations Clause, found in Article I, Section 9, Clause 7, of the Constitution, grants the power to appropriate funds exclusively to Congress. It states that "No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law."
This clause means that only Congress has the authority to authorize the expenditure of federal funds for government activities. Federal agencies are not constitutionally permitted to set their own budgets or independently acquire funds outside of the appropriations process established by Congress. All federal spending, regardless of the source, must be in accordance with appropriations passed by Congress.
While federal agencies may generate revenue through various means, such as fees, fines, or other income, these funds are typically considered "offsetting collections" and are subject to congressional oversight and approval. They cannot be used to bypass the appropriations process or establish independent budgets for agencies. The core principle is that Congress holds the power of the purse and must approve all federal spending, as mandated by the Constitution."
https://www.newsweek.com/supreme-court-ruling-sparks-fears-economic-fallout-1828164
"But a brief submitted to the Court from the Mortgage Bankers Association, the National Association of Home Builders and the National Association of Realtors warned the court that a ruling that goes beyond the payday lending issue and questions the constitutionality of the CFPB's rules and regulations could be highly disruptive to the U.S. economy.
The three organizations are clear to say that their involvement in the case is not in support of either of the parties involved but is simply to warn the Court about the potential ramifications of their ruling.
"[We] submit this brief to highlight the potentially catastrophic consequences that a decision drawing those rules into doubt could have on the mortgage and real-estate markets," the brief reads. "Thus, this Court should take care not to call into question current CFPB regulations, including those governing the real-estate financing industry, which could lead to immediate and intense disruption to the housing market, harming both consumers and the broader economy."
Susan is towing the line of the NAR, MBA, and the NHBA in sounding the alarm that the elimination of the CFPB (and possibly FHFA) will turn the Mortgage Industry upside down.
Unsaid by the alamarist critics of the October 03, 2023 CFPB Case is that the SCOTUS could craft a remedy whereby the US Congress has time to fund the CFPB and tailor their ruling to the CFPB only.
All it would take is Kevin McCarthy having the House of Representatives initiating litigation on this one. Will he?
Don't know, that's why we should keep our eye on it.
Violation of the Major Questions Doctrine? Congress refused to do this in the BBB Act and the POTUS dropped it from the IRA because it was controversial.
Can POTUS spend money on a program that the US Congress specifically rejected?
"The White House on Wednesday announced a program that will aim to train 20,000 young people for climate-focused jobs related to clean energy, land restoration, forest management and more.
The American Climate Corps is a federal effort to “ensure more young people have access to the skills-based training necessary for good-paying careers in the clean energy and climate resilience economy,” the White House said in a press release. In addition to training, the program also intends to be a pipeline for participants to get hired into green jobs.
This isn’t Biden’s first effort at building a green workforce.
In 2021, he proposed spending $30 billion on a Civilian Climate Corps, which would have had more than 300,000 members, as a part of the larger Build Back Better Act bill, the framework of Biden’s climate agenda. The Civilian Climate Corps appeared to be a modern version of the New Deal-era Civilian Conservation Corps, a program for unmarried young men to train for jobs in public land and forest improvement.
Biden’s CCC was eventually left out of the Inflation Reduction Act, the $430 billion package that poured a record $369 billion into climate policy initiatives, which Congress passed in August 2022. In the meantime, some states have been starting their own programs, but Democratic congress members have been waiting on federal-level action.
This move is an executive action and won’t require congressional approval. The White House didn’t announce how much it was spending on the program."
https://www.cnbc.com/2023/09/20/biden-launches-american-climate-corps-to-train-the-green-workforce.html