Sample Letter to Department of Housing and Urban Development (HUD)
Secretary Benjamin Carson
US Department of Housing and Urban Development
451 7th Street S.W.
Washington, DC 20410
Dear Secretary Carson,
Our family is writing to you from Southern California about a very real issue we see in housing in our neighborhoods. In particular, a confluence of
• economic incentives,
• tax advantages,
• weak banking oversight, and
• Fair Housing Act nuances
is enabling businesses/investors to purchase residential property in neighborhoods intended for families under the guise of helping the disabled. We use the term “family” here in the legal sense: up to 6 adults living together as a communal unit.
Economic drivers contributing to the problem are:
1) Small Business Association loans given in exchange for real estate in residential neighborhoods
2) 1031 property exchanges encouraging rapid re-investment of money in secondary residences
3) Banks offering mortgages to businesses or LLCs operating businesses in neighborhoods
4) Wrap-around loans, in which a homeowner “sells” a property on a long term contingency, based on the profits of a business run on the property in the meantime.
5) Banks ignoring signs that individuals with a mortgage on a residence are operating a business there.
The banks are so disinterested in this issue the they do not even have hotlines through which consumers can quickly and anonymously report such fraud.
In the past, homeowners in most residential neighborhoods were precluded from operating short-term Boarding Houses through municipal zoning. Through an intentional misinterpretation of the Fair Housing Act, businesses have now opened up “virgin” real estate to which they could never before lay claim and are homesteading in the Beach Cities of Southern California, in Florida and in Arizona. They operate short-term tenancies with high turnover rates in areas where people have invested their life’s savings in a home.
This is discriminatory to homeowners for the following reasons:
1) Businesses can charge short-term rental rates to cover the cost of their properties; homeowners cannot.
2) Businesses have access to investment capital to purchase properties; homeowners do not.
3) Businesses therefore can afford higher prices than traditional homeowners, squeezing them out of the bidding process
4) Businesses buy multiple residences within short walking distances from one another, and even on the same street, altering the character of the neighborhood.
Just as with the subprime mortgage crisis, banks and investors have found a way to make quick money. It is only a hop, skip and a jump from this practice to a time where the Mayo Clinic is buying houses for distributed post-operative care; Hilton is buying houses to rent out distributed rooms; and Corrections Corporation of America is buying houses in residential neighborhoods to place parolees. We believe that the federal government wants to ensure that neighborhoods remain residential. We invite you to come to San Juan Capistrano to see how these businesses are buying up neighborhoods.
Our family is asking that you investigate this problem so that you fully understand the economics contributing to it. Guidance issued by DoJ and HUD on November 20, 2016 is inadequate and contradictory; cities and states need to hear that separation requirements of 800-1000 feet are fair and legal. We ask that you urge Congress to support Darrell Issa’s HR 6070, the Safe Recovery and Community Empowerment Act, to enable local communities to manage the infiltration of businesses into neighborhoods. The Fair Housing Act was intended to provide equal access for the disabled, not to enable businesses to run amok in residential areas.
Thank you very much.
US Department of Housing and Urban Development
451 7th Street S.W.
Washington, DC 20410
Dear Secretary Carson,
Our family is writing to you from Southern California about a very real issue we see in housing in our neighborhoods. In particular, a confluence of
• economic incentives,
• tax advantages,
• weak banking oversight, and
• Fair Housing Act nuances
is enabling businesses/investors to purchase residential property in neighborhoods intended for families under the guise of helping the disabled. We use the term “family” here in the legal sense: up to 6 adults living together as a communal unit.
Economic drivers contributing to the problem are:
1) Small Business Association loans given in exchange for real estate in residential neighborhoods
2) 1031 property exchanges encouraging rapid re-investment of money in secondary residences
3) Banks offering mortgages to businesses or LLCs operating businesses in neighborhoods
4) Wrap-around loans, in which a homeowner “sells” a property on a long term contingency, based on the profits of a business run on the property in the meantime.
5) Banks ignoring signs that individuals with a mortgage on a residence are operating a business there.
The banks are so disinterested in this issue the they do not even have hotlines through which consumers can quickly and anonymously report such fraud.
In the past, homeowners in most residential neighborhoods were precluded from operating short-term Boarding Houses through municipal zoning. Through an intentional misinterpretation of the Fair Housing Act, businesses have now opened up “virgin” real estate to which they could never before lay claim and are homesteading in the Beach Cities of Southern California, in Florida and in Arizona. They operate short-term tenancies with high turnover rates in areas where people have invested their life’s savings in a home.
This is discriminatory to homeowners for the following reasons:
1) Businesses can charge short-term rental rates to cover the cost of their properties; homeowners cannot.
2) Businesses have access to investment capital to purchase properties; homeowners do not.
3) Businesses therefore can afford higher prices than traditional homeowners, squeezing them out of the bidding process
4) Businesses buy multiple residences within short walking distances from one another, and even on the same street, altering the character of the neighborhood.
Just as with the subprime mortgage crisis, banks and investors have found a way to make quick money. It is only a hop, skip and a jump from this practice to a time where the Mayo Clinic is buying houses for distributed post-operative care; Hilton is buying houses to rent out distributed rooms; and Corrections Corporation of America is buying houses in residential neighborhoods to place parolees. We believe that the federal government wants to ensure that neighborhoods remain residential. We invite you to come to San Juan Capistrano to see how these businesses are buying up neighborhoods.
Our family is asking that you investigate this problem so that you fully understand the economics contributing to it. Guidance issued by DoJ and HUD on November 20, 2016 is inadequate and contradictory; cities and states need to hear that separation requirements of 800-1000 feet are fair and legal. We ask that you urge Congress to support Darrell Issa’s HR 6070, the Safe Recovery and Community Empowerment Act, to enable local communities to manage the infiltration of businesses into neighborhoods. The Fair Housing Act was intended to provide equal access for the disabled, not to enable businesses to run amok in residential areas.
Thank you very much.