My review of Aaron Glantz’ book Homewreckers: How a Gang of Wall Street Kingpins, Hedge Fund Magnates, Crooked Banks, and Vulture Capitalists Suckered Millions Out of Their Homes and Demolished the American Dream
Washington Independent Review of Books
December 5, 2019
This exploration of the housing crisis evokes anger but comes off as a sloppy polemic in places.
The cover of Aaron Glantz’s Homewreckers depicts Donald Trump holding wads of cash, Steve Mnuchin riding a wrecking ball, and Wilbur Ross pulling money out of a house. It is a rather apt summary of the book’s main argument, along with the somewhat-hyperbolic characterization of the destruction of the “American dream” the title hints at.
While many books have been written about the 2008 Great Recession, including The Big Short and The Two Trillion Dollar Meltdown, few have explored who benefited from the bank bailouts and what happened to all of those foreclosed homes. Homewreckers tells that story — the story of what the author cleverly dubs “vulture capitalists” profiting off the very disaster they orchestrated.
But Glantz spends an unwarranted part of the book drawing detailed biographical sketches of people in Trump’s inner circle, including Mnuchin, Thomas Barrack Jr., Stephen Schwarzman, Sean Hannity, and Trump’s father, Fred Trump. While the investigative zeal with which he goes after these figureheads is keen and captivating, ultimately, it detracts — or, better put, distracts — from the strength of his argument.
Glantz points to the fact that U.S. homeownership rates began declining in 2012 to the present, reaching some of their lowest levels in history. He argues that this is at least partly due to buyers not being able to snatch up the foreclosed homes because banks were not interested in issuing post-meltdown mortgages, and the government preferred to sell to Wall Street:
“In March 2010, the U.S. Treasury estimated that 6 million home loans were at least 60 days delinquent but the federal government reported that only 230,801 Americans had renegotiated their loans with the help of the Making Homes Affordable program, the part of the bank bailout that was supposed to help homeowners stave off foreclosure.”
The most incisive condemnation of “business as usual” is the story of shadowy (and shady) banks hiding behind shell companies with sci-fi-esque names like ColFin AI-CA5 LLC that purchased foreclosed homes in bulk, only to flip them into rental properties with exorbitant rents and minimal maintenance costs. Between 2012 and 2014, for example, Schwarzman’s Blackstone Group spent $7.8 billion to buy 41,000 foreclosures and turn them into rentals.
The most bitter of ironies is that some of the owners who had lost their homes to foreclosure stayed on as tenants who now paid rent to these faceless, absentee landlords. But Homewreckers fails to convince the reader that rent-seeking alone is lucrative enough for these investors; Glantz hints at the creation of mutant mortgage-backed securities but offers no evidence to support it.
In other words, renting out 80,000 homes seems like small potatoes for these billionaire robber barons. Glantz doesn’t make a strong case for why we, the readers, should be outraged and not simply see this as sound capitalism (buying low and selling high is Investing 101).
He veers off track in exploring reverse mortgages, as well. These mortgages have been in place since before the meltdown. Are they predatory? Yes. But what they have to do with the 2008 debacle is not made explicit. Still, the story of Sandy Jolley, who lost her family home to a reverse mortgage and then sued the bank for constructive fraud and financial elder abuse is eloquently and poignantly narrated.
This is where Glantz’s journalistic prose shines, compelling and trenchant. Yet, he struggles to connect the story to his general argument. He details how Mnuchin’s OneWest Bank (which purchased failed IndyMac) foreclosed on thousands of reverse mortgages across Southern California, but again, there was nothing illegal about doing that even though no one will dispute the pernicious nature of reverse mortgages.
Glantz makes a stronger argument for the way in which a small cadre of billionaires took advantage of the government’s fire sale on lending banks that had crafted their own demise. He cogently traces the way in which American taxpayers ultimately footed the bill for the bank bailouts without reaping any of the benefits.
In that sense, Homewreckers is a captivating read, almost thriller-like in its way. But Glantz could have benefited from avoiding some of the rather petty and irrelevant asides, such as what fur coat Melania Trump wore and how “flipping wives went hand in hand with flipping houses.”mp wore and how “flipping wives went hand in hand with flipping houses.”