Inside the Policy Shift: NARPM on Trump’s SFR Executive Order and HUD | Monica Gilroy & Tyler Craddock

A Podcast | Monica and Tyler

Pete Neubig: All right, everybody, welcome to the NARPM podcast. I actually feel like Brit Hume. We have breaking news. I have Tyler Craddock, who is the Chief Advocacy Officer for NARPM, and I have Monica Gilroy, owner of the Gilroy Firm, and she's the outside national property management counsel to NARPM. So guys, thank you so much for being here. We got a directive from President D.D. Lee, or NARPM National President, not President Trump, but NARPM National President D.D. Lee, to get on here and give you, the NARPM members, this information as quickly as possible. So there's two things that have come out just recently. I don't know if you've heard, but President Trump came out with some executive order basically saying that institutionals can no longer buy properties. Monica and Tyler are going to break that down for us. Then there was a directive from HUD with something that said, basically, it's our job now, the landlord's job, to verify, to make sure that all these residents have legal status. So let's start with you, Tyler. Let's start with you. Let's talk about the President's executive order. I know it's got a real true name, but let's talk a little bit about that and about institutionals buying properties.

Tyler Craddock: Sure. Absolutely. And just as a matter of context, this issue has been cropping up for a few years now, both at the state and the federal level and on the legislative side. On January the 20th, the President issued an executive order. The official title was Stopping Wall Street from Competing with Main Street Homebuyers. And it goes through and it does a few things that I'll let Monica walk through. She's deep dafted a little more than me. I did catch a few odds and ends that are of particular interest on the lobbying side for us. But I'll defer to Monica's analysis of a larger picture.

Pete Neubig: What is Trump trying to do here? What's he trying to do? And what's actually the repercussions?

Tyler Craddock: Yes.

Monica Gilroy: Great. And thanks, as always, Pete, for having us. Yeah. I mean, basically, this is something that, and I want to for sure hear Tyler's perspective on this, but it's actually something that is sort of more democratically focused, in my opinion. It sort of seems like it aligns him a little bit more with the Democrats. But the thing is, he wants to stop the Blackstones of the world, the American Homes for Rent, the Progress Homes, from basically the Walls, what they're calling Wall Street, right? From purchasing and owning properties that the administration thinks should be available to individual homebuyers. So it's really, but when we dive into and when you read it a little bit, it's really just, it's not quite as scary as it sounds. Like, if I was the counsel for those institutions, I think it's going to create a lot of paperwork, but it basically is trying to stop large, what they're calling institutional investors, from basically buying up, you know, gobbling up the houses like they do. It's an interesting thought.

Pete Neubig: I'll play devil's advocate here.

Monica Gilroy: I mean, I think it's really just a series of-

Pete Neubig: I'm going to be agnostic here. I don't want everybody to get mad at me one way or the other, but do you think that the One is these institutionals don't own as many properties as people think. Is that right or wrong? Like, do we even know the percentages that institutionals own?

Monica Gilroy: Yeah. I actually listened to something the other day that said that in June of 22, right? Investors owned around 450,000 or 3% of all the SFR. So yeah, to your point exactly, right? And one of the first things that the executive order says is that the treasury, it's supposed to consult with the assistant to the president for economic policy to formulate an actual definition of what is a large institutional investor and what is a single family home. So that's the first step. Tyler, I was thinking that, you know, knowing our efforts at NARPM with lead-based paint, I'm a little nervous about seeing what this definition might be, because what I've heard is that the department of treasury or the secretary of the treasury- So I've not heard what that definition is going to look like.

Tyler Craddock: A lot of us are following it. And even at the outset, say, you know, at NARPM, if you go on our website, we have a very, you know, not hard in favor, hard against this because we know we represent a number of property managers and they represent a number of different types of investors.

Pete Neubig: Tyler, you're just reporting news, man, on NARPM. We're not fake news. We're news news. You're just giving them facts, baby.

Tyler Craddock: That's right. That's right. We're the umpires. We're just calling balls and strikes here, folks. But I've not seen that yet. Obviously, a number of us are following it just because of the ripples effect it can have in other things, because even outside of this, y'all, and y'all know this real well, once that definition goes and it sticks, then it can get tacked to other things that might not affect you now, but it may only be swimming around you, but, you know, in a year or two, it'll be jumped up in the boat and be snapping at you. So, you know.

