Capitalism doesn’t work without competition.
So it would be nice to see rank-and-file real estate people — who rightfully oppose socialism for things markets can do better — get just as worked up about anti-competitive practices in the industry.
Credit bureaus are a good example. Three are dominant players: Equifax, Experian and TransUnion. Instead of promoting competition among them, the government does the opposite.
When a homebuyer applies for a mortgage that will be sold to or backstopped by Fannie and Freddie — and we’re talking 70 percent of mortgages — the two government-sponsored entities require that the buyer’s credit history be obtained from all three major credit bureaus.
Because of this “tri-merge” policy, Equifax, Experian and TransUnion do not have to compete for that business. The result is higher prices that inflate closing costs for buyers.
The Mortgage Bankers Association has long called for reforms, lamenting in a June blog that “government mandates for a tri-merge report have insulated providers from competitive pressures, allowing them to raise prices with little regard for quality, performance, or innovation.”
The Biden administration heeded that call in 2022, proposing two alternatives to tri-merge. One was “bi-merge” — requiring a credit score from two of the three major credit bureaus. The other was using the FICO 10T and VantageScore 4.0 models. Again, two sources.
The proposal was never implemented because Joe Biden lost the election a year before its scheduled start date, which the Federal Housing Finance Agency postponed four days before Biden left office. Industry opposition was a factor. As six large mortgage players later told the Trump administration’s FHFA director, Bill Pulte, the plan created “significant uncertainty, complexity, and multitude of unanswered questions.”
Last month, Pulte allowed Fannie and Freddie to use VantageScore 4.0 by itself, which will help responsible renters become homeowners because VantageScore takes rent and utility payments into account. Pulte also ditched the bi-merge plan, leaving tri-merge as the other choice.
The Mortgage Bankers Association cheered that news, but wants to replace tri-merge with a single-score option: Equifax, Experian or TransUnion. Using all three was once necessary because their reports varied widely, but their information is far more consistent now, the MBA says. Single-score is working well for auto loans and home equity loans, according to the group.
What we’re thinking about: Woody Pascal, who authored the criteria by which a substantially rehabilitated building may be removed from rent stabilization, was hired four months ago by the New York Apartment Association, which represents rent-stabilized owners.
The criteria — as interpreted by the Division of Homes and Community Renewal — have turned out to be very difficult to meet, trapping some buildings in rent stabilization.
But the NYAA clearly did not blame Pascal. It considers the regulations to be a product of the agency, not of Pascal in particular.
Send your thoughts on sub rehab and demolition to eengquist@therealdeal.com.
A thing we’ve learned: The G train, which fully opened in 1937, was the last complete subway line built in New York City. It was originally called the IND Crosstown Line. No subway stations have been built in Brooklyn since 1948, when the A train was extended from Broadway Junction to Euclid Avenue. The Interborough Express, if built as planned, would end both of those droughts.
Elsewhere…
— A former NYPD lawyer filed a corruption suit against the department and Mayor Eric Adams, alleging she was fired after recommending disciplinary action against the highest-ranking uniformed officer, former Chief of Department Jeffrey Maddrey, according to Gothamist. The plaintiff, Amy Litwin, investigated Maddrey following allegations by civilians that he intervened to halt the arrest of a retired officer who threatened teenagers.
— Three years into Gov. Kathy Hochul’s five-year housing plan, the state says it has “built or preserved” 65,000 of the 100,000 promised affordable homes, according to City & State. However, according to the official housing plan dashboard, only 47,000 homes are done or in the works. The state attributes this discrepancy to a delay in data collection. New York City has the bulk of the units — 19,000, including 8,000 in Brooklyn.
— There’s no official enforcement or oversight of ballot petitions, Gothamist reported. The outlet looked into fraudulent signatures found on Adams’ petitions and concluded that no city official reviews the signatures. Enforcement is typically done by rival campaigns. — Quinn Waller
Closing time
Residential: The top residential deal recorded Thursday was $5.5 million for a 3,650-square-foot townhouse at 683 Leonard Street in Greenpoint. The Yuval Vidal Team at Compass had the listing.
Commercial: The top commercial deal recorded was $12 million for a 35,349-square-foot warehouse at 31-39 39th Street in Sunnyside.
New to the Market: The highest price for a residential property hitting the market was $15 million for a 4,032-square-foot condominium unit at 36 Bleecker Street in Noho. Tony Sargent at Compass has the listing.
Breaking Ground: The largest new building project filed was for an 870,124-square-foot, 22- and 28-story project with 630 total units at 61-06 Junction Boulevard in Rego Park. Lu Ning Architecture filed the permit on behalf of Jiashu Xu of Grand Construction and Development.
— Matthew Elo
