The CFPB’s about-face, an iconic retail chain’s downfall and the rescue of a derelict Frank Lloyd Wright home. From the wild and wooly world of real estate, here are our Hits and Misses for the week of March 24-28.
Hit: An Unprecedented Oops. Once upon a time, you’d have a better chance of seeing pigs flying than having a federal regulator admit an enforcement action was done in error. Well, we’re now in a new era of porcine aviation – the Consumer Financial Protection Bureau (CFPB) is seeking to vacate its $105,000 settlement of redlining charges from last November against nonbank mortgage lender and broker Townstone Financial Inc. The agency acknowledged that it “set out to destroy” the company “solely on perceived racial disparities in mortgage application and origination statistics. That disparity? An agency-defined “shortfall” of just 31 applications from ‘majority-minority’ areas, out of 876 total applications in a three-year period.” The action is a vindication for Townstone – a well-respected company prior to this action – and it affirms the arguments of many critics that the CFPB chronically overstepped its authority. And speaking of the CFPB…
Miss: Powell Beware? Everyone’s favorite faux-Cherokee, Sen. Elizabeth Warren (D-MA), declared in an interview this week that President Trump is planning to remove Federal Reserve Chairman Jerome Powell from his position. The CFPB architect conveniently failed to produce any evidence to back this assertion, arguing only that Trump believes “all the power belongs to the king” and that he operates under the belief that “he can just mow through every civil servant.” Never mind that Trump already stated he had no plans to fire Powell before the Fed chief’s term expires next year, or that he’s barely made any mention of Powell since returning to the presidency. Warren nonetheless shrieked, “Nobody is safe, not even the chairman of the Federal Reserve.”
Hit and Miss: Great Message, Strange Messaging. This week, Federal Housing Finance Agency (FHFA) Director Bill Pulte announced the rescinding of five advisory bulletins and directives issued during the Biden administration – the advisory bulletin on climate-related risk management, the directive on multifamily release policies, the directive on the Special Credit Purpose Programs, the directive on “Repair All” strategies for real estate owned properties, and the advisory bulletin on “Regulated Entity Unfair or Deceptive Acts or Practices Compliance” policy. Our problem is not with Pulte’s message – Biden was a genius in layering onerous regulations on a financially challenged housing industry – but we are confused at how Pulte announced his actions. Rather than the employ standard practice of publishing a press statement, Pulte took photographs of the paper documents that he signed and posted them to his personal X account – no announcement came through official FHFA communications channels. As much as we like the new director, we hope that he runs the FHFA as a regulatory agency and not as “The Bill Pulte Show.”
Miss: End of an Era. Hudson’s Bay, the Canadian retailer that can trace it operations back to 1670, began liquidation for nearly all of its stores this week. The financially frayed company owes $950 million to nearly 2,000 secured and unsecured creditors and is now liquidated the inventory of all but six of its stores. The company’s lawyer Ashley Taylor glumly announced, “If a solution can be found, there is an opportunity to pull additional stores out of the liquidation, but if a restructuring solution is not found very quickly, (the six) will be added to the liquidation sale.” Here’s hoping for a much-needed happy ending to this sad commercial real estate story.
Miss: Property Divestiture, Take Two. Earlier this month, the General Services Administration put out a list of 440 federal properties it was positioning for sale. That list was quickly withdrawn, and this week a new list consisting of eight federal office buildings was published. “We are accelerating the disposition process,” said Michael Peters, commissioner of the GSA’s Public Buildings Service. Hmmm, going from 440 properties to eight doesn’t match our definition of “accelerating.” Yes, it’s a step in the right direction – though, perhaps, a giant step would be better than a baby step?
Hit: Making Things Wright. A Frank Lloyd Wright-designed residence in Chicago that has been in a state of dilapidation for years will soon receive long overdue restorations. WBEZ reports the long-vacant Walser House – which is designated as a Chicago landmark and is listed on the National Register of Historic Places – has no shortage of problems awaiting repair: rotting wood, cracked and failing exterior stucco, exposed structural elements, and a deteriorating roof and chimney. It also has a list of building code violations that need to be addressed – which is no surprise, considering the great architect designed the property in 1903. The property’s last owner died in 2019, and the restoration work is complicated because the property is in foreclosure and carries a reverse mortgage that is greater than the home’s value. The Frank Lloyd Wright Building Conservancy is hopeful that it can acquire the property to complete the restoration work. And as you can see from the photograph at the top of the article, restoration needs to happen sooner rather than later.
Phil Hall is editor of Weekly Real Estate News. He can be reached at phil@wrenews.com.
Photo courtesy of Frank Lloyd Wright Building Conservancy
