The Confounding Contradictions of Detroit’s Land Contract Houses

Detroit   It was a rough day on the doors in Detroit. One team recorded 14 abandoned houses out of the 17 on the walk list. Remember that these were all homes according to all available records that are owned by one of the big three land contract companies operating in the city: Harbour Portfolio, Vision Property Management, and Detroit Property Exchange, the only local outfit. Another team had eight on its list, and we had six on ours. The math is unsettling and profound, meaning that more than half of the houses these companies owned were abandoned and therefore open wounds bleeding on their blocks, neighborhoods, and community.

There were three dumpsters in the driveways of the abandoned houses our team visited and a trailer at another with a couple of bags of trash on it, but no signs of workers or work being done at these locations. At one location that we marked as “not home,” because the neighbor across the street told us that there were people going in and out of there and work being done, who knows what the story might have been, but the impression from the other locations on our list, left me wondering if these were dumpster “decorations,” rather than construction sites. We were roughly, and it was often rough, in central Detroit, if there’s such a thing, while one team was on the East Side and another was on the West Side. They reported no dumpsters and signs of construction on the abandoned houses on their lists. Don’t get me wrong, the land contract houses were absolutely not the only abandoned houses, and we saw abandoned houses on our route that were not not on our list but had signs offering them for sale, if one could call it that, or auction, with come-on’s hawking $400 a month down payments and lures advertising opportunities to flip the homes or rent-to-own more cheaply that buying. Once we were back at the offices of the historic and giant Ford Motor based UAW Local 600, which had opened their doors to the Home Savers Campaign for this project, we discovered, to no one’s surprise at this point, that both of the names on the signs we saw were simply other eye-candy LLC’s that were part of Detroit Property Exchange.

rent-to-own signs from Detroit Property Exchange subsidiary

Visiting with people, the contradictions are confounding. Our first visit was a woman with had just completed a contract with DPX as locals call Detroit Property Exchange, though her house had been listed under their French Sirois subsidiary. She had been in the home for 12 years and dutifully paying off a mortgage, until two years ago. She was informed then that DPX had bought her home by purchasing a $6000 tax lien. She had being paying everything in the usual bundle to her mortgage servicer, who had gone bankrupt and not paid her taxes, so Wayne County had put her in play without any notice. DPX gave her a contract to buy back the house for $20,000 while paying $750 per month as part of a lease to live there. She was happy because she had managed to pay them off in 18-months, partially by taking advantage of two “matching” opportunities, one at income tax refund time, where they had matched her $2500, and another a month or so later when they matched her $1000. She was proud of herself for getting them off her back and saving her house, but the math still adds up to street-side robbery. She had paid DPX $16,500 on the contract plus another $13,500 in rent, or whatever you might want to call it, so they had $30,000 from her in a year-and-a-half by stealing her house from the taxman when her mortgage servicer went belly up. The day before another team had stumbled onto a similar case, so this woman’s story is, tragically, too common.

Vision Property Management lockbox on abandoned hous

All of these contracts are predatory, though and people were being ripped off right and left, but one home we visited we talked to the brother on the porch, who was apologetic that he had not gotten his act together to buy a house, while both of his sisters had just done so, though we knew this sister was on a rent-to-own contract with Vision Property Management and suspected that was the case with the other as well. Earlier in the morning, I had briefly addressed more than 50 people in the regular meeting of the Detroit Action Commonwealth at the Capuchin Soup Kitchen. People there knew about land contracts, and they knew ACORN, so I was in good company. After a brief explanation of what the Home Savers Campaign was there were questions flying from the crowd. One caught me up short and has left me thinking more and more about these contradictions. A young man said he was on SSI payments of $750 per month. His question: how could he get one of these rent-to-own houses?

Detroit Action Commonwealth Meeting

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Predatory Land Contracts and Rent-to-Own Schemes May be More about Affordable Housing than Home Ownership

Detroit   We had hit the front door a couple of times without success. The house was a single-story white brick facade set back from the street. If we had not been anywhere other than the west side of Detroit, we might have been able to blink our eyes and believe we were in a working-class suburb. We would have had to clear our minds of the vision of driving only minutes before in street after street of neighborhoods where the grass was already knee-high across acres and acres speckled with the occasional occupied house along with some deteriorating ghost structures.

The local public radio reporter rolling with us on assignment from Reveal, the well-regarded national investigative pod-cast operation on the West Coast, offered a weak apology earlier, saying something about hoping this wasn’t all we would see of Detroit. I had replied that I had been here before, and Dine’ Butler, an organizer with me, reminded her that we were from New Orleans, where we had post-Katrina neighborhoods like this as well.

