Imagine getting a $1 billion, interest-only loan and later lying to your creditor. That’s what a congressional subcommittee said happened between Fannie Mae and Invitation Homes, the single-family rental landlord that in 2017 got a $1 billion interest-only 10-year loan from the government-sponsored enterprise.
The Select Subcommittee on the Coronavirus Crisis found that from March 2020 to July 2021, as many as 29% of the company’s eviction cases resulted in the tenant ultimately losing their housing — a rate more than four times higher than the rate it represented to Fannie Mae.
Officials from Fannie Mae asked Invitation Homes about its eviction practices in March 2021, the report alleges, following news reports that Invitation Homes was disregarding federal guidance to curb evictions.
Via email, an Invitation Homes representative told Fannie Mae that only 6% of the company’s eviction filings in the previous six months resulted in “residents losing their housing,” the report alleged.
But the congressional report found the company’s internal data for October 2020 through March 2021 painted a different picture. That data showed approximately 27% of tenants Invitation Homes filed to evict in that period lost their housing either formally, through court-ordered eviction, or informally.
Recent research by Ashley Gromis and Matthew Desmond of Princeton University has found that informal evictions outnumber formal evictions five to one. Informal evictions are instances where landlords incentivize or coerce tenants to vacate rental properties without relying on the courts. There is little data to track the prevalence of such strategies.
Invitation Homes also told the congressional subcommittee in May 2022 that it “did not maintain centralized, detailed eviction proceeding data,” and a company executive told congressional staff that it could not give even a rough estimate how many tenants moved out, because it did not keep track of this data for all its eviction filings.
A spokesperson for Fannie Mae said it is reviewing the report and evaluating its findings.
Kristi DesJarlais, a spokesperson for Invitation Homes, called the subcommittee’s report a “fault-finding mission.”
“We have always worked with our residents to keep them in their homes, and we will continue to do so,” DesJarlais said.
The report, which focused on four large single-family rental landlords, found that they collectively filed three times as many eviction cases as previously reported, totaling almost 15,000 eviction filings.
The findings specific to Invitation Homes reveal Fannie Mae’s powerlessness when it comes to influencing the relationship between a landlord and a renter, even when Fannie Mae financed the property. In sharp contrast, a mortgage backed by Fannie Mae comes with a comprehensive array of borrower protections.
In 2017, Fannie Mae facilitated a $1 billion loan to Invitation Homes which allowed the company — at the time backed by private equity giant Blackstone Inc. — to lower its debt costs across its single family rental properties.
The deal generated pushback from 25 affordable housing groups, mortgage and real estate trade associations who criticized the deal as running counter to Fannie Mae’s mission.
The following year, Federal Housing Finance Agency director Melvin Watt ended the government-sponsored enterprises’ foray into large-scale investment in the single-family rental market.
“What we learned as a result of the pilots is that the larger single-family rental investor market continues to perform successfully without the liquidity provided by the Enterprises,” said Watt at the time.