Facing protests over their role in providing “displacement mortgages” to those who buy tenant-occupied buildings and then invoke the Ellis Act in order to flip the property or occupy it themselves sans tenants, First Republic Bank will now ask mortgage applicants if they intend to repurpose their target property by way of an Ellis Act. And if the answer is yes, First Republic will not make the loan, according to a statement from the bank.

No official word, however, on what, if anything, will happen to buyers who answer “no” on their application but then invoke the Ellis Act anyway.

Comments from Plugged-In Readers

  1. Posted by The Milkshake of Despair

    This is akin to developers canvassing the neighborhood with toddler in one arm, plans for monster home in the other seeking permission to build their “dream home”. Which of course is occupied just long enough to flip. There’s no recourse once approved.

    • Posted by farts

      true, it probably will be impossible to enforce. canvassing for building permits under false pretense is merely rude – but lying on a loan application can be a federal crime.

      • Posted by soccermom

        “Do you at this moment have any plans to remove this building from the rental market?* YES/NO

        *Please note that if you have plans to remove this building from the rental market now we will be unable to provide you with a loan.”

        • Posted by san FronziScheme

          If there’s one freedom we have in life, it’s the freedom to change intent. They’d better have some pretty airtight legalese on this line item. IANAL.

          • Posted by Patrick

            The key word is “knowingly”.

  2. Posted by oh yeah

    Ok, so First Republic will loose 3 deals a yr, if that, big deal. It’s hardly a loss.

    We need MORE Ellis Acted buildings in SF to make more room for first time home owners, this is what the market isn’t good at making. Why is anyone in support of a system that doesn’t work in SF? Oh, it’s because they want cheap rent!

    If someone get’s Ellis’ed who’s making 250k/yr who cares? but the activists expect those who cannot support them selves in the regular market place to be supported by private individuals.

    Small Property Owners are not going to finance people for eternity. Get over yourselves First Republic.

  3. Posted by jimmy

    If Sterling did this; I’d be intrigued. FRB is a personal service/relationship oriented bank. If a big FRB client buys a building w/intent to Ellis, FRB will cave vs. lose the client. Nothing more than a PR move by FRB.

  4. Posted by soccermom

    Capitulating to the rabble? How will we believe in the bank’s glossy testimonials in the back of free pseudo social magazines.

    • Posted by JR "Bob" Dobbs

      Nice job spotting that irony! They seem to cater to precisely the demographic that would be buying places and Ellis-ing them.

  5. Posted by Hitman

    First Republic better remember who their real clients are. I’m pretty sure the tenant union doesn’t have a dime there.

    • Posted by san FronziScheme

      First Republic is making TIC fractional mortgages, right?

      Well, people should go to Sterling Bank from now on.

    • Posted by Truethevote

      Below please see email I just sent to my first Republic mortgage banker:

      Hello X, I hope you are well.

      I just saw this article on socket socket site. This is the most disappointing stance taken by First Republic.

      It took me 12 years to condo my building. The condo rules forced me to stay in my unit which had 57 steps. If I had become unable to climb those stairs, I would’ve lost my ability to participate in the condo conversion.

      After paying thousands of dollars in fees to the city and hundreds of thousands of dollars in property taxes, the only way I could get a unit vacant was to evict for reasons of selling the newly condo’ed property. While I did not have to invoke the Ellis Act, as a property owner, my rights and options with my respect to my property are severely restricted by the ridiculous rules in San Francisco. I paid property tax on those units for 12 years, yet I am forced to sell it under San Francisco condo law.

      The tenants union lacks a basic understanding of economics. Further their militant tenant positions restrict housing development, which drives rents up higher.

      The city of San Francisco tasked me with the responsibility of subsidizing the rent of my tenants for the last 12 years.

      The person at First Republic who created this policy doesn’t understand your account base and doesn’t understand the difficulties that one has being a landlord in San Francisco. I would strongly suggest that you overturn such a policy. Can we also expect a box on forms for tenants who are living greatly under market rents and then get roommates and make profit from rent control?

