Cities Trying to Fight Back Against Home Exploitation Scams

housing inspector in Toledo

New Orleans     Perhaps against their will, some Ohio communities have become ground zero in trying to throw roadblocks in the path of companies exploiting the desperate need of lower income and working families for affordable housing and, just maybe, the hopes of traversing the credit desert to home ownership.

The best local ordinance that seems to have emerged in this effort is in Toledo. Chapter 1765, entitled Conditions for Conveyance of Property by Land Installment Contract, passed in 2015, tries its best to grab this bull by the horns. Toledo does so by first making the issue of responsibility very, very clear. It’s not just the seller or owner of the property that has to follow the ordinance but “any agent” of the owner and any entity defined as the owner.

The critical issue that ACORN’s teams confronted repeatedly in recent visits to Pittsburgh, Youngstown, and Akron was the fact that families were finding themselves in land contracts which met no conceivable standards of habitability. Toledo’s ordinance goes out of its way to do two things that are essential in protecting families from abuse in these contracts. On one hand the city insists that all contracts have to be recorded with the city. Most of these companies are playing whack-a-mole in this regard. Vision Property Management for example listed only five properties in Pittsburgh, though we found more than twenty on a quick search of property ownership records, and suspect that the real number is many times more. Secondly, and even more importantly, Toledo requires a certificate of occupancy before a family can reside in a house under a land installment contract and only after the city has inspected the property and its major systems and found that they are satisfactory.

The language in the ordinance is mandatory and unambiguous:

(a) No vendor shall convey any interest in a residential property through land installment contract unless a Certificate of Property
Code Compliance or Temporary Certificate of Property Code Compliance has been issued, pursuant to this section.
(b) No vendor shall fail to deliver to the vendee a copy of the current Certificate of Property Code Compliance or Temporary
Certificate of Property Code Compliance prior to the execution of the land installment contract.
(c) No vendor shall fail to record, as provided in R.C. 5301.25, the land installment with the county recorder and deliver a copy to
the county auditor within twenty days of the execution of a land installment contract.
(d) In a conveyance of any interest of a residential property through land installment contract sale, no vendor shall knowingly
require a vendee, as a condition of the sale, to sign a “quit claim” deed, deeding the property in question to the vendor in the event of a
default by the vendee.

The penalties are perhaps weaker than they should be, beginning at $250 for the first offense and moving to $1000 for the third within a two-year period, and judging the offenses to be a misdemeanor if recurring, which may not be sufficient to intimidate these fly-by-night outfits. Furthermore, the devil is in the details, when it comes to how aggressive Toledo has been in forcing the hand of these predatory operators, which we have yet to determine.

The City of Lorain in Ohio passed an ordinance in 2014 also requiring certificates of inspection and occupancy clearly also trying to get their arms around this crisis in their community, but sadly a close reading of the requirements pulls them up short. Lorain’s measure tries to impose the burden “at the point of sale.” Part of the entire business model of these companies and the core of this predatory scam is keeping the family from ever getting to the point of sale and forcing them to live in often dangerous structures with limited resources holding on to little more than their hope of ownership.

Similarly, Youngstown, Ohio, path breaking ordinance creating a “foreclosure bond,” forces refundable payments after foreclosures, forcing responsible upkeep of the property by corporate and individual owners, and has worked spectacularly in managing the overall condition of communities from what we could see, but doesn’t cover evictions, at least not yet, or specifically rent-to-own or land purchase contracts, and of course is better at locking the barn door after the fact, rather than on the front end like Toledo.

Regardless, Ohio cities confronted with this grassroots crisis are responding, rather than pretending it doesn’t exist or looking the other way like most communities, oblivious to the way that low to moderate income families are being exploited by these schemes and forced to live in abominable conditions.

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Wisconsin Worker Whistleblowers Expose Vision Rent-to-Own Scams

wearegreenbay.com

Pittsburgh   Vision Property Management, headquartered in South Carolina, seemed like a bad penny that kept turning up in every neighborhood we door knocked in Pennsylvania and Ohio. The ACORN teams spent a lot of time before and after these visits trying to understand as clearly as possible the business model for the company. It was hard to ever figure out how they lost money on any of these almost universally rundown and dilapidated properties, but their model wasn’t so much rip-and-run, as it was lie-steal-and-scam.