We knew someone was home because the back end of the small SUV was wide open. Dine’ went around the side to the fence, and we quickly met the master of this castle. We knew he was on a land contract purchase agreement with Harbour Portfolio. He had been in the house 2-years, and had looked at a lot of Harbour houses before seeing this one and believing he could make a “go” of it. He had paid about $1500 down payment on a $42,000 purchase price with a 30-year contract at between 12 and 13% interest with monthly payments between $400 and $500. His family had been there for 2 years. He had put in about $7000 cash having to install a new furnace, roof, and wiring, which was still a work in progress. I asked him how he “felt about it,” and he said, “it’s all right for now until something better comes up.” Could he have applied for a conventional mortgage, I asked, and he answered, “not at that time.” He would be glad to come to a meeting and share his experiences and talk to others in the same situation.

The more visits we log, the more that it seems to me we aren’t hearing the responses we might expect from typical home buyers or home owners. Too often when we peel back the layers of these predatory contracts with people, there reaction isn’t surprise and in fact often seems more flight, than it is fight. People are often shocked by how bad their contracts are, but seem to have their eyes wide open to the fact that their housing is substandard. With the average rent in Detroit for a two-bedroom apartment reportedly $1300, many of them seem to almost be doing the math in their heads that even with a down payment and making repairs with sweat equity and cash on hand, they may be in better financial shape in these houses, even if they are at best “works in progress,” and at worse uninhabitable.

We haven’t hit enough doors and talked to enough people yet on the Home Savers Campaign, but listening to people and hearing what they are really saying, there’s no question that these land contract and rent-to-own or lease purchase schemes are predatory, but the crisis we are facing may be less about home ownership in the classic sense, and speaking a lot more to the crisis in available, decent affordable housing. With decreasing public housing units and section 8 vouchers and long waiting lists for both, with rising rents that are taking 50% or more of many household incomes on one hand, and an unforgiving post-2008 credit desert on the other with higher down payments, higher credit scores, and higher bank lending requirements, a lower income, working family may find themselves caught in the middle where a bigger place in rougher condition for lower monthly rent and pay-as-you-go repairs comes to look like a deal worth taking, everything being unequal. Heck, they may figure, there’s a slim chance, like playing the lottery, that they might even own the house some day…a carrot later, while being beaten by the sticks now.

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“Option to Buy,” another Twist on Predatory Purchase Schemes

Detroit   Preparing for the Home Savers Campaign teams to hit the doors in Detroit and visit with victims of the various installment land purchase and rent-to-buy schemes in the city, a crew of us sat down for a preliminary briefing with Joe McGuire, a staff attorney with Michigan Legal Services who has tussled with a number of these companies while representing their low-income clients. Joe was a fount of information and couldn’t have been more helpful, but much of what he told us was depressing in the extreme.

Perhaps what demonstrates this bleak credit desert for lower income and working families in the Motor City most vividly are the terms of one lease he shared with us promulgated by a company called Bean. It’s hard to make a rent-to-own agreement look good, but the Bean agreement was a “residential lease and option agreement,” which, when read closely, was really only a one-year option to buy the property with absolutely no guarantee that the agreement would be extended past the one year allowing the “lessor” to finally purchase the home, even if they had met all conditions of the agreement perfectly, unless of course they magically came up with the full purchase price within 30 days of the end of the lease. The mishmash of legalese really was simply a one-year ripoff and an option-to-steal by the lessor from the lessee. The terms started with a $4000 down payment for the “privilege” of purchasing the house for $30,000. An additional “option consideration of $130 per month” would be paid toward the “down payment/purchase” of the property as well as $645 per month throughout the one-year term which was the lease on this “as is” house. Any repairs, “major and minor” would be paid for by the “optionee,” and if any are paid by the “optioner,” they are added onto the purchase price. McGuire was as stunned by the agreement as all of us were.

Much of what he told us was equally bleak. The city requires an effective warrant of habitability before people move in, and all rental units, including those on rent-to-own contracts are required to be registered, but it became clear there was little to nonexistent enforcement. Even so, McGuire felt the protections for rent-to-own were better than those for land contracts, because they were even better shielded by state law with little thought that the legislature would improve them. In a sobering catch-22, McGuire actually made the case as we were leaving that he worried that tightening down on rent-to-own abuses might lead to more land contracts, which given their legal protections would be even worse for the victims. Forfeiture to the city and the Detroit land bank seemed equally fraught and neighborhood crippling.

The conversation was not without some rays of hope. Work by some of the anti-eviction groups was encouraging. Data being prepared in cooperation with local universities and professors might offer some opportunities. Focus on concentrated neighborhoods where this kind of activity might be curtailed, McGuire felt could show results.

