Land Contract Companies Settle Lawsuits in Cincinnati Without Celebrations

New Orleans     In the more than a year that the ACORN Home Savers Campaign has built committees of owner-occupants in cities in Michigan, Ohio, Pennsylvania, Arkansas, Georgia, and Tennessee to try to force companies to convert land contracts to ownership for the occupants, to renegotiate the terms, and bring homes up to standards, others have argued that the best tactic in dealing with land contracts was through the courts.  Lead lawsuits filed in Cincinnati a year ago have now been settled and provide a template for understanding what relief is possible and what is not, so let’s see what an examination of the settlements provides for the future organizing.

The City of Cincinnati sued both Harbour Portfolio, based in Dallas, and Vision Property Management, based in Columbia, South Carolina.  The suits were based on the condition of certain properties owned by the prospective companies.  The settlements in both cases resolved various fines and assessments involving these properties.  Harbour will have to pay $125,000 to settle and Vision will be required to pay about $88,000.

Going forward the companies are required to record all properties in the future.  They are also barred from entering into any future land contracts until the city has inspected the property to determine that meet minimum code standards.  There was an attachment with a list of properties that Harbour needs to resolve.  In the Vision settlement there were four properties at issue, two of which the City agreed had already been brought up to code and were deemed approved and two that were in process.

Pretty much that’s the bottom line on the settlements.  Pay up, fix ‘em up, and go on about your business.

The one area in which the settlements are completely silent is on the issue of the land contracts themselves and their provisions.   Harbour has been a classic contract-for-deed company in most of its transactions.  After investigations and subpoenas from the Consumer Financial Protection Bureau about their business practices since contracts-for-deed are under Dodd-Frank, the company seems to largely be exiting the market, even though the CFPB has been rendered toothless at this point.  Vision is a lease-purchase-option company where owner-occupants sign an agreement with a term of seven years normally and at the end of that term have credits set aside and the option to then buy the property and refinance.

In the settlement the City and Harbour agreed that a separate disclosure would be given to Harbour occupants explaining that they were in a land contract.  In the Vision settlement the company agreed, regardless of the nature of their contracts, to comply with any Cincinnati regulations that govern the conduct of landlords with tenants.

All of this is for the good, but leaves both companies whole and intact though chastened, and leaves the nature of their contracts affirmed as legal and appropriate business models under state law in Ohio, either because land contracts are covered in the case of Harbour or the law is silent in the Vision situation using lease-purchase-options.  Efforts to amend the Ohio law in the legislature proposed by some seem to not be making much progress and lack Republican support in the bodies they control.  The Cincinnati settlement will be the benchmark by default and gives relief where there are nuisance properties, but leaves the structure of land contracts in various forms untouched, leaving the ACORN Home Savers Campaign with plenty of work to do in our efforts to push companies towards mortgage conversions and different contract and business models.

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Discrimination is Running Rampant in Bank Lending

New Orleans        One of the toughest questions I got on my road tour of six countries was essentially, “how does it feel to have to keep fighting to hold on to every victory against constant opposition,” or in other words how do we do the work when every victory involves constant struggle.  My answer, most simply put, was that constant struggle is the nature of the work and relentless opposition to our demands, defines the necessity of building powerful, mass-based organizations.

At the same time the example I often gave was the significant accomplishment over thirty years from the 1977 to 2007 in home ownership in American by lower income families, African-Americans, and Latinos from the passage of the Community Reinvestment Act, joined aggressively by ACORN and many other community organizations, to the housing bubble crash at the leading edge of the Great Recession.  Now most of those home ownership gains have been erased in the last decade of foreclosures and the widening expanse of the credit desert.

It turns out there is even an uglier story underneath that disaster.  Reveal, the online publication of the Center for Investigative Reporting, picked up a task that used to be ACORN’s annual labor for thirty years through 2008 and examined 31 million mortgage records to understand current banking practices in making loans.  They found that the odds of African-Americans and Latinos being denied conventional mortgages compared to whites of equivalent income, loan size, and other factors were worse in sixty-one metropolitan areas.  The list of cities suffering that infamy included Atlanta, Denver, Philadelphia, St. Louis, and San Antonio.  African-Americans bore the worst brunt of discrimination in the South, unsurprisingly, in cities like Mobile, Alabama, Greenville, South Carolina, and Gainesville, Florida.  Latinos took the worst beating in Iowa City, Iowa.

The litany of discrimination by banks and heartbreak for families trying to build citizen wealth is relentless.  Blacks were turned down more often in 48 metro areas, while Latinos experienced the same in 25, Asian-Americans in nine, and native Americans in three.  Take a bet with me that these are areas where each group is significant in the overall population.  In Philly, African-Americans received ten times fewer loans than whites even though their numbers are about equal.  In Washington, D.C, all minority groups faced discrimination compared to whites, so welcome to the nation’s capital where banks discriminate across the board.

Banks have been hiding behind their errors, compounded with multi-billion-dollar settlements, for the last decade, just as they have hidden their discrimination behind the  confidentiality of credit scores, that often have the reliability of lie detector tests.

Can we count on the Federal Reserve to step up as the regulator here?  Not likely.  How about Congress, where campaign contributions are king?  Not likely.

As I answered in Brighton, struggle is constant, and this example is a reminder that the battle needs to be engaged again on the housing front with new tactics and new demands now that banks have reverted to newer and more subtle systems of discrimination.

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