We were mystified how this predatory outfit could get away with this plain and simple fraud and grand larceny? One of our team found a video from Green Bay, Wisconsin of all places done by Channel 5 television and its reporter, Nate Stewart. The piece had the vibe of an ISIS hostage video with the speakers disguised so that Vision would not recognize them. Perhaps they were concerned that now that they were confessing their shameful acts, that Vision might do the unspeakable to them? Since Vision does virtually all of its dirty work via the internet and telephone with virtually no on-the-ground staff, they were probably right to realize that the company could follow the dots back to them.

We had heard plenty horror stories from victims, and reading the Green Bay report, these were confessions right from the horse’s mouths! Read, listen, and weep:

· “We knew we were putting people into situations that they couldn’t handle.”
· “My big problem with the culture there was that we knowingly manipulated people’s bad situations for our own gain.”

Ok, you may not have been with us on the doors, but if there was any doubt about their corrupt business model, here’s what another Vision worker has to say:

“When the customer ended up signing the contract and there were liens or the pipes were missing, we could say ‘well we had a recorded phone call with you, I instructed you to go find that out.’ But by nature, we weren’t dealing with the most sophisticated real-estate consumer. So I can say ‘go to the clerk of court, go look up public records’ all day long, but if you don’t know how to do that or if you don’t even know what I’m talking about and you just want to get off the phone with me so you can get into this house, just say yeah all day long.”

“If they’re already in a financial situation that puts them in a position to be working with a company like this, they probably can’t afford to throw down several hundred dollars to have an inspector come in and look at all this stuff. Often times when they do, the inspectors are appalled like, ‘no, no don’t buy this!'”

We met a number of people who were on SSI or Veterans payments, where Vision was taking between one-third and one-half of the wannabe buyer’s check for their scheme, and according to their workers in Green Bay, this was no coincidence, but their deliberate strategy. Here’s what one said to Channel 5:

“We sold a considerable amount of houses to people who were making a $721 month social security check – and with $228 monthly payments, they had no business living in the house. They obviously didn’t have the means to repair it themselves or pay somebody to repair it.”

The Vision crowd, according to its employees, were equal opportunity thieves. Their business model was exploiting lower income families desperate for housing, but they didn’t mind stiffing local governments and anyone else they owed a buck. Here’s what one woman told Channel 5:

“I would sometimes record two or three deeds at a time for one actual sale or one actual purchase, and no tax would be paid because Michigan, Pennsylvania and Maryland have higher taxes. They yelled at me and told me they refused to pay that tax and I would need to find a loophole. There were some that were legit, but the majority of them we just didn’t send them in. We were told that ‘we’ll just pay it if we get caught, but if we don’t, we’re not paying the government a dime,’ and so that’s what I did.” She added that many times she was told to get the deeds to the county overnight so Vision could get it processed in the tenants name before they found out – even if the house had many repairs needed or was up for demolition.

These are just stone cold crooks. You’re wondering why the FBI isn’t investigating for wire fraud, well so am I. You’re wondering why the Consumer Financial Protection Bureau isn’t all over these bad boys, well so am I.

In November, Channel 5 touted the fact that Vision’s operation in Green Bay was being investigated by the Attorney General in Wisconsin. Writing this, I found another Channel 5 piece in mid-February but there’s still no sign almost six months later that the AG in Wisconsin has done much to stop Vision. In fact the February piece was mainly about the fact that reporters from the New York Times, the City of Green Bay, and Channel 5 were all being stonewalled by Vision. No mention of any activity by the Wisconsin AG or any progress there.

Stealing from poor and working families isn’t big news, it’s just standard operating procedure for Vision and a pile of other operations. It seems pretty clear that Vision will operate with impunity until we organize enough of the victims to stop them.

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Harbour Portfolio Contract Purchase “Buyers” Are Either Mad or Scared

Akron   They may spell Harbour with a “u” in a head fake to make you think this is a high-class operation from London or something, but when you are dealing with Harbour Portfolio, it’s just a Dallas-based private equity operation with Wall Street roots, that leaped down into vulture financing to buy thousands of FNMA foreclosed houses. What makes them different though is that they have flaunted the fact that they were going to try to make their bucks by off-loading the homes using contract for deed land purchase agreements, which most people in Ohio and Pennsylvania just call rent-to-own, though they are a bit of a different animal.

