Serial evictor landlords do not operate alone. By accessing funding from banks and other lenders, they are able to purchase property, and in turn, evict renters. Banks are co-conspirators in the displacement crisis that has unfolded in Oakland and throughout California.
The Hardy family is being evicted from the triplex in Oakland that they’ve lived in for 45 years. “My mom and uncles grew up here,” said Raynett Nottie, a third-generation renter in this home. The owner is seeking exemptions from Oakland’s Just Cause and Rent Control protections in order to double the rent of Raynett’s unit and almost triple her grandmother’s rent. When the current owner purchased the house in July 2017, they put it on the market without telling the Hardy family.
“The home was never offered to us to by the current owner. By the time my family and I were informed, it was too late for us to look into loans to buy the house. When the new owner bought the house, he came to visit and said he didn’t want to evict us. He wanted us to sign new leases. But the leases called for the rents to double and triple. He said, ‘I just want my mortgage paid.’ He took out a loan that is bigger than the price of the house. Maybe to fix the place. But the house is not in bad condition. It’s not our fault that our rent does not cover your mortgage. He wants to remodel and flip, or rent out the property at market rate. In Oakland right now, he can get a lot more for the units.”
Raynett’s story is not uncommon, and it raises questions about whether the bank knew the new owner wouldn’t be able to pay his mortgage with the current rental income without dramatically raising rents or evicting the Nottie family. It also raises the larger question: Should banks have policies in place to make sure they are not financing displacement? The answers to these questions are crucial, as yet another multi-generational family is pushed out of a home they have lived in for over four decades. Of all the cities in the Bay Area, Oakland has experienced the fastest pace of displacement and gentrification, according to the Urban Displacement Project.
For over three decades, CRC and our coalition of 300 nonprofit organizations in California, have leveraged the Community Reinvestment Act (CRA), and fair housing and fair lending laws, to advocate for equitable development in communities and to fight the role that capital can play in increasing inequality. When responsible community investment occurs, families have access to safe, affordable financial services; low-income residents have secure, affordable housing and a pathway to home ownership; and small businesses have access to affordable credit. With equal access to capital and credit, people of color can hand down assets (such as homes and businesses) to future generations and help close the racial wealth gap.
However, banks can also increase the economic hardship experienced by low-income communities and communities of color through practices like redlining, disinvestment, and gentrification that leads to displacement. Not every loan is a good loan, as we’ve learned from predatory payday lending and the subprime mortgage and foreclosure crisis. That’s why we need banks to sign on to an Anti-Displacement Code of Conduct, so that they develop policies to prevent displacement financing and help communities, homeowners, residents, and small businesses thrive.
Banks are behind much of the displacement that is occurring in Oakland and across California. Banks and other financial institutions are:
· Lending money to property owners who have a history of evicting tenants and removing buildings from local tenant protections.
· Underwriting multifamily loans that assume property owners will pay back the bank by evicting tenants and charging higher rents to new occupants.
· Financing REO to Rental schemes and making single-family home loans to investors who rent out the homes without any tenant protections, instead of lending to first-time homebuyers seeking to live in the community and build wealth.
· Turning a blind eye to what is happening by refusing to take action to halt or mitigate displacement.
· Failing to adequately reinvest in affordable housing, small business development, and community ownership models to help communities remain intact and build wealth.
Small businesses are vulnerable to displacement as well. In a recent CRC survey, 84% of nonprofits working with small business owners reported that their small business clients faced the threat of displacement.
The Chavez family has owned El Huarache Azteca, on International Boulevard in Oakland for 17 years. Mayra Chavez is concerned about small businesses: “Businesses are very vulnerable when it comes to being evicted. Many don’t even have leases. There are no protections for small businesses. They are subject to whatever the landlord wants to do.” The family had hopes of purchasing their building, but ultimately, could not find a bank willing to work with them. “I think if we had a more receptive lender, we might have bought the building,” Mayra said.
CRC and its members are working with the Anti-Eviction Mapping Project to map displacement in Oakland, develop corporate and policy campaigns to prevent further displacement, and build capacity of community groups to advocate for anti-displacement policies and practices.
We have developed an Anti-Displacement Code of Conduct that lays out what banks, private equity, and Wall Street firms should do to avoid financing displacement and to help first-time homebuyers, tenants, small businesses, and communities attain stability and build wealth. Over 50 non-profits have signed on so far.
If you agree that banks and financial institutions should help lift up communities, not remove them, join us by signing your organization on to the Anti-Displacement Code of Conduct.