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NC Members Of Congress Demand For Federal Investigation Into Corporate Housing Investors


Two congresswomen from North Carolina are urging for a federal investigation into a program from the housing crisis era in 2008. This program permitted institutional investors to purchase large portfolios of foreclosed homes at substantial discounts, with the requirement that they be rented out.

Triangle-area Democrats Valerie Foushee and Deborah Ross argue that the “Real Estate-Owned to Rental” (REO) program has resulted in a significant increase in institutional investments in single-family homes. They claim that this surge in investments has led to higher housing prices, making it difficult for many families to afford homes in the market.

Foushee and Ross have written a letter to Sandra Thompson, the director of the Federal Housing Finance Agency (FHFA), and Rohit Chopra, the director of the Consumer Financial Protection Bureau, requesting investigations into whether federal programs, such as the REO-to-Rental program, have disproportionately benefited large financial institutions at the expense of working families and first-time homebuyers. According to them, it is crucial to explore this issue and determine if institutional investor participation has been biased towards these institutions.

Programs like the Low-Income Housing Tax Credit (LIHTC), designed to promote affordable housing development, may end up favoring institutional investors who control the application process and have easy access to financing markets, according to the two lawmakers.

“We write to request an investigation into the effects of these federal programs and the broader impacts of institutional participation in residential real estate, especially as rising housing and rental costs continue to price out many North Carolinians,” Foushee and Ross wrote. “We are concerned that the policies designed to allow institutions to acquire large numbers of properties have had unintended and harmful effects on working families, first-time homebuyers, and renters alike.”

Similarly, Foushee and Ross stated that Fannie Mae and Freddie Mac’s multifamily loan effort has encouraged large investors to purchase multifamily rental properties, which can result in higher rents that drive out long-term residents. Section 8 Housing Choice Vouchers, intended to provide stability to low-income renters, are a particular concern for the congresswomen.

“Institutional investors are increasingly acquiring properties that cater to voucher holders, knowing that the federal government guarantees a portion of the rent, they said. “This creates an incentive to overcharge both the government and the tenants while offering substandard living conditions.”

According to Foushee and Ross, corporate expenditures in single-family houses have surged over the last decade from 15% in 2021 to roughly a quarter of all acquisitions by 2021.

The congresswomen highlighted a “significant increase” in housing costs in the Research Triangle. According to a recent 24/7 Wall Street report, median property prices in Raleigh, Cary, Chapel Hill, and Durham grew by more than 25% between 2020 and 2023.

“Wake County has seen an increasing share of properties purchased by institutional investors, with reports estimating that nearly 18% of all homes purchased in 2022 in the region were bought by such investors,” they said. “These large firms, often backed by Wall Street capital, are able to outbid middle- and low-income buyers, leaving them with few options.”

Foushee and Ross have requested that the investigation involves assessing the following aspects:

    • federal programs that provide incentives to institutional real estate interests, and recommendations to strengthen these programs so that they will serve their intended purpose
    • the impact of institutional ownership on home prices and rental rates, regardless of participation in federal housing programs
    • how investor-driven practices, such as rent inflation, are contributing to the displacement of middle- and low-income families
    • exploitative business models of certain investors and their effects on tenants’ rights, living conditions, and financial well-being

In an impressive display of commitment, Ross attended a momentous ceremony in Cary to unveil a significant announcement. The esteemed individual proudly declared that $1 million in federal funding has been secured for the construction of the Maynard Road Multifamily Housing Development. This remarkable achievement was made possible through Ross’s diligent efforts as part of the 2023 government funding package. The allocated funds will be utilized to establish a housing complex consisting of 126 units, dedicated to offering affordable, mixed-income rental options at below-market rates.

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