The Inside Story of Predatory Land Contracts

New Orleans      A paper by Eric Seymour and Josh Akers in the Cities journal ranked the density of various forms of land contracts that have surged to the forefront in low income areas since the 2008 financial crisis.  This brilliant paper aligns with the work of the ACORN Home Savers Campaign’s findings in the field on the doors.

Seymour and Akers crunched the data correlating where such contracts, REO foreclosures, and race all converged in patterns that leave little room for debate about where predators were feasting with the help of Fannie Mae auctions and other fire sales in lower income, minority neighborhoods.  The highest concentrations were in the in the zone around Detroit from Toledo to Flint and Pontiac.  The second highest was between Cleveland and Youngstown.  Third, was Cincinnati and Dayton.  The fourth finally broke out of the upper Midwest with pockets in St. Louis and Kansas City, but the maps showed it was everywhere.  We had been on the doors in a majority of those cities and could see the faces behind the numbers as people opened their doors.

This is a story writ large over generations.  Reading contemporary memoirs, it is not surprising that if the writer was African-America and came from rough and tumble, hardscrabble beginnings, not infrequently contract home purchases were part of the tale, as much for the predation as their precariousness.

Although Charles Blow has never mentioned it in his New York Times columns, one of the many poignant stories in his memoir, Fire Shut Up in My Bones (2014) mentions that his mother packed he and his siblings up to flee an abusive situation when he was a child coming up in northern Louisiana.  Underlining how bad it was, he noted that she was leaving a house she had bought on a land contract when it only had one month to go before she would have gotten the title.  I wrote Blow begging him to write a column about this, but there was no response, which also says a lot as well.

A new book, The World According to Fannie Davis:  My Mother’s Life in the Detroit Numbers, by Bridget Davis is getting a lot of favorable attention.  Davis emphasizes how open her mother was about her business inside her home with her children, and how important it was that all of that be kept secret from the world.  In fact, the driving force for Davis telling her mother’s story is to honor her mother’s commitment and reveal the secret.  Reading the book, one discovers quickly that there was another secret that was equally important, personal, and precarious, like her mother’s illegal business, and that was the fact that they were on a month to month land contract.  In order to escape even more risks and even higher interest and payments, her mother had made a deal with someone she knew with better credit to absorb the land contract and paid him in cash every month.  Bridget Davis is clear it was predatory, and her childhood memories read like fresh scars as she writes about how much they loved the house and the neighborhood, and feared on a monthly basis that because of the land contract they could lose it all and everything they had put into it overnight with no recourse.

The story from the outside about what racial discrimination and exploitative real estate contracts have done to communities around the country is a picture of state-sanctioned evil, but the story from inside looking out from the children’s perspective that is now being told as part of lived experience is also tragic.

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Please enjoy Patty Griffin’s Where I come From. Thanks to KABF.

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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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