Community Organizations Respond to First Republic Bank’s New Policy to Stop Financing Displacement Mortgages
San Francisco, CA- September 3, 2015- In response to a new policy announced by First Republic Bank to stop financing so-called “displacement mortgages,” 11 local community organizations released this statement today:
We commend First Republic Bank for boldly acknowledging the significance of displacement mortgages in the housing displacement crisis that is occurring in San Francisco. We are pleased to see the Bank respond to the concerns raised directly by impacted tenants and their allies in meetings and in our protest of this harmful product. The origination of displacement mortgages ultimately facilitate Ellis Act evictions of innocent tenants in rent controlled buildings. These loans have led to the displacement of seniors, low income residents, and other vulnerable renters, and have led to a reduction in the supply of housing units that are affordable to low and moderate income people in cities like San Francisco.
Specifically, we acknowledge First Republic’s new policy of:
1) Asking in its loan applications if borrowers intend to use the Ellis Act to evict tenants;
2) Declining loans where borrowers indicate an intent to evict tenants via the Ellis Act; and
3) Reserving its rights to enforce its policy by later withholding consent to borrowers who seek to evict tenants via the Ellis Act, where possible
Importantly, First Republic Bank has not only expressed concern about the problem of Ellis Act evictions and their impact on communities, but has also indicated its desire to be part of the solution, where feasible, by helping nonprofit affordable housing developers to finance the purchase of buildings where landlords may otherwise threaten to evict tenants and convert rent-controlled housing units into market-rate or luxury Tenancies in Common.
We look forward to the results of First Republic Bank implementing this policy, including by talking to local nonprofit groups about financing the purchase of at-risk buildings so that long term residents are not forced to leave their homes as a result of displacement mortgages made by the bank. We call on the bank to ensure that it provides the financing necessary for nonprofits to successfully purchase the buildings and halt the eviction of Martiza Osorio, Leticia Morales and other tenants impacted by the bank’s harmful practices.
This response from First Republic Bank, which came in response to community concerns, establishes a good precedent and first step for other banks to follow. We will be approaching Sterling Bank, Bank of Marin, Wells Fargo, Bank of America and other banks that may be originating displacement mortgages in San Francisco, Los Angeles, and other cities that have protections in place for rent controlled buildings and tenants. We will encourage these banks to follow First Republic’s lead. In the meantime, we will continue to monitor First Republic Bank to ensure that it honors its commitments.
Anti Eviction Mapping Project
California Reinvestment Coalition
Causa Justa :: Just Cause
Housing Rights Committee
Mission Economic Development Agency
San Francisco ACCE
San Francisco Community Land Trust
San Francisco Tenants Union
Tenderloin Housing Clinic