The ACORN teams on a doorknocking blitz this week starting in Pittsburgh, then Youngstown, Ohio, finished with two teams hitting forty doors in a cumulative ten-hour sprint in Akron. Over the three days, we may have put the flesh to the wood on close to 100 homes. We wanted to listen carefully to what people were saying to understand how their experience with these high-risk and often blatantly predatory home purchase schemes were working out for them. We learned a barrel full and met some great people, and the week was invaluable in allowing us to finally get our arms around this campaign after surrounding it with almost four months of researching property records, looking at agreements, and getting a sense of the field and its cast of characters.

With few exceptions, people wanted to talk to us because they were as confused and uncertain about the fine print on their contracts and agreements as we were. They knew they wanted to buy a house and for the most part thought this was the only way they had a chance, so dove in and hoped they would never hit bottom.

One of our teams though talked about part of their conversation as the “angel of death” piece of their rap where they felt like they were giving people the news that they very likely would never going to own the house. My team was more gingerly, and as my doorknocking partner said to one Harbour Portfolio contract buyer with four years into the deal that we would like to go over the contract with them to make sure they would own the home at the end of their agreement, she looked us in the eye, and said that she also was scared that the contract would really never end up with a deed.

On one of our visit Harbour Portfolio visits in Akron, we started after identifying ourselves and asking the confirmation question about whether the man had a contract with Harbour. He quickly came to the steps saying, “You mean Harbour Portfolio!” He was mad about every part of his experience with Harbour. A bathroom ceiling had fallen down on his sister causing $1400 in repairs, and, worse, hurting her so badly she wasn’t able to work. On our first Harbour visit in Pittsburgh, we had been ushered into the living room to talk to the owner who was confined to the couch, recovering from surgery on a fused disc in her neck. Later in the conversation it turned out faulty steps in the house had caused the fall. To say some of these homes are unsafe for their new contract buyers is not speculation, but a statement of fact.

There was confusion about the contracts from start to finish. One owner noted that somehow they had allowed his sister to sign, rather than him, confusing the family and the potential ownership. Another was sure she had a mortgage despite the fact that she was paying National Assets, one of Harbour’s servicers, had only paid $1500 as a down payment on what she knew as a double-digit rate of interest and thought would cost her $100,000 before it was over on a home she knew Harbour had bought for $13,000. She finally agreed it was not a mortgage, when she recognized the term “contract for deed” was on her agreement after we mentioned that kind of instrument. Another had gone through three servicers already. None of the terms matched. One was paying insurance directly and having problems with Harbour telling her they were also paying for the insurance through them, and had been unable to stop the double payments.

None of this was “let the buyer beware,” so much as all of it was “make the buyer scared!” Every Harbour buyer we met was holding their breath that they would own these homes on a hope and a prayer without any real grip on their contracts and even a scintilla of belief that Harbour was dealing with them in good faith.

Several of our team were veterans of ACORN’s many anti-predatory lending campaigns so for some of them it seemed like déjà vu all over again. The only exception was that these contract purchase and rent-to-own schemes were so much worse. In those deals, most of the theft was on the level of the interest, points, and fees. Here it’s everyday pocket pinch on homes built on hopes and often crumbling around them.

Please enjoy Willie Nelson’s He Won’t Ever Be Gone.

Thanks to KABF.

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Vision Rent-to-Own Buyers in Ohio are Confused and Unhappy

Youngstown  Where we had four ACORN doorknocking teams in Pittsburgh, we only had two in Youngstown, Ohio, but that seemed right since with hardly 70,000 inhabitants now, Youngstown was less than one-fifth the size of Pittsburgh. Putting the lists together at the Youngstown Public Library and the second-chance Café Augustine, run by the Catholic Diocese in space there, our list of homes with various forms of contract land purchases kept growing like weeds. We had too many choices and too little time. Focusing our work just on Vision Property Management, which had been the source of so many complaints in Pittsburgh, we found ourselves with more listings in Youngstown that we had in all of Allegheny Count which dwarfed its size. We had a tiger by the tail it seemed.