The odds were long, but we were welcomed into the fight. Any push back would be a positive. Any effort to force more accountability by victims would be helpful. Detroit might be ground zero for this campaign, but there were mountains to climb with uncertain footholds on every route.

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Loose Cannon Goes Off Again, Blows Up Part of White House

James B. Comey, the former F.B.I. director, during a Senate Intelligence Committee hearing this month. Credit Gabriella Demczuk for The New York Times

Detroit  What’s that famous Hunter Thompson line? Something like, “when the going gets weird, the weird turn profession,” I think. But, there I was, like much of the rest of America, with a 3 AM wake-up for a 515 AM flight, but unable to not read one article on-line after another in the Times, Wash Post, and Journal about the latest meltdown of government, as we have come to know it in good times and even bad, as we watch with our mouths open, the devaluation of the United States to the level of a banana republic except with bombs and one of the largest armies in the world. OMG!

In one day, still reeling from the political obtuseness and self-delusion that Democrats and the country would applaud his firing of FBI Director James Comey in the middle of the FBI’s investigation of his own political campaign, which has been a story spinning around in one version or another so much we’re all dizzy, we find out that President Trump in his braggadocio has blurted out secret intelligence about ISIS. Boom, the loose cannon fires at the White House!

And, he doesn’t blurt this out to the White House custodial staff or in the White House kitchen where the chef is frying him up a big, fat burger to go. Oh, no, he does this foolish chest thumping to the Russian Foreign Secretary and the Russia’s US Ambassador in the Oval Office in an oval office meeting where he had even barred any photos from US-based media, but did allow the Russian foreign office to broadcast video and pictures far and wide. Why, was he meeting with them now, well, as he curiously explained, he was doing it at the bidding of Russian president Putin. Let’s hope Putin at least said “pretty please.” Of course this intel was given to us by a Mid-Eastern ally, that turned out to be Israel, and we hadn’t bothered to tell them we no longer could be trusted to keep secrets, and it involved ISIS, and it just goes down hill from there. Boom, another cannonball hits the West Wing!

And, of course President Trump also intimates that he may be taping conversations and phone calls, and it turns out, and according to Trump Organization sources, that has been his m.o. for years and standard operating procedure in his business. But, oh no, of course Comey had done a contemporaneous memorandum and shared it with other senior FBI staff after his early February meeting with Trump, on what he saw as an effort by Trump to try to persuade him to terminate the FBI investigation of former General and ex-NSA chief Mike Flynn and his extralegal contacts with the Russians before and after the election. Whoops, someone opened a big can of whip-ass there! The President must have confused Comey and the FBI with some small-time contractor desperate for work on one of his old Atlantic City casino dream machines. And, the bombs were bursting in air, but our flag is still standing…hopefully.

But, what else would we have expected? Bizarrely, I’m minding my own business and reading The Economist as a diversion flying between Houston and Detroit and there’s a small box on one page distilling some points from an audience they were given with the President. Trump is talking about the economy and his so-called plans. He mentions that he wants to “prime the pump,” and then goes off of a riff about how much he likes that expression, asks whether the reporters have heard it before, and then in his profound ignorance he takes credit for coining the expression, “priming the pump.” Why not, it’s only been in common use since 1932. Who’s to know? Who’s to care? Another bomb. Not even funny, just a huge dud.

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ACORN a Major Force in Voter Registration for Tenants in United Kingdom

New Orleans   Your mind just did a double take, right? ACORN and voter registration in the same sentence, that’s so 2008, right? Well, yes and no, but screw your head on tighter and focus, focus, focus, because now we’re talking about ACORN as a force for voter registration, and the setting is the United Kingdom. What’s up?

The snap election called by British Prime Minister Theresa May is coming soon, and voter registration has become more difficult in the UK. Until recently the head of a family with one swoop could register everyone in the household, now everyone must individually register. Other new rules that fit in with the global voter suppression efforts of conservatives impact potential young voters because universities, for example, are barred from registering students, largely to keep them from creating a voting block in the towns where they are located.

The other huge group that is being disenfranchised now in the UK is tenants, and ACORN’s base in England and Scotland is significantly composed of tenants, given the housing affordability and access crisis which has swept the UK. The Guardian quoting an ACORN report, noted that “ 93% of property owners are registered to vote but only 63% of renters.” Others say the number may be as low as 59%.