Monica Gilroy: Yeah, that was my gut reaction. Yeah, my gut reaction was, you know, you know, I think I think there is such a difference. And again, I think this is part of the confusion we see with some of the government agencies. There's such a difference between who, with this executive order targets, right, which are big companies that buy properties and they manage them all in-house, right? These companies don't use third-party property management. So I think the distinction that, and if we are going to be, as NARPM, I'm a part of this conversation, like, I'm not sure if there'll be a comment period or whatever, but obviously if there is, I think, you know, Tyler and I will probably for sure, you know, just give some two cents about the, you know, that an institutional investor or a large institutional investor, as the CEO is calling it, really wouldn't be your traditional NARPM member, right? Because we're managed, we're not, oh, I mean, yes, we may be managing some of our own properties, but we're for the whole managing other people's property. And I think that's a big difference. But to Tyler's point, yeah, my initial reaction was, uh-oh, if we're going to get a definition of what a large institutional investor is and what a single family home is, yeah, that's going to creep into other things that we need to be super, super, super careful. The second thing, Pete, that it does do is that within 60 days of the date of the order, the secretary of agriculture and HUD and the secretary and the VA and the general services, and FHFA, they all have to create guidance to basically stop those government entities from basically helping these large institutional investors. They don't want them basically approving them, insuring them, sponsoring them, securitizing them. So basically, they just don't, they're basically saying, look at the government agencies are not helping -

Pete Neubig: If I hear this correctly, if I'm listening to this, I'm a NARPM member and I'm managing thousands of homes. The first thing is, at first, I don't think this affects me at all because we don't own the homes, right? And so, but when they define it, depending on how they define it, they can literally define third-party management, potentially get lumped in. Highly unlikely, though. Is that both of y'all's kind of gut feeling? Highly unlikely?

Tyler Craddock: I think that it is, but I think all of us who've been around either Washington or around state capitals know that you don't ever turn your back on anything because nothing is ever, as a legislator from back home used to say, nothing is ever dead until it's quartered and spread to the four corners of the earth. And then it's really still not even dead then. So it's just, our investors, our clients do due diligence. That's the same thing on the legislative side that we do. This is on that, on that definition. For us, it's just a matter of due diligence because you just want to be able to check that box and know that you've protected your members that way.

Pete Neubig: Now, the next thing is, I was going to ask, they have not defined what an institutional investor is yet, have they? Like they don't have like, if I have somebody who's a client of mine and they have a hundred homes, it's not unheard of to somebody who's not institutional to have a hundred homes. It's highly unlikely. It's a small percentage, but it's not unheard of. Is that person institutional or do they have to have, yeah, go ahead.

Monica Gilroy: That's the thing that, yeah, that's the thing that made me nervous because I heard that the secretary, or I have an understanding that the secretary of the treasury seems to think that number could be something like a hundred homes. Clearly that is a dichotomy with what I think is trying to be done here. You know, one of the things that I think is interesting is that we see this a lot, and Tyler, this is one of the things I wanted to see if you agreed with it. We see a lot, this administration tends to kind of drop big things, but then when you kind of peel it back and when it finally gets to the end of it, it's really not as bad as we think. And like in this one, when you keep reading it, right. It says things like, you know, they're, you know, one of the policies is they don't really want the, you know, VA HUD to be selling to wall street. Right. But then it has a complete exemption for bill to rent, which is fantastic, which again, probably isn't our typical NARPM member, but that's a like bill to rent. That's actually, that's great. That's a recognition by the administration that bill to rent is a really good thing because of the shortage of homes that are out there. And then it goes on to say, in, in, when you keep reading, basically, it just sounds like it's going to be a lot more paperwork for however, these large institutional investors come. The FTC has to review when they make big purchases. So like I say, I think it's kind of interesting.

Pete Neubig: The time is the time that it's coming out, Monica.

Monica Gilroy: You know what? That doesn't offend me locally.

Pete Neubig: I mean, I have my pulse to the, to the ground and I can tell you institutions have not been buying anything in the last year and a half. So if you think, you think this might be a, you know, we know that the midterms are coming. I'm wondering if this is just more of smoke than it is anything else to try to get the general public who hates the bad landlord, you know, to, to on his side. And maybe like you said, across the aisle and talk to that and kind of have something that's in common with the Democrats is that could be all, could it just be smoking?

