Cashing in on the Housing Crisis

Sheelah Kolhatkar’s article “Trailer-Park Trades: When corporations acquire mobile home communities, what happens to the residents?” in the 3/15/21 issue of The New Yorker explores how private equity companies have targeted the low-income residents of mobile home parks. The residents have a substantial investment in staying if they own the mobile home, but not the land it sits on. The mobile homes are difficult and expensive to move. Some of the rate hikes Kolhatkar mentions are so extreme (as high as 87%), that the residents are at risk of losing those homes.

Mobile home parks represent the least expensive housing in the country outside of government subsidized housing. Since reading the article, I’ve learned that equity companies are busy investing in that market as well. In those cases, it’s HUD that pays the new higher rents.

The practice of targeting the poor for further gain raises the specter of Ferguson, Mo., where the costs of city government were supported by outsized fees levied on poor Black residents.

Kolhatkar mentioned the Carlyle Group as a private equity company that currently invests in mobile home parks in Florida and California. The company is worth 246 billion. In California they focus on areas where technology has pushed up housing costs, where trailer-parks offer a last vestige of affordability.

I was familiar with the Carlyle Group from the Gulf War, when they invested heavily in the defense industry, everyone making a killing. More recently, I had my own dealings with them, when my car was sideswiped on an on ramp to the Bay Bridge a year or so ago. The driver was a trucker who readily admitted his responsibility and gave me his insurance information. Since he worked for a large company, I had no doubts about their having sufficient insurance to pay for the damage to my car.

I was stunned when the insurance representative told me three weeks later, with no elaboration, that the driver said the accident was my fault. She took my detailed testimony on the accident and said she’d get back to me with her decision.

When I looked up the insurance company online, ninety percent of the comments on their website were from disgruntled insurees who reported being fleeced out of legitimate claims—in disability insurance, homeowner’s, and automobile insurance. The ten per cent of the comments that were positive sounded like company shills, with scripted pep talks unanchored in incidents. The company was owned by the Carlyle Group.

I was totally prepared when the insurance representative denied my claim a week later, with zero rationale for her decision. There was no appeals process. I looked into reporting them to the State Insurance Commission but the only way to recoup my loss was to take them to Small Claims Court. After first trying to palm me off on an L.A. TV show, a “Judge Judy” spin-off called “Hot Bench,” where I would have the chance to appear before a “hot,” blond Guliani appointee, a lawyer contacted me a few weeks before the court date, seeking to settle. They eventually paid me what I was asking for. Nowhere along the line were the facts of the case ever really in question; I had plenty of evidence and photos on my side.

When I checked the insurance company’s website a few days ago, it had been cleaned up. The comments were all gone and there was no place to leave one. There was no mention of the Carlyle Group. Instead, there were Orwellianisms like “compassionate care focused on you,” and references to their community giving, with no details. (In her letter denying my claim, the insurance representative had closed with the company motto, “Caring counts.”)

If Biden and state and local governments are serious about doing something about wealth inequality, Kolhatkar’s article provides us with an obvious place to start—no predatory investment schemes targeting the poor or government agencies serving the poor. Kolhatkar mentions that some of the investment firms are eligible to government subsidized loans, like Fannie Mae and Freddie Mac.

I was dismayed that the California Public Employee Retirement System (CALPERS) is one of the Carlyle Group’s biggest investors. They may be robbing some of their pensioners of the only home they’ll ever be able to afford. I hope they’ll pull out of this immoral investment black hole. Perhaps they can exert their shareholder influence on Carlyle’s investment strategies, by vetoing its predatory practices, but I wouldn’t bank on it. Government regulation and strict oversight are necessary to make it so.

Sally Mansfield Abbott is the author of Miami in Virgo, a coming-of-age novel set in California’s Central Valley in the 1970’s.