      Please forward this on to the person who made this policy decision. I have had a great relationship with you for two years, in fact yesterday was the two-year anniversary of my first mortgage with you. This shortsighted policy is the first black mark on our otherwise very good relationship.


  6. Posted by san FronziScheme

    I know what bank to avoid like the plague. It’s not like they are competitive in anything anyway.

    • Posted by Really?

      They are very competitive to qualified people with certain mortgage products, mostly ARM’s and many financed IO with strong down payments and good credit histories. My experience is that their customer service is exemplary. Credit is also stellar – with FR able to understand complicated pay structures in making credit decisions. I don’t know what the haters are about, but it is true they do attract a more affluent customer. Good for them, I say.

  7. Posted by Mike

    Will never use First Republic again for anything.

  8. Posted by Boher

    I agree with all above comments regarding First Republic’s hypocrisy. That bank has become somewhat irrelevant over the last few years. It will be interesting to see what slick testimonial pictures they hang in their windows with this anti business move. As a mortgage holder with FRB I can honestly say the customer service sucks and I will not work with them again.

  9. Posted by cleverpunhere

    I will add this to my list of reasons why I don’t do business with First Republic. They appear to have no idea who their customers are.

  10. Posted by mikey woodz

    So what happens when one purchases a property with hopes of negotiating and buying out a tenant and they can’t come to an agreement? FR will force you into staying in the Landlord business if you want out?

    • Posted by Orland

      Maybe blinded by a conscience.

      • Posted by EcceMorons

        If First Republic has a blinding bright conscience, they should donate 50% of their profits – a good start would be giving it to random SF tenants, without means testing them.

        That, in essence, is what they’re demanding of their loan applicants.

      • Posted by san FronziScheme

        A conscience? Do you mean housing is a social obligation? Sometimes SF tenants are so disconnected with the real world it makes me wanna buy/ellis/buy/ellis until I run out of money.

  11. Posted by EcceMorons

    While you’re at it, First Republic, why don’t you require that ALL loan applicants (business, personal, real estate), sign notices that they intend to NEVER do or say anything which might, in any way, be objectionable to…someone, somewhere….

    This is just ludicrous.

  12. Posted by oh yeah

    Paulina Gonzalez, of ‘California Reinvestment Coalition’ – should be fired.
    This is a ridiculous proposal. FR has financed a GRAND TOTAL OF ’12’ Loans in SF.

    The more out of reach a loan becomes, the cheaper it is for people with money = more monopoly for the rich. These activists have no common sense, and unable to see the future.

    We should be aiming to have every building in SF to be Ellis’ed in the next 10yrs, this will bring rents down, homelessness down, and remove the corruption of the THC etc.

  13. Posted by Michael

    Good for First Republic. Bet half the people whinging above would still go with FRB if they offered the lowest rate. The other half probably wouldn’t consider FRB in the first place…

    • Posted by Patrick

      The other half probably wouldn’t be considered by FRB.

  14. Posted by Amewsed

    Don’t answer the question on the form then. Replace it with another question. Or say “I don’t know what my plans are yet. I don’t really need the loan but am using one for tax purposes.”

    • Posted by Really?

      It’s not the 1%’s fault they can use bank borrowings to finance tax advantaged investments with higher coupon rates. If you have the ability to carry, you would too.

  15. Posted by BTinSF

    For those above who say they’ll “never use” First Republic and making other adverse comments, know that First Republic probably doesn’t want your business. It is essentially a “private bank” in the business of “wealth management” for people with serious money–at least a few million (but 10 or 100 million is better).

    The list of towns in which they operate may give you an idea about the customer base: San Francisco, Palo Alto, Los Angeles, Santa Barbara, Newport Beach, San Diego, Portland, Palm Beach, Boston, Greenwich and New York City. I can’t explain why Palm Beach, Nantucket and a few other locations are missing but otherwise they seem to have the bases covered. But the fact they have made only 12 real estate loans in San Francisco, if that’s the case, may simply mean there just aren’t THAT many tech titans needing or wanting to borrow to buy.