Tyler Craddock: So one of the, one of the truisms is in politics there, there are never any accidents, coincidence, coincidences in politics. There are no coincidences. There are no, there are no accidents. Things happen for a reason. I do know that everybody on both sides of the aisle, executive branch, legislative branch, are all really trying to focus on the, the larger quote, affordability issues. This plays into that. And, and, and, and I know some see this and I think Pete, you just alluded to it, Monica, you alluded to it, you know, Hey, this is one of those across the aisle kind of things. But I will tell you on state level, we've seen legislation like this actually come from conservative Republican legislators and what drives it there isn't as much a, we hate Wall Street, although obviously that makes up, you know, wonderful, you know, talking point. What drives it there is that you'll find like you'll pull back and you'll find some instances these folks represent, you know, really tight housing markets. And so, you know, there's this perception, even though Pete, as you rightly say, Hey, they've, they've cool. They've tapped the brakes a little bit on the buy-in, but Hey, it's a tight housing market out there. I can't find a home. Who's, who's the book? Who's the, if I can say politically correct, the boogie person. Who's the boogie person we have to blame here? Oh, well, there's these big bad institutional investors out there. So you, again, I, you know, I've, I've seen the legislature, I've seen legislation in states and I've seen it also as one would write, you know, perfectly logically think Senate come from your progressive, you know, left of center legislators. So I think there's, I think there is a certain element to that.

Pete Neubig: Yeah. So if I'm invitation home or invitation homes, progressive, I'm looking at this really, really closely. If I am your average NARPM member, that's managing, you know, let's call it even a thousand homes. I don't know if I'm giving this much thought and I'm just kind of waiting on Tyler to kind of just send something out that says it's not have to do anything with third party. Now they need to find what a house is and they made, they can't even define what a woman is, Tyler. They're going to define a house. I don't know if they're gonna be able to find a single family home anytime soon.

Tyler Craddock: So I'm going to ask you a question, but I ain't going to touch a part of that, right? I've got, I've worked both sides of the aisle. And so no, in all seriousness, Pete, here's the part though, when I read, when I read the executive order, you know, here's the, here's the, the one thing just as the NARPM lobbyist that does just, just jump off the page at me, if you will. You know, as first as Monica alluded to the president does ask, you know, treasury and FTC and the attorney general. So justice, treasury and FTC to, to look at some antitrust things and particularly also to look at, you know, large numbers of acquisitions in specific markets, right? Because we know some of this, some of this activity that's referred to does it, you know, it's, it's more acute in some markets and less than others. But when you, but when you come down to that section below it, there's a part, this is a part, you know, because remember all executives order, executive orders are, are telling executive departments to do things, look at, give me ideas for, give me guidance on, right? So, and so some have more effect than those, but that, you know, here is, here's, and I'm just going to read it verbatim. A secretary of housing and urban development shall, to the extent permitted by law. And again, that's a me and Monica to figure out, mostly Monica, because she's, she's the smart lawyer on the hat. To permitted by law, require owners and managing agents of single family home rentals participating in federal housing assistance programs, read section eight, housing choice voucher to disclose to HUD, and now I'm paraphrasing, to HUD, direct or indirect owners, managers, or affiliates, including changes in ownership and control of single family rentals to the extent necessary to determine any involvement of large institutional investors. So, so a NARPM member is managing, you know, and a lot of our members in various and sundry markets manage, manage rentals that are earned in the housing choice voucher program, right? So the way, and I don't know what this is going to look like when it comes out of HUD, but my, my initial just put, you know, gets my radar going on this is, okay, so every time one of my owners, if I'm a property manager, one of my owners sells, one of my owners has someone who invests, you know, invests in a venture with them, whatever, are they then going to have to turn around and, hey, hey, HUD, they, they bought into this house over here, right? And that's, again, not that there's anything untoward with it. It's just, it's another layer of things to keep up with and things that if you don't keep up with them, they cause you headache and liability.

