California housing crisis and Domuso’s predatory lending

One of the most prevalent issues the U.S. working class faces today is the exorbitant and quickly rising cost of housing. California has witnessed extreme growth in these costs, although this trend is not exclusive to California. Families from all over the state are struggling to make monthly payments as capitalist rental companies are looking to exploit that struggle. According to a Quinnipac poll released Feb. 6, 61 percent of Californians aged 18 to 34 cannot afford to live in the state.

Amongst a severe crisis in affordability, landlords constantly try to find new ways to coax more money out of tenants. Santa Monica-based startup Domuso, which pretends to offer a simple way to solve your rent problems, is an example of the many ways capitalists are carving out new markets to exploit, to the detriment of working people.

Michael Lightfoot and Damian Langere created Domuso Inc. to profit off of families who have run out of options. This company offers loans with immensely high interest rates and advertises this exploitation as financial assistance for those in need. Their annual interest rates are an alarming 27 percent, which almost guarantees that tenants will be unable to catch up on rental bills. The median cost of rent in an area like San Francisco is $4,730 a month for a two-bedroom, which with a rate this high could create an interest payment of about $15,325.20 a year.

Domuso is targeting management companies so that they do not need to sign up tenants individually but can manage all rent payments, and profit off the payments for as long as they are in Domuso coffers. Then, when tenants are late they can “offer” them the opportunity to pay exorbitant interest rates to make flexible payments.

Hiking rents to improve ‘resale value’

Domuso is associated with six other startups that participate in some degree of rental management: GELT, GELT VE, Skya Ventures, Happy Home Communities, and Alpha Bridge Ventures. According to TechCrunch, Domuso currently runs an online payment platform that contains the data from over 30,000 properties, 7,000 of which are owned by their own real estate company, GELT Inc. GELT is based in Tarzana and describes itself as a “company that focuses on purchasing properties and improving their resale value,” which is just a nice way to say forcing evictions by unreasonable increases in rent.

David Kim, the main investor in Domuso Inc., is also a founding member of the Bascom Group, who in the past has gone to court several times to evict residents from their complexes in both Texas and Los Angeles. In 2015, the company also went to court for its part in the slip and fall of a tenant due to improper maintenance of its facilities.

In June of 2002, the Bascom Group was brought to appeals court in Los Angeles, for allegedly destroying personal property, spraying hazardous chemicals, and causing personal injury, by June Teecher, a tenant at their Magnolia Park Apartments. Teecher charged that the Bascom Group negligently allowed trees on the property to fall onto her patio and break both her personal items as well as her foot. She also alleges that the company allowed sandblasting close to her apartment that blew hazardous chemicals in, causing lasting injury to her health, and contributed to her contracting emphysema.

Skya Ventures, one of the companies affiliated with Lightfoot and Langere, in May 2016, earned nefarious fame for forcibly evicting Marimon Royal Apartments residents in Highland Park, California, after buying out the previous rental company. They imposed a 50-percent rent increase on the 60-unit complex, forcing tenants to pay nearly an extra $1,000 a month. The Los Angeles Times reported that Skya Venture’s management agent, Chris Gray, seemed willing to only negotiate with white tenants. Nineteen tenants were served with short-notice eviction papers, and many were subjected to water shutoffs to ensure relocation. The tenants of Marimont fought back, but after many days of striking and staging sit-ins, they exhausted their eviction appeals and lost their homes.

The Highland Park evictions are one of many examples of what real-estate capitalists do to constantly increase their profits, regardless of people’s rights or needs. These are the kinds of companies Domuso is affiliated with, companies that do not look out for their tenants’ best interest.

The defeat of Proposition 10

Domuso is building this “new venture” following the defeat of Proposition 10 in California. Landlords and real-estate developers scored a defeat for the rights of working-class people and the struggle for affordable housing. In November, California voters voted no on Proposition 10, which would have repealed the Costa-Hawkins law and allowed communities in California to enact rent control. The Costa-Hawkins law bans rent control on housing built since 1995 and even earlier in the major cities. Banks, developers and rental companies funded a multi-million-dollar smear campaign focused on confusing voters about the actual stipulations of the proposition. Major funders of this misinformation campaign included the California Apartment Association, the California Rental Housing Association, the Essex Property Trust Inc, and the Blackstone Property Partners L.P., none of which have renters’ interests at heart.

Announcing the receipt of $3.1 million in funding last summer, Langere said: “We built this technology to fit the needs of our residents. But we realized that it also fits the needs of owners. Rent is stuck in this archaic age of stringent payments, and for the owner/operators, their property managers have to be bankers, debt collectors, and risk assessors, things they don’t have the tools for and that they’re not very good at.” Langere is right about one thing: Their service does fit the needs of owners, but although he doesn’t say it outright, what he means is the class of owners, the capitalist class. Lightfoot and Langere did not create Domuso to assist those in need of “flexible rent payments”; they created this business to expropriate money from those who are already struggling to make ends meet. Like capitalists everywhere, they are searching for markets they can exploit for their benefit.



Related Articles

Back to top button