In a more recent article in The Guardian, the case was even clearer that ACORN is working to register and bring attention to millions of tenants being disenfranchised. The Guardian reported:

Campaigners have also warned that another high-risk group is the more than 3 million private renters in England. Generation Rent and ACORN, both pressure groups for renters’ rights, estimate that about 1.8m private renters have moved home since the 2016 referendum and must therefore register again.

Private renters are typically on tenancy agreements of no longer than 12 months and are six times more likely to move in a given year than homeowners, the groups said. A further 1.6 million private renters are estimated not to have been registered in the first place.

ACORN’s national organiser, Stuart Melvin, said renters’ rights were dependent on registering to vote. “Renters need a government that will reform the housing market to protect them from unfair evictions and rising rents, and we won’t get one unless we vote for it,” he said.

Before renters can do that, they need to make sure they’re registered, and when you are on the register it is too easy to fall off it when you move.”

Buzzfeed was even more specific on the importance of ACORN’s efforts noting that “research from Renters Vote, a campaign from renters rights groups ACORN and Generation Rent… say 1.8 million renters who are eligible to vote moved home since the EU referendum in June 2016 and will need to reregister in their new address, while a further 1.6 million renters were unregistered to start with…Renters move home six times more often than homeowners on average, due to the widespread use of 12-month assured short-hold tenancy agreements, meaning they have to register each time they move.”

This is a major issue given the upcoming election, and the clock is ticking. Despite the efforts of ACORN and our partners, a huge number of tenants will be left voiceless in this election, as ACORN’s national organizer, Stuart Melvin noted. There isn’t much doubt that that was the point of these voter suppression efforts.

One bright light for the future was included in the recommendations by a Guardian columnist of what needed to be done to fight this problem in the future, which we totally embrace:

6. Unionise

Official recognition for tenant unions, such as Acorn, Living Rent [ACORN’s affiliate] in Scotland, Tenant Voice and Generation Rent. Include them in discussions, invite them to select committees, listen to what they say.

Amen to that!

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Tech Monopolies are Getting Like Airlines in Disregard for Consumers

New Orleans   The current global ransomware hack impacting 74 countries could gross the bad guys up to $3 billion, experts say. A couple of intrepid computer guys, one in Britain and another in the US, thwarted the hacking temporarily in a couple of lucky moves, reportedly. Many believe its impact will continue to be felt as more computers fire up this week.

Digging deeper it turns out once the finger pointing starts that computers are susceptible when they are not updated. A kneejerk reaction is to say, whoops, someone got lazy here or there, but it’s more complicated. Much of it has to do with the business model of Microsoft and the rest of the tech monopolies. They discontinued “supporting,” which really means fixing, Microsoft XP, so if you were a huge outfit that had paid them millions for XP, like FedEx or the British National Health Service, if you didn’t move all of your thousands of computers over to whatever their latest product was, then you were a sitting duck.

Anyone who has a computer operating on Microsoft Windows has mixed feelings about the way they do these updates. On Windows 7, the number of times I might wake up and find that overnight my computer had been updated without so much as a nevermind, and I had lost whatever websites were on my browser for study or had to recover Word and Excel files endlessly, there was time lost and cursing involved. Then in an update recently my computer was caught in an endless update cycle until Windows 10 was installed, their latest shot at the world, forcing me to start all over on everything. Suddenly, 10 doesn’t recognize my camera, and it won’t let me send emails from a right-click from my Passport or tape recorder. They do kind of let you schedule updates, but it’s all brute force. Bottom line, it’s easy to imagine tech departments in a lot of big shops, deciding to pick and choose and turn off updates until they are good and ready, but the notion that Microsoft can sell a product and then stop supporting it is absurd. When my car breaks, GM and Ford will still have the parts and fix it, regardless of how old my vehicle or how many miles I have on it.

Apple is certainly no better, and possibly worse. I’m still trying to figure out how to recover all my iTunes that are supposedly on their cloud, but now they are claiming they don’t recognize any of my passwords, and don’t email me a the protocol for a new one. A friend lost all of what they had on their iPod when they got a different computer. I have the same old, beat-up computer, but I’m in a new world. Google…hmm… maybe better but trying to get on their Project Fi phone program for international calls, they didn’t ever say exactly that the version of the phone it accepted has an X on it, and won’t take any responsibility. Wonder why so many people buy stuff from Amazon, they actually refund on mistakes and have some customer service.

So, hey, we’re all on computers, and we’re all vulnerable, and a lot of us are techno-peasants, and I’ll admit it, so we’re going to mess up, but these huge tech monopolies are treating us like cattle, rather than customers, and that’s going to mean more worldwide computer meltdowns. Don’t blame the victims, and be careful even on the criminals, because the tech monopolies are creating and enabling these disasters.

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