According to a limited poll by TransUnion of 150 property managers who oversee mid- and large-size apartment projects with a total of 3,300 units, a third of those who are aware of their ability to report on-time payments currently do so. That’s a 37% increase from a year ago.
There’s nothing particularly altruistic here. Indeed, the main reason they report on-time payments is self-serving. Helping residents build their credit ratings attracts would-be occupants and encourages tenants to pay on time.
Currently, according to the Urban Institute, fewer than 5% of all rental households have their rental payment histories on file with the three major credit reporting agencies — TransUnion, Equifax, and Experian.
There’s no question that lenders and their clients need to be protected from buying into condominium and cooperative projects that are suffering from critical deferred maintenance and special assessments. And so it is that Fannie Mae and Freddie Mac this month will make permanent project review standards put in place on a temporary basis two years ago as the result of the Champlain Towers South collapse in Miami.
The update will deny financing for condo and co-op units in projects with unfunded repairs totaling more than $10,000 per unit are unwarrantable. The new guardrails also impose project review standards to address the risks posed by buildings with significant deferred maintenance that can result in “unsafe living conditions, evacuations, and uninhabitable homes.”
There’s also no question that condos — and to a lesser extent co-ops — are perhaps the lowest-cost option for rookie home buyers trying to get a toehold on the first rung of the housing ladder. So, the now permanent rules, rightly or wrongly, take what may be a significant share of less-expensive units off the market by making them ineligible for less-expensive financing.
Reigning In Tax Breaks
Speaking of creating inventory, eight Democratic senators have thrown into the hopper a measure that they hope persuades Wall Street investors from buying up thousands of houses that would otherwise be sold.
The bill, whose co-sponsors include Chairman Sherrod Brown (D-Ohio) of the Senate Banking, Housing, and Urban Affairs Committee, and Ron Wyden (D-Oregon), head of the Senate Finance Committee, would restrict tax breaks for private equity firms and other big investors.
Specifically, the legislation would deny investors who purchase more than 50 houses write-offs for interest and depreciation. These are the very same bennies that allow big-time investors to outbid real buyers for affordable houses that end up for rent instead of for sale.
“Our bill will help prevent corporate landlords from driving up local housing prices, and put power back in the hands of working families who need a safe, affordable place to live and raise their children,” Brown said in a statement.
Other lawmakers on the bill include Tina Smith (D-MN), Jeff Merkley (D-OR), Jack Reed (D-RI), John Fetterman (D-PA), Elizabeth Warren (D-MA), and Tammy Baldwin (D-WI).