FNMA Opens a Crack in the Predatory Land Contracts Wall

New Orleans   Fresh off our meeting and work in Detroit, the Home Savers Campaign got a break. In response to Baltimore Congressman Elijah Cummings complaints about Vision Property Management, the national rent-to-own operation’s lack of cooperation with him and his committee, symbolized by the lead poisoning of children living in one of their contracted properties, FNMA banned VPM from participating in further purchases of foreclosed properties in REO auctions. Vision of course cried foul, but there was finally a crack in the wall that Vision and hundreds of other companies have built through impunity and predatory practices.

What was less clear about FNMA’s response was whether they were just trying to get the Congressman off of their backs or whether this is a real change of heart. Although in their announcement they indicated to the New York Times that they had investigated the various claims, the nature of their investigations and the standards they used to bar VPM were not disclosed. It was also unclear that they were looking past VPM to the other companies that are bleeding lower income and working families in the same way. Furthermore, while Fannie Mae has stepped up, Freddie Mac is still cowering in silence even though they were also asked by the Congressman to ban Vision.

The Home Savers Campaign is drafting a letter to demand that FNMA bar any company from their auctions that relies on “as is” contracts for contract land sales or rent-to-own agreements. In Pittsburgh, Akron, Youngstown, Detroit, Memphis, Philadelphia, and other cities, we have found that this “as is” language is a license by not only Vision, but all of the companies in this sector to push properties into the hands of families desperate for affordable housing on any terms. Many times the companies are relying on the gray area of whether they are contracting with families who can claim to be tenants and access some rights available to them as tenants, depending on the city or state, or whether the families are now putative “owners-to-be” and allowing them to escape the strictures of local and state regulations.

The Toledo, Ohio ordinance makes it clear that such families in any manner of contract land purchases have to have a warrant of habitability before any contract can be validly signed and the family allowed to move in. The devil is in the details though when it comes to enforcement. Lawyers and tenant advocates told the campaign in Detroit that there is also a similar warrant of habitability required in that city, but there is no enforcement so it’s a dead letter.

The Home Savers Campaign intends to demand that any company operating with “as is” language in their agreements should be barred from accessing any property through auctions or sales foreclosed or delinquent homes in order to dam the flow of properties upstream to these predators. Enforcement or no, that will ensure in the future that companies have to ensure at least that minimum standards have been met in these homes, before desperate families are allowed to live in them. Additionally, any work done by the families before they receive the deeds should be reimbursed for out-of-pocket expenses directly or be discounted in the sales price.

Families desperate for housing cannot be the ATM for predatory housing schemes and the companies, big or small, that are running these scams.

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Vision Rent-to-Own “Buyers” Meet and Find Out Every Deal is Different

San Francisco  The first organizing meeting in Detroit of the Home Savers Campaign had spirited discussion when families discovered that they only had one thing in common in the contracts they had signed with Vision Property Management or its subsidiaries: the contract itself. When it came to the terms, to everyone’s shock and anger, everyone had a different deal!

The differences were not simply where we might expect to find them in the price of the houses they were hoping to buy or the number of years to term. In fact the prices were all very close to each other. As the campaign has come to expect from visiting so many families in Pittsburgh, Philadelphia, Akron, Youngstown, and now Detroit, some families attending the meeting were still shocked to find out that in seven years they would not own the home as they expected, but simply face wrenching choices between balloon payments, long term agreements, or walking away from extensive investments in money and labor in repairs.

The differences in the contracts were huge. Excitedly talking about their contracts, they found for example that in some contracts as little as $14 of their monthly payment was going to principle on the purchase while in others as much as $150 was being applied. That was often the case when the payments were virtually identical. In several cases, they discovered they had not been clearly told how much of their payment was going to principle at all. Even when the purchase price of the houses were roughly equivalent, families were finding that the amount of their monthly payment being applied for insurance was often different.

Looking at the question of tax payment which is especially freighted with concern, since nonpayment of taxes to the county could lead to loss of the property on tax delinquency sales. Only one family could determine from their payment the amount that was supposedly being paid to taxes, while the other families at this first organizing meeting became worried that since there was no indication, Vision might not be paying their taxes at all. Even in the one case where the tax level was stated at $150 per month or $1800 per year, there was skepticism that the house valued so modestly really was sustaining such a relatively high cost compared to true value.

Many of the people at the meeting were also on their second contract with Vision. The first had given them up to 45 days to make good on their payments, while the more recent gave Vision the right to void their option to purchase if they were late on the payments at all, making the contracts essentially no more than rental agreements, despite the fact that this was a triple-net lease with the “buyer” paying everything including thousands and thousands in repairs. One family was livid having invested over $50,000 in repairs, yet still debating whether or not they should walk away. Everyone at the meeting shared stories of about the “fishing” Vision’s representatives did with them over the phone to try and suss out the amount families had invested themselves in repairs, presumably for the company to guess whether the property might have been fixed off enough for them to seize the first opportunity to evict and flip.

People were happy to meet, but that was the only happiness in the room once the members and organizers cleared the fog away that hung over the legalese of the agreements. There was anger and plans for quick action. On the question of fight or flight, people were ready to fight. Powered by people, the campaign now begins in earnest.

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