Wall Street speculators are becoming landlords across the country, writes Seattle City Council member Lisa Herbold in an op-ed for the Seattle Times, as around 95% of delinquent Fannie Mae, Freddie Mac, and U.S. Department of Housing and Urban Development loans have gone to hedge funds, private-equity funds and Wall Street banks.
The speculators can then turn the properties into rentals — often bundling them into securities for investors, just like the bundling practice with mortgages that led to the housing crash. Rents are then increased and contribute to displacement of poor and working families — particularly African-American and Latino families.
It’s a problem, Herbold writes, that’s impacting a lot of Seattle families. With Mayor Ed Murray’s call for a state of emergency on homelessness, we need the federal government’s help. Fannie Mae, Freddie Mac and HUD can assist by selling any of these delinquent mortgages they have in Seattle and King County to nonprofits, which work to both prevent foreclosures and to create affordable housing.
We know that home-ownership in Seattle-area neighborhoods has changed dramatically, especially in particular neighborhoods. ZIP codes that were the hardest hit early in the crisis still are. In September, Zillow reported that in the Seattle metro area, 19.5 percent of the bottom-tier homes are still underwater — owing more than they are worth.