Monica Gilroy: That's what I was going to say is, I think the 1 that affects our members directly is that directive that basically you have to disclose. If you're managing section 8, you're going to have to disclose the ownership. The property managers are going to have to disclose who owns it. Right? And it's the, and the concept is to see if, in fact, they are. Whatever, however, the definition of institutional investors again, the timeframe here is going to be in the next 30 days. We're going to get these 2 definitions, right? What is an large institutional investor and what is a single family home? Once we get those definitions, then the next thing is within 60 days of the date of the order date of the, that's when they're going to, they're going to have to all these departments are going to be working really fast to put together guidance from, you know, to HUD, the GSEs, Fannie, Freddie, right? Basically saying that they can't help facilitate these things. Right? But yet they basically no help with the purchase and sales. But again, the thing, when you read this in its totality is it doesn't, it's not a direct ban on a purchase. It just adds to Tyler's points, lots of layers of extra work for the big institutions. Like, for example, there's going to have to be FTC, right? There is an FTC review right now, unless you're dealing with publicly traded companies. But there's going to have to be under the executive order if they want to buy. So, if I'm like, sitting in the offices of American home for rent or something like that, I'm sort of thinking, okay, well, it's not a flat out ban, but it is just going to add a lot of headache and paperwork, which is, you know, again, very common with things of this nature. But to Tyler's point, until we see what these definitions look like, that's the part that makes me a little nervous is to your point, Pete, what if that large institutional investor is a thousand? That would not be cool because we have a lot of NARPM members who manage even more than that and certainly do not fix, fit the, they're not the same as an American homes for rent. I think what we really need to be sure, and again, if there's a comment period or anything like that, we've got to draw that very specific distinction as NARPM of owned and managed all in house and third party management, right? Because again, the third party aspect is what sets our members completely apart from Wall Street, right?

Pete Neubig: Now, as you guys are going to be close to this and watching out, and as information comes out, how are we getting that out to the NARPM members? And if you listen to this and you're not a NARPM member, shame on you, need to join. Is it the NARPM advisor? Is it, there's an advisory email that comes out. Is something like that, an illegal advisory thing that comes out, Tyler? Can you, is that where the information would come out or is it just on the website?

Tyler Craddock: Several places. First of all, yes, the weekly talking points that goes out to our GA leadership, chapter leaders, others. And by the way, if you're a NARPM member and you're not on that, just, we scoop up a lot of members with that. But if you happen to be that one member out somewhere who's not, and you want to be, just email me tcraddock@NARPM.org. We will gladly put you on the list. So there, that comes out weekly. So we'll get it out that way. We will, of course, put it into monthly government affairs update that runs. We'll push it out through social media. We'll push it out through the socials. Victoria just does a slam bang job with that. So we'll, we'll get, we'll get that out that way. And, and, and, you know, particularly even probably also we'll push it out as just a NARPM advocacy alert, you know, we have the one offs that we just, we can send an entire membership that we send that to our quorum system. And so we'll, we'll, cause that, that, I think when we get those definitions, I can't, I can't underscore what Monica said enough, the importance of that, that, that that's going to be one of those two. And, you know, and then of course, obviously we'll, I'll do the fun thing, the beautiful part now with a site that has WordPress working in the back is we can make these wonderful shareable blurbs that we can just push out and gives a nice, wonderful shareable link that we can just push out, push out on the site

Pete Neubig: Just another, just another valuable, you know, just another valuable tool as being, being for being a NARPM member. Right? Like, this is what NARPM does.

Monica Gilroy: That's what I was going to say, that's what I was going to say is that you have a voice, you have a seat at the table, but you really have a seat at the table. Everybody who's listening NARPM members in particular. Yeah, and as Pete said, if you're not a member of the National Association of residential property managers, and you are managing even 5 houses or whatever you're doing, this is an educational fun fest and it's resource heavy and it's a wonderful collaborative environment and organization. But for our NARPM members listening, this is why even giving 25 dollars to the pack is so important because we don't know what's going to happen. And we don't know in 30 days from now, suddenly we have to send Tyler up to, you know, the hill or to talk to the talk to these departments. So now let's talk about this definition hurts us.

Pete Neubig: So is it now it's up to the third party managers? We have to verify their legal status or what? I'm already scared to go to without my gun and flag jacket, just because I haven't paid rent. Now I got to go verify if they're gringos or not. What's going on here?