    • Posted by Really?

      You aren’t reading the balance sheet correctly. They originate tons of loans in SF and on the peninsula (their primary historical client base). If it’s correct, I constitute 1/6 of the loans in SF. Sorry, no way.

      FR knows their clientele would never allow such intrusion on their affairs. They scored a very minor PR point but they can honestly use every one they can get. Truly the 1% bank.

      I come for the rates but stay for the service. At one point, they were underwriters of 5 mortgage loans for us, trying getting approval for that with the big 3. I had business across the street at Chase and the branch had all of the amenities of the DMV along with the matching “helpful” personnel. You certainly pay for it, but I get what I want and apparently FR gets what they want from me.

  16. Posted by MoneyMan

    They made 12 real estate loans? Do you mean multi-unit property loans? Because I can assure you that they’ve made more than 12 real estate loans in SF. That’s a ridiculous number. They financed and refinanced my house, so that’s two of 12. Oh and I don’t have 10 million dollars.

    • Posted by Really?

      Even multi unit is absurd. And I can’t be that they just sold them all, either. All of our loans with one exception have been portfolio loans. So, no, it’s just plain wrong.

    • Posted by SFResident

      12 multi-unit loans were financed by FR – that were subsequently ellis’ed. That’s what the activists are complaining about, that they had to make a map about it.
      I’m assuming your home is not a multi-unit bldg that you ellis’ed.

  17. Posted by soccermom

    I think this is just a headline to make the patchouli and arroz con pollo crowd move along. Something tells me that if you decide to Ellis a building the day after you do a loan, they won’t fight you on it.

    Did you ever read that Jeff Bezos came up with Amazon the day after he resigned from DE Shaw? If it had occurred to him in his prior job, it might be considered work product of his prior employers. You just have to time your epiphanies.

  18. Posted by Landru

    God, what a bunch of babies!

  19. Posted by intheknow

    Good for FR. The vast majority of renters evicted due to Ellis are not making $250K as someone said. I for one have had several very middle-class friends evicted and it tears their lives apart, since they’ve lived in the City for a couple decades and all their social and economic ties are instantly severed. It’s awful.

    I’m 110% for building new housing everywhere, but cannibalizing existing housing stock is not a solution to anything.

    • Posted by SFCitizen

      The existing housing stock is sold to someone. Owner occupied units are fantastic. Buildings are properly maintained and property taxes increase. Neighbors win, the City wins, the new home owners win. It is very short-sighted of your friends to not see the changes occurring all around the City.

    • Posted by jack

      “several very middle-class friends…[rented] in the City for a couple decades” <==

      Renting for a couple decades is not a middle-class thing to do. They might live like a middle class by spending the savings from rent-control.

    • Posted by JR "Bob" Dobbs

      I’ve noted my lack of sympathy for landlords who enter into leases under rent control and then complain about their own actions. I equally have little sympathy for decades-long renters who get Ellis-ed.

      There have been a number of periods in the last 20-25 years when good housing was quite affordable in SF — 1990-97, 2001-02, 2009-12. Sure, the outright poor were still priced out, but any middle class resident could have (and should have) bought during those periods. They would then have been protected from being evicted and having ties severed. They really need to look in the mirror to find the party responsible for their situation. I feel bad for them, but it’s not the banks or landlords who are to blame.

      • Posted by Orland

        And I have no sympathy for those who choose to invest in residential property and then crassly deal with it as just another commodity seeking every financial return possible.

        • Posted by san FronziScheme

          And yet without a financial incentive (aka money) the roof over your head would not have been built. Or maybe it was built with magic? Unicorns?

          Renters in SF today profit from Capitalism of yesterday. Now I know you love cheap rent, but you cannot deny that Greed gets things done.

