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    You know the old saying, “the more things change, the more they stay the same“? We’ve come across two interesting stories in the news over the last week that challenge this classic sentiment.

    1. Taking on the affordable housing crisis

    A lack of affordable housing is pushing low and middle-class folks out of the housing market. Adding to the problem are ever-increasing rents. With an election year looming, many of the Democratic candidates have proposed plans to tackle the issue. One plan developed by the progressive group the People’s Action Coalition is proposing an investment of, “billions of dollars in housing infrastructure and radically restructuring the way the housing market works.”

    The Coalition’s plan, known as the “Home Guarantee,” is described as a viable alternative to what the Coalition describes as the “failure of the housing market.” The Coalition’s vision is driven by the belief that “in the richest country in the world’s history, everyone should have a safe, accessible, sustainable, truly/permanently affordable home.”

    The group cites the growing need for a public housing option. Part of its plan includes:

    • Making a $150 billion reinvestment in existing public housing
    • Building “12 million social housing units…targeting the 12 million extremely cost-burdened renters who spend more than half their income on rent.”
    • Advocating for a “tenant bill of rights…including universal rent control, a national right to lease renewal, and universal access to lawyers for low-income renters.”
    • The creation of “a People’s Housing Commission, comprised of members of government and tenant rights and community organizations, who would be tasked with creating 10-year plans for further improvements to the nation’s housing stock.”

    The plan also proposes the payment of reparations “for centuries of racist housing policies” and “rigidly enforcing fair housing laws, including the Obama-era Affirmatively Furthering Fair Housing (AFFH) rule, and guaranteeing principal cancellation or reduction for groups impacted by discriminatory housing laws.”

    Lastly, “the market itself would be shifted to prioritize housing access and rights above profits.”

    The Home Guarantee wants to end housing and land speculation, and de-commodify housing; suggestions to meet these goals include taxes on speculation and foreign buyers, a flipping tax, and requiring someone to reside in a residential unit a certain number of years before selling.

    For more information and to download a full copy of the proposal go to

    2. Banks bringing back private-label mortgage bonds

    An article published by Ben Eisen and Telis Demos for the the Wall Street Journal entitled “Banks Warm to Mortgage Bonds That Burned Them in 2008,” describes how banks, including Citigroup Inc., Goldman Sachs Group Inc., Wells Fargo & Co, and JPMorgan Chase & Co. have “restarted or expanded the business of spinning fresh pools of mortgages into securities over the past year.” The return of private-label mortgage bonds, a financial instrument that “blew up during the financial crisis of 2008” and was, “once among the most significant businesses on Wall Street” lays “the groundwork for a market that stands to grow as the Trump administration tries to reduce the government’s role in housing finance.”

    At its height in 2007, $1 trillion worth of mortgages were private-label mortgage bonds. Last year the amount was nearly $70 billion. This market could continue to grow should the Trump administration move forward with its plans to privatize Fannie Mae and Freddie Mac.

    Eisen and Demos note “the fact that many investors say they are once again getting comfortable buying these bonds also underscores the broader market’s search for yield. Instead of viewing these bonds as toxic reminders of the financial crisis, many money managers see them as an opportunity to generate more income in a low-rate world.”

    While the authors describe these efforts to revive private mortgage-backed securities as “baby steps,” and note that banks like Citigroup are “working…to provide data to investors about the underlying mortgages,” it will be interesting to see how this story unfolds as interest rates continue to drop.

    The bottom line

    These two stories illustrate that the divide between the left and right, so prevalent elsewhere, may also impact the future of housing policy and the market itself. Are we looking at radical change or a return to dangerous practices? Stay tuned.

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