Learn More: Tell Bank of Marin to Stop Financing Evictions!
For years, real estate speculators planning mass evictions for condominiums have stayed away from larger apartment buildings in SF. Now Bank of Marin is leading the small pack of lenders willing to issue a new kind of loan that has brought large rent-controlled buildings in SF into the crosshairs of real estate speculators.
Large rent-controlled apartment buildings generally cannot be converted to condominiums. For this reason, larger buildings have mostly escaped the epidemic of SF condo conversion evictions. In smaller buildings, speculators have used the Ellis Act (a state law that allows landlords to evict all tenants to get out of the landlord business) to throw out all tenants, and sell off individual interests in the building as so-called TIC’s (tenancies-in-common), for eventual conversion to condominiums. TICs are a form of ownership similar to, but not as desirable as, condominiums.
Traditionally, this strategy of evictions has not been applied in larger buildings because the speculators would be stuck with permanent TICs. Permanent TICs are hard for the speculator to sell due to the uncertainties of this form of ownership. For example, with a traditional loan, if one TIC owner defaults on their mortgage payments, the bank could foreclose on the entire building. This makes TIC projects particularly risky for big buildings, since the risk of default increases as there are more and more TIC partners.
Bank of Marin has begun issuing so-called “fractional loans” for TIC projects. Real estate interests are hailing these loans as a breakthrough that will allow the conversion of rental housing in larger rent-controlled buildings. They claim that these “fractional” loans will provide more stability for permanent TICs. (Fractional loans involve the bank agreeing to lend only on the particular TIC owner’s interests, thus decreasing the risk that the bank will foreclose on the entire property in the event that one TIC owner defaults). While there are many questions about these loans, there is little doubt that real estate speculators view fractional loans as an opportunity to begin targeting bigger apartment buildings that have in the past been safe from mass evictions.
Few banks have committed to making such loans. Bank of Marin has taken the lead. E-Loans has reportedly expressed interest in these loans. Other banks are reportedly interested, but will not identify themselves publicly, presumably because they know that these loans will ignite a public relations disaster.
Bank of Marin boasts of its connection to local communities. The bank’s mission statement asserts that the bank seeks to “positively impact the communities in which we operate.” According to the bank’s website, “Bank of Marin is proud to be a part of the unique communities we serve” and “Bank of Marin feels a strong sense of being in partnership with the community we serve.” Tenant advocates are asking whether Bank of Marin’s supposed commitment to the community extends across the San Francisco Bay.
Bank of Marin could take one very simple step to stop mass evictions in San Francisco. The bank could include a ‘no Ellis Act eviction’ contingency on their loans for large apartment buildings.
Please TAKE ACTION to demand that Bank of Marin stop financing evictions in San Francisco!