Tyler Craddock: So here's what happened there on Friday, HUD put out a press release and again, and again, because when I first read it, Pete, Monica, I thought the same thing, you know, and right in the right in the in the in the beginning paragraph, second paragraph, it talks about PHAs and owners having to having to do these things. But as Monica said earlier, sometimes and again, this when we say things when we say that, you know, EEOs and agency directives and press releases, when we talk about that, they look like this, but then you realize they're much more constrained. That's not that's not just, you know, that's with almost every president and every executive branch, right? Because it just is. Here's what actually went out and I actually have if you're watching a video.

Pete Neubig: So I went and put this thing called paper. I don't I don't I haven't seen that in a while.

Tyler Craddock: I feel so so old. I'm waiting. I'm when I print something at the office. I'm waiting for like the Gen Zers to call me Unc or something.

Monica Gilroy: But the remember, remember, my dad is a paper. My dad's a paper scientist. So he's a paper chemist. So, so there's, you know, we were kids.

Tyler Craddock: Yeah, there's actually a similar to that Senator Mark Warner from Virginia industry of money started out. He made his money in cell phone business. So when he's somewhere in cell phone rings, he goes, ah, the sound of money. But so, so this, so when I actually you read through this, yeah, this is this is actually the website on the release and on, you know, you'll see the little blog blurb news item. It's on our site. Everything is linked there. Basically, this is a letter that that HUD sent to the executive directors of the public housing authorities across the country. And it goes, you know, it gets through some introductory stuff. And then it again says, hey, basically, here, here's what here's what happened. If you can well imagine HUD has their tenant files, right? Like the PHAs have turned in and that here's the list of our folks who qualify for housing assistance. And then here's how we qualify them, etc, etc. So they have it. Just think of it as their membership database, if you will. They took that. And part of that, by the way, when the PHA qualifies the person, they have to verify, they have to verify immigration status, right? Because that gets to the point.

Pete Neubig: You should be here legally to be able to get some housing from the American taxpayers.

Tyler Craddock: So right, right. And so and it's and it's in the in the housing choice voucher program, which that's the one that we watch the most closely on the on the NARPM side, because that's what so many of our members, so many of our members are managing properties that are in that. So on the housing choice voucher side, right, the PHA qualifies them does that. So they have their file. They took their file, bumped it against the DHS file, right? So, you know, Tyler's here and Tyler's here. Does Tyler's status match in both these? And if it does, hey, we're fine, right? If it doesn't, then that's the list that they sent the DHS sent back to HUD. Yeah, well, and then HUD is going to the PHAs and saying, well, it's interesting, they're saying, hey, look, we've got these people, right? So and HUD up front says, hey, this may not this this does not automatically mean they're ineligible because, you know, sometimes folks come in and they may ping, but then you go back and look, oh, no, no, no, this is all in order. They're saying, hey, PHAs, if you've qualified, then we know you've we know you've already done this legwork. So just show us that and check it out. So, you know, basically, you know, send us back something and confirming you've sought the additional documentation, you have it, you've correctly coded them. And hey, if they're not correctly coded in your files, then, hey, we may have to look at, you know, termination of assistance. So here's here's the most important part, though, and I should have led with this part that scared me the most. And in my conversations with HUD, I said, hey, there are certain policy areas. That we're not going there are certain policy areas that, hey, we're you know, we're not going to get in on either side of. But don't turn our property managers into having to implement and do these things and particularly do not have them having to address questions of immigration status, because that gets them into all sorts of liability places they don't need to be. And it actually looks like on this one. That what they did reflects what I asked them. Now, I'd like to sit here and take credit that, hey, I did what I told them to do. You know, I don't I don't think that was the case, because in my conversations with HUD, they were clear that was not their intent to turn out to turn our folks into having to do that. But it was their intent that any work like that would have to be done by the public housing authorities.

Pete Neubig: So, go ahead. No, go ahead.

