I'm going to explain what a 'red herring' is. It's a meaningless distraction from the conversation at hand, generally used when someone is backed into a corner but not ready to stop talking.
Person A: This company should take away people's earned rewards, so they can be distributed to different people
Person B: That goes against their standards of ethics, they would never do it
Person A: Well, they make expansion packs! (this is a red herring)
Regarding the "What if 5 accounts own 120 houses" comment, that's mathematically not possible. Even with 8 personals and 8 FC houses, it would take 8 accounts to hold 128 houses. It seems unlikely to me that 8 accounts are built up like this on any one server. It is unlikely to the point of impossible that all 112 houses freed up by your proposal would go to FCs. As an aside, most FCs have many fewer than 200 members, and almost every FC with anywhere near 200 members has housing.
Anyway, again, SE doesn't revoke already earned rewards. Grandfathered houses are here to stay until their owners quit the game.
My advice would be: petition for SE to enforce a 1 FC house per account guideline in future purchases. Currently they do not, and it is perfectly possible to collect 8 FC houses on any account. People continue to do this and while it is not the core problem with housing, it is undeniably detrimental.
EDIT: OP says the above example 'is dumb.' Here's the actual conversation:
(This company should take away people's earned rewards, so they can be distributed to different people)
(That goes against their standards of ethics, they would never do it)
(Well, they make expansion packs!)
I'm calling out this changing the subject to Paladin tank stances in the middle of a discussion of business ethics as a way for OP to distract from a debate they don't have anything left to contribute to.