Repetition in Land Contracts Confronts Simple Predatory Assumptions

New Orleans  One of the most interesting things the ACORN Home Savers Campaign has learned is to pay very close attention to what families are saying on the doors when we visit. Over and over we have had some of our operating assumptions challenged by what we learn when we are actually visiting with contract signers who are the owner-occupants in these deals.

None of this changes the basic paradigm at the heart of all potentially predatory transactions. On one side a company or individual or slumlord-wannabe is seeking to take advantage of a market dysfunction, usually financial, for consumers, usually low-and-moderate income. On the other side the consumer, often a family, is desperate for its tax refund or for affordable housing or for money to pay a health or funeral or education expense or access to credit for anything and everything. It’s the premise that allows banks and payday lenders to charge usurious interest rates, tax preparers to advance refunds a couple of days quicker than the IRS at incredible rates, and hundreds of other schemes.

In the real estate market it is why a Harbour Portfolio can charge 12% interest on a 30-year loan with a low downpayment on a contract-for-deed property when mortgage interest is running at 4%. It’s why thousands of slumlords in city after city can charge exorbitant rents, deposits, and fees for barely livable housing to families who are simply desperate for housing. It’s also what hovers around the rent-to-own, lease-to-own, lease-option markets that offer below market rents in “as is” condition, often with minimal assurances of habitability to families also desperate for housing but also sometimes hoping for ownership.

In the first months of doorknocking in Philadelphia, Pittsburgh, Akron, Youngstown, Detroit, and Atlanta listening taught us that the search for lower rent and bargaining power against rising eviction rates for tenants was making various land purchase schemes more of an attractive alternative for many lower income families than any hope of ownership. Often in the early doorknocking when we actually explained the contracts they had signed with various companies, families would ask us straightforwardly whether they should flee or fight, though most wanted to fight if they had a way to do so and had already put too much money and sweat into their places to want to walk away.

More recently in Detroit visits we are finding that families are often on their second or third contracts with various companies. In Detroit we also found in talking to people and warning them about the predatory nature of some of the contracts, almost as many people were asking us how they could get into a contract as were asking us how to protect themselves in a contract. In Detroit and Atlanta we were finding family after family where people were asking us how they could get into additional contracts. One young man in Detroit told us he was embarrassed that his mother, uncle, and sister were all “bettering themselves” in contracts, and he was still just renting a place. In Atlanta a Harbour contract holder told me her mother had also had a contract with another company, and she had tried to see if Harbour had other properties available.

So, yes, in some cases people are willing to sign a contract to have secure rent, regardless of the situation for a couple of years, but others, along with their families, are climbing up the contract ladder in the hopes of owning a home and doing so over and over again, even after slipping to the bottom, and they are bringing friends and relatives with them. Sometimes what you learn in organizing is not what you expect, but you have to adapt, and in this case it is clear that the Home Savers Campaign has to fight on one front to make sure the homes on various contracts are habitable for families and fairly understood, and on the other hand has to devise the ways and means to help families over the last rungs of the ladder to their dreams of home ownership.


Major Lease Purchase Option Company Comes to Agreement in Campaign

HSC committee in front of the Vision building

New Orleans   Agreements are always hard to win and in the campaign to stop predatory practices in the contract for deed, land purchase, lease and rent-to-own markets in lower income and working communities any such understandings would have seemed unlikely as the campaign began in 2017. But, now after months of actions, demands, and back-and-forth between ACORN’s Home Savers Campaign and the largest lease purchase option company in the country, Vision Property Management, an agreement has been reached.

The process began with a protest from the campaign over harassment of campaign leaders in Philadelphia and Detroit, but surprisingly those first harsh and accusatory conversations led to more lengthy telephone conferences that explored the differences between the parties and their goals, which led to the discovery of some common ground and then the hard work to affirm good faith on both sides that finally produced two face-to-face meetings, one to establish ground rules, and another with full committees that hammered out a tentative memorandum of agreement, and then a final document and a path forward.

The press release that went out in the campaign cities recently summarizes the substance of the MOU by saying:

The agreement outlines the installation and testing of systems to report lease payments to credit agencies, to allow owner-occupants to access their own payment record and option status as well as “lease credit,” and to assist in verifying direct out-of-pocket expenditures that improve the property. The campaign and the company shared the goal of making the agreements clearer and more transparent for the owner-occupants and agreed to achieve this result with a revised agreement. Additionally, the agreement anticipates the creation of partnerships in various cities between ACORN and VPM to implement this new program, starting in metropolitan Detroit and central Arkansas, where the company has a significant footprint. In another unique feature, the agreement anticipates creating a joint program in cities with significant available unoccupied housing stock such as Detroit, New Orleans, Youngstown, Pittsburgh, and Philadelphia where lower income families potentially interested in home ownership would be identified by ACORN and go through housing and loan counseling and then combining with Vision’s experience and expertise in vetting and acquiring suitable housing stock for rehabilitation and occupation, achieve their goals of home ownership.

The real foundation and accomplishment of the agreement was the discovery of the mutual interest of ACORN and Vision in rapid conversion of families under Vision’s agreements into standard, conventional mortgages creating full home ownership. Everything in the agreement moves to achieve those goals, critical to the families and creating stability in these cities and their neighborhoods.

The real test is obviously not the MOU itself, but all that happens next in the implementation. ACORN was encouraged by Vision’s willingness to listen, act, and resolve member issues we brought to them from the field. As importantly, Vision was willing to transparently allow campaign negotiators to look under the hood at their entire operation in order to get a fuller understanding of standard operating procedures as well as ongoing repairs being made to fix problems.

The “as is” assumption of the property by owner-occupants with any of these companies is at the heart of the problem and often exceeds the stark and predatory terms and conditions included in the contracts. Vision was able to convince the campaign that their new systems, check lists, verification programs, including pictures of problems and repairs, recorded conversations and inspections, have now been instituted for new agreements, assuring that the homes have met habitability standards before occupancy. This had been the source of most of the complaints from everyone involved in the campaign, and assurances that the homes are safe and decent under these provisions, allowed an agreement to be reached on the rest of the issues from contract transparency to ownership conversion.

For low-and-moderate income families caught in the housing crises of the last decade that have meant a credit desert that blocks home ownership for most and rising rents and soaring eviction rates for all, coupled with a reduced commitment by the government to support these families’ needs and aspirations, companies willing to change and face the dilemma in partnership with community organizations and campaigns that have struggled with these issues for decades is both a challenge and an opportunity. The agreement reached between the ACORN Home Savers Campaign and Vision Property Management is a significant step along this path. If it works as well as the parties hope, it will be historic.

Home Savers Campaign Committee with Vision

Please enjoy Neil Young’s Hitchhiker.

Thanks to KABF.