Youngstown people are nice. We were met with curiosity and courtesy everywhere. Unfortunately in talking with Vision customers, hoping to be homebuyers, we were also met with confusion and uncertainty from everyone when it came to understanding their contracts with Vision. Many of the stories resembled each other, but none of them were the same. What we thought we understood from our many visits in Pittsburgh was often modified and amended in ways both subtle and significant in the almost twenty doors we visited in Youngstown. Mostly, people hoped they understood their contracts, but they could rarely put their fingers on them while we visited, so we were all like the blind men touching the elephant and trying to describe it to each other.

The most poignant visit was with a man who did have his contract, was convinced that he would have paid off Vision in seven years and would own his own home outright, and was in shock and disbelief as our team worked with him paragraph to paragraph to show him that after paying almost $20,000 in 7-years he would own nothing, but the right to make three choices that Vision offered at that juncture. Since the company was only counting a small part of his monthly payment towards the purchase price, he could make a balloon payment of $15,000 or so and get the deed, which he said was an impossibility for his income and credit. In a second choice, he could walk away from the house and lose his equity, down payment, and the money and labor he had already sunk into repairs. Or, in a final choice, he could keep paying on the same basis for another 15 or 20 years hoping to still own the house. This isn’t a lady or the tiger choice, but more like a choice between the devil and the deep blue sea. The wannabe homeowner was near tears and our team had to try to put a smile on the horrible face of Vision Property Management, not as an act of organizing, but as a simple act of humanity.

As we debriefed at the end of our day on the doors, we found ourselves grabbing at straws. One woman told us she had muscled Vision into an agreement that she would own the house in six years. We hoped she was right, but didn’t see the contract. Another man was convinced he could mortgage the house after his seven years. We hoped with him that there would be an oasis springing up soon in this credit desert. One man told of having been given a couple of weeks to catch up on his payments when he forgot one to prevent eviction. Another man told us he was in this Vision rent-to-own property for the last year after his previous Vision contract had been demolished, and Vision had let him choose from where to try again from their website. A woman said she was given three months to catch up on her payments once.

We found ourselves looking for light at the end of this terrible Vision tunnel of heartbreak. As horrid and predatory as the Vision contracts seemed, the company also seemed hesitant to let someone spit their hooks. If people were able to organize, hear each other’s stories, and take action, they just might be able to force Vision to change their contracts and terms. If some people could force small concessions with their anger, if they came together to fight in the campaign, they might be able to force Vision to buy into their vision of themselves as homeowners, rather than as simple fodder for the company’s exploitation.

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Doorknocking Home Buyer Victims of Contract Buying Scams in Pittsburgh

Pittsburgh   The more we researched the revival of contract for deed land purchases in places from Memphis to Chicago, Detroit to Philly, and the rapidly spreading, predatory scam involving rent-to-own agreements, the more it became obvious that we had to get on the doors and listen to what people were saying who were living in these houses and facing the daunting odds and brutal gauntlet to home ownership. ACORN assembled a team of veteran organizers from Philadelphia, Boston, Brooklyn, and New Orleans to rendezvous in Pittsburgh to partner with our affiliate, ANEW, and its great leaders and staff, to begin a doorknocking blitz in three cities in an organizer’s version of a listening tour and an exploration on whether or not there was potential heat and traction for a Contract Buyers Campaign or whether or not families signing these agreements were happy campers.

Actually, camping did come up quickly in one of the first visits in the team I was with, but happy was never ever mentioned. When we got up the steps a gate blocked the porch that said “Do Not Enter,” but after I tapped on the window, a woman came out, and when I said we were talking to people who had experience with rent-to-own purchase agreements, she waved us all into the living room, sent the children scurrying so we could sit, and she had her partner start the conversation saying they had had nothing but trouble in buying the house, and then proceeded to detail years of trials and tribulations with Vision Properties, based in South Carolina and this scheme. From the day they signed the agreement and even before moving in, they discovered someone had kicked in the back door and stripped the electrical wiring and the plumbing. They called Vision, asking them to take responsibility, and Vision said they were on a triple net lease, and it was all on them, so in their words the first six months they “were camping in the house.”