        • Posted by gribble

          You also seem to choose to believe that describes every landlord. We Ellis Acted a building in San Francisco not to seek every financial return possible but to prevent ourselves from losing money every year while subjecting ourselves to the possibility of total financial ruin if one of the tenants decided to sue us for any reason, warranted or not. This building now provides a home for three San Francisco natives that otherwise could not afford to live here anymore: the owners of the building.

        • Posted by parklife


          Your ire should be directed at the seller of the residential property rather than the buyer who needs to Ellis to have the transaction make financial sense. I’m pretty sure the seller could execute lifetime leases with tenants prior to selling their property but, of course, that would result in a pretty hefty discount on the profit realized on the sale.

          But then quite often the sellers in the Mission are Latino and that message doesn’t resonate as well with the tenant activists.

      • Posted by san FronziScheme

        The say that wealth doesn’t survive 3 generations. In the case of SF we were builders until the late 80s. Now we’re behaving like the fortunate sin trying to shore up his privileges and actually eating up the fortune through self-indulgence. The builder generation will come back in full force one day and the self-indulgent will have to live somewhere else.

      • Posted by scott

        Agreed with JR “Bob” Dobbs! I moved to San Francisco in 1988 and people do not believe me when I tell them that “the city” was rather affordable compared to similar neighborhoods both for rentals and/or the purchase of housing in Los Angeles or Chicago back in the 80s and even most of the 90s. I moved from my student apartment in Pasadena to a much nicer apartment in Pacific Heights with parking on Jackson street for $400 a month less than my Pasadena rent. (Sorry Pasadena, you are no Pacific Heights)

        The old “its always been more expensive here” is not necessarily true.

    • Posted by gribble

      How is this any different from somebody losing their job or being transferred to another city by work? Why does a landlord have any special reason to have to subsidize and give housing to somebody forever even if the landlord’s finances and circumstances have changed?

    • Posted by [oh yeah]

      ‘Cannabilzing’ existing housing IS the answer = it makes housing costs much fairer for renters & owners. This way Private Citizens no longer have to subsidize those who don’t need it, or those who do. Those who need subsidizing should be through the City. It’s not the job of a property owner to provide cheap rent (means tested or not), the property owners job is to provide a safe, habitable building. With low rents, no one has any obligation to offer rent forever. These activists are dreaming. The rent laws keep changing for the worse every few months, so no one who bought just 6 months ago is locked in to the laws they thought they were buying into because the laws are constantly getting worse.

      Ellis’d units can sell for $300-800k (for 1-3bedrooms), this is great for middle class housing. It’s the type that the City will never create due to costs (for planning process & construction). Remember, the City just proposed to spend 900k!!!! for 60 ‘affordable’ units in the Mission. Just who is paying for that? – it’s the middle-class peoples taxes, for a few lucky low income winners.

      For anyone who’s in the 20-40’s who can buy a building, alone or with some friends I say buy it. You will make the City better, cleaner, and safer, the public school system will improve so you won’t have to send your kids to private schools. These buildings are perfect for the first time buyers.

  20. Posted by Government Shrinkage

    I own multiple units in SF, and plan to buy more. I considered them for my latest purchase, but went with someone else.

    First Republic is now off the short-list.

    • Posted by Sara Short

      Good, why do business with sell outs who have no morals…..

  21. Posted by GoBlueInOakland

    Whole lot of sociopaths on this comment thread.

    • Posted by san FronziScheme

      You mean capitalists? Like it or not, capitalism is the driving force behind real estate, even in San Francisco.

      Now please explain us how all those rental units have been build 100, 80, 50 years ago? Were they built by community groups? Social activists? Regulators?

      Nope, they were built by people who wanted to make a buck.

      Now guess what? The people who inherited or purchased these properties still want to make a buck. Unbelievable, right? Who do these people think they are?

      Bloody sociopaths I tell you!