Monica Gilroy: And I think Pete, as I say, I just think, you know, while we're on the topic of, you know, the immigration status, just everyone remember, especially in light of all of the events coming out of Minnesota over the last few weeks. Just remember that did produce a wonderful article that I tried to help with in terms of how a property matter should deal if ICE appears at your office. The biggest concern, of course, for property managers is that you don't want to find yourself in a fair housing situation. You again, what that article reminded you is that ICE short of having a federal subpoena doesn't have any ability to come in and to your office and say, give me all your files or tell me about your tenant and unit 52 they, you do not have to provide anything. And, in fact, my advice is, you should not, because it's just, it's potentially a fair housing violation to be profiling someone based on country of origin race color. So, now it's different if they come back with a court order, but even then, if there's a court order or subpoena, or something that says, you must produce files, you always are going to have a certain amount of time to do that. It's going to explain what the penalty is, but to just have random ICE officials showing up at your office or contacting you or showing up at your property, you have every right to politely decline to assist and ask them to leave. And obviously safety 1st always, but just be very conscientious of the fact that as PMs, that's that that guessing right? Or that that participating with ICE without them having proper documentation. As to their authority to do so, ICE does not have any authority. They can do these, they can issue these things that are that are not actually the same. They're just administrative warrants are not the same as a federal subpoena and there's no duty under the law to comply. But obviously, you're always going to be polite and professional, but my professional opinion is be very careful in providing anything.

Tyler Craddock: And I want to 1 thing I would add from a court because again, it could both of these things that we're mentioning. The directive with regard to the Housing Choice Voucher, well, regard to assisted housing, but in our case, Housing Choice Vouchers and with regard to the President's EO, you know, both of those, a lot of it, what's going to run are going to come out of HUD, the section of HUD that that that's going to run out of out of public and Indian housing, the Assistant Secretary for that is going to be speaking at Northrop Capital Summit, which is February 17th through 19th. And speaking, doing a little bit of Q&A, so if you just a way, you can get even a little more insight on it. We still have some space available. If you go to the Northrop website and again, yeah, yeah, come join us.

Monica Gilroy: It's going to be great. The other thing, Tyler, I think, yeah, Tyler, we need to also come back you and me to Pete one day to still try to figure out why they withdrew that 2020, how they withdrew that 2020. Emotional Support Animal Directive and we actually the second day we're going to have a real answer on that. So, yeah, I mean, you know, the Capital Summit, friends is a great way to get more information, right?

Tyler Craddock: I think I think theoretically, there's an idea and a lot of instances now that they want.

Monica Gilroy: Perfect.

Tyler Craddock: They want some of this more.

Monica Gilroy: You can ask that question that I want. I don't know the answer. And I'd love to know.

Tyler Craddock: Hey, discrimination is discrimination. We're going to let the courts decide. And you and I know have had some long conversations about how it depends on which circuit you're in. And I have to always remind my friends of administrations of both parties, the business community abhors uncertainty.

Monica Gilroy: Absolutely.

Tyler Craddock: Absolutely. We like consistency and predictability. Please. Yes.

Pete Neubig: Well, I appreciate you guys jumping on being on here. And I appreciate all of your efforts for NARPM and to help the third party property manager. And if you are not a NARPM member, please go to narpm.org. Monica, if somebody wanted to reach out to you, what's the best way they can connect with you?

Monica Gilroy: Yeah, you can go to the Gilroy firm, which is just www.gilroyfirm.com. I have a national Practice specializing in single family residential property management. I consult and provide help all across the whole United States, particularly with fair housing and also litigation investigations. And there's a whole page on my website for gilroyfirm.com that's dedicated to property management, education, forms, things of that nature. I love it. It's very exciting. And yes, our lovely president who I'll be seeing tonight, Miss Didi, who actually now goes by her married name Garzon. She, you know, she very excitedly announced at our national convention, our annual convention, NARPM 2.0. She's giving back, giving more to the membership, educationally, legal services, branding, a variety, advocacy, a variety of things.

Pete Neubig: Tyler, if somebody wanted to reach out to you.

Monica Gilroy: Oh, there you go.

Tyler Craddock: Of course, narpm.org.

Monica Gilroy: No spoilers.

Tyler Craddock: Yeah, but it's a great time to join. narpm.org. My direct dial, which is on, I think it's on the website. I prefer to put it everywhere. It's 202-918-1135. Usually email is usually the easiest way to get me just because I'm in and out of meetings so much. So that's usually the easiest way to get in touch with me.

Pete Neubig: Thank you both so much. And if you want to reach out to me, Pete@vpmsolutions.com. Look forward to seeing you next time. Thanks a lot, guys. See everybody.

Tyler Craddock: See ya. Thank you, Pete. Y'all have an awesome day, folks.

Monica Gilroy: Thanks, Pete. Bye, everybody. That was good. You guys, I'm really sorry again for the delay, but thank you.