Predatory contracts exploit home buyers
Posted July 20, 2018 in Press Releases
Land installment contracts, once a tool for speculators to exploit black families barred from access to traditional mortgages, have made a resurgence in Ohio since the foreclosure crisis. Under these arrangements, buyers accrue zero equity in their home until the entire cost, plus interest, taxes, leins, and fees, are paid in full. Buyers who fail to keep up with payments can be removed from their home, forfeiting all investments they’ve made.
There were more more than 47,000 land contracts in Ohio between January 2008 and January 2018 according to a report released today and written by Policy Matters Ohio researcher Victoria Jackson. The report documents the exploitative nature of these contracts, their growing prevalence in Ohio, and their concentration in the Mahoning Valley, one of the areas hardest hit by predatory home sellers.
One such seller, Harbour Portfolio Advisors, which operates out of Dallas, Texas, was sued by the City of Cincinnati for “predatory and unconscionable” practices targeting low-income residents.
“Unscrupulous speculators use land contracts to foist the costs of home-ownership onto buyers without actually selling them anything. Buyers, meanwhile, retain none of the protections of a conventional mortgage,” said Jackson. “Land contracts combine the worst parts of renting a home with the worst parts of buying one.”
Jackson’s report was released today at a Youngstown press conference that also featured Ian Beniston, Executive Director of the Youngstown Neighborhood Development Corporation, Anne York Romanoff of the Alliance for Congregational Transformation, consumer Craig Gilchrist and State Representative Michele Lepore-Hagan. The report recommends legislation to rein in the exploitative practice.