    • Posted by cleverpunhere

      GoBlueInOakland: I think you need to get out of San Francisco more often.

    • Posted by EcceMorons

      GoBlue sounds like a poster child for every voter who has mindlessly bought into the political rhetoric that people are entitled to lots of free stuff – to be given to them by other people who worked to get that stuff.


      • Posted by san FronziScheme

        It’s a bit simplistic view of the San Franciscanus Activistus.

        There’s a pretty numerous class of people in SF who can be roughly defined as post-communism collectivists. They know all brands of practiced communism have failed and yet do not accept that the general concept of communism is unsound when confronted with real life situations.

        Now whether they will accept it or not, they are actually eager to implement in San Francisco every possible rule that can be legally imposed to advance their ideal. For communists, ownership is theft, therefore a landlord is a leech and any rent paid is too much rent. Anything that can be done to punish a landlord is acceptable, and is a payback for all the sufferings that landlords have enacted across history. For communists, everyone is entitled to shelter, food, a job and a direct say in what different people are doing. They will not allow you to try and earn more money (why do you need more money anyway?), set up the shop you want (formula retail!), expand your dwelling (why do you need more space?), even within the legal envelope, or decide to do whatever you want with your property (you are a thief anyway!).

        When all of this is taken into account, you’ll understand why they are vociferously against almost anything outside their set of beliefs. And for them, it’s the people not like them who are the problem.

        Unfortunately, a big enough number of them lives in SF, and thanks to rent control, they’re not going away that easily.

  22. Posted by Snobby McGoogle

    LOL… this crowd is hilarious. Isn’t there a Trump campaign event you need to be at?

    • Posted by san FronziScheme

      Isn’t there any middle ground between SF’s extreme activism and Donald Trump? I am a liberal but also a capitalist, and we are all willingly living in a capitalist society. Now I am for social programs and some form of redistribution, but they have to be government funded. The current system that takes from the Landlords’ pockets into the Tenants’ is not sound policy since

      1) why target landlords? After all, they should be encouraged to rent, not punished.
      2) there’s no means testing of the subsidized tenants, which leads to a huge waste of resources as well as any goodwill left from the landlord base.

      Right now SF activists sons like they just want to keep the gravy train rolling. If they were bound on social justice, they’d push for a means tested rental subsidy funded by taxpayers. But this would mean many of them and their friends would lose the current subsidy.

      They want to help the poor, but they also want to help themselves first.

      • Posted by cleverpunhere

        Totally agree with san FronziScheme…

        Have you ever tried to explain our system to someone from another state? They almost universally think it is insane, regardless of their political views. And that is because our policies are a terrible fit for our professed goals, and they fly in the face of very mainstream views about properties rights and the scope of legitimate entitlements. If you think critics of the current system are somehow on the fringe, you don’t get out often enough.

        • Posted by Snobby McGoogle

          It’s a horrible, messed up place… you should leave. Why would you stay? You’d have to be insane!

          • Posted by cleverpunhere

            Because I find your logic hilarious, and would simply miss it too much if I left.

  23. Posted by BayviewSF

    Protests are very bad for the property owners and increase the default risk, First Republic is simply to protect itself from the increased risk caused by SF activists who protest and protest and cause economic damage to the society.

  24. Posted by Pablito

    More meaningless cynical corporate pandering. First Republic managers clearly have no shame.

  25. Posted by oh STFU SF

    wow so many losers here thinking they’re badasses when in fact they are keyboard cowards, cowering in the basement, making up grand conspiracies that don’t exist, inventing boogie men to fit their twisted right wing extremist views and yet never bothering to listen to anyone, just ranting like a two year old saying “NO NO NO MINE MINE MINE”.

  26. Posted by Sara Short

    Everyone has a right to property, you just have to pay the going rate. Trying to price fix it in your favor is immoral. Which is why i will never do business with First Republic Bank. By siding with irrational rent control “activists” they do not share my values. I boycott Zephyr realty for the same short comings.

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