That was four years ago so the situation has improved, but their relationship with Vision remains poisonous. They had paid $1000 down payment for a house Vision said they were selling on this basis for $20,000. The first five years though their monthly payments would be $300 per month with 30% supposedly going towards what they described as an additional down payment, which would add another $6000 to their down payment. They weren’t able to put their hands on the agreement to show us, but supposedly only then would they start really purchasing the house from their understanding. We didn’t bother them with the math, not wanting to be bad news bears, but the numbers were already shocking. In another year, they would have paid $7000 on something Vision was calling a down payment and another $12000 in rent to Vision, which clearly despite having an ostensible rent-to-own agreement was not adding up to any payments on the principal, even though at the end of their first lease term they would have paid $19,000 against the value of a $20,000 house. They had put another $5000 into the place, not counting their countless hours of labor, and felt fortunate that the borough inspector was working with them on a problem with the sewer line in the other half of their house which everyone involved knew was going to cost thousands to repair. Without any of us saying it, they knew and we knew, that Vision was likely going to be telling them after five years to keep paying this so-called rent with only a piece of it going towards a deed at the end of their rainbow. Oh, and don’t think for a second that Vision is smiling yet as they giggle while walking to the bank. While changing jobs as a housekeeper in a Pittsburgh motel this last December, they were late on one payment and Vision gave them a 7-day eviction notice which they only avoided with a phone shouting match and a double rent payment of $600.

When I asked if they were ready to come to a meeting in a couple of weeks, there was a quick yes from both of them. Were they prepared to bang on the table and shout their protests? Hell, yes, was the response. They had tried to post warnings to others on Facebook about these scams. They had been talking about running for the borough council to make them listen.

This was just one story from the doors.

It wasn’t exceptional though. It was typical. There was resignation and understanding from every family that they were caught in a scam, but in the common conflict of predatory transactions, all of them had been desperate for affordable housing and some way to make something their own, took the gamble with their eyes open, hoping for some good faith, and now were reaping the whirlwind with anger and frustration and looking for justice and ready to embrace and take action with an organization willing to allow them to fight.

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Vision Property Management: Exploiting Lower Income Home Buyers as a Business Model

New Orleans   In writing about Vision Property Management, the predatory and unscrupulous rent-to-own real estate company, reporters for The New York Times obviously struggled for a way to describe where to place Vision and other bottom-fishing realty companies that exploit lower income and working families’ hopes of home ownership. They ended up just talking a walk and euphemistically referring to these operations as operating in “this corner of the housing market.” If it’s a corner, it’s a very dark and nasty place.

Vision, based in Columbia, South Carolina, owns more than 6000 houses, many of them purchased at rock bottom prices from the foreclosure inventory dumped on the market “as is” by the quasi-governmental housing finance giants Fannie Mae and Freddie Mac. The Times described their modus operandi succinctly:

Vision markets its homes on a website, with most of the transactions taking place either over the phone or by email. Sometimes the photos of the properties are several years old and do not reflect what they actually look like.

You’re wondering how that would not run afoul of truth-in-advertising laws aren’t you? I thought the same thing, but to the degree that state and federal laws do not seem adequate to regulate operations like Vision, this dark corner of the real estate market, whether called contract-for-deed, rent-to-own, lease purchase, or whatever, is based on transactions where the “looks” of the place may be the least of the problem. No inspections, no appraisals, and agreements based on condition “as is,” make it easy to hide problems as severe as lead poisoning and roof leaks in Baltimore, lack of water, heat and good sewage in Arkansas, and unaddressed code violations and thousands of dollars in fines in Cincinnati, all of which reporters were able to document from disgruntled and exploited wannabe home buyers. Even a recent photo on the Vision website would not have revealed the horrors that awaited these families – and thousands of others.

As we’ve noted over recent months, contract for deed land purchases, like a bad weed, have grown in the credit desert since the Great Recession for lower income families still hoping to own their own homes. In the wake of these horrible stories of exploitation, some states are finally looking to tighten up regulations. A bill in Illinois is progressing that would give buyers some additional rights, especially once they have paid more than 10% of principal and interest. A bill proposed in Maryland had less luck, as the real estate industry muscled up to prevent reform even in the wake of lead paint poisoning in some of the homes, arguing that over worked and undermanned city inspection teams needed to do better. The Uniform Law Commission is evaluating whether to draft model legislation on contract for deed purchasers in the wake of all of this shame and scandal, but that will also take years.

Exploited home buyers shouldn’t have to crouch in this dark corner of the market waiting for relief. Signing light on the problems is valuable, but this is a situation that cries for action, since the words aren’t working.

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