Heartbreaking Stories of Housing Ripoffs

New Orleans   Meeting with friends and lawyers in Austin, Texas, including my longtime, go-to-counselor for organizational and personal matters, we had stopped briefly on the way to their celebrated annual spring crayfish boil for a cup of coffee and to watch marchers with homemade signs hearing towards the Texas capitol in the name of science. Later in the back patio of the law firm’s offices in a downtown house, while we watched young people take their turns at stirring the four boiling pots filled with crayfish, potatoes, corn, mushrooms, and even sausage, we found ourselves talking about how in the world it could be legal for the contract for deed and rent to own real estate predators to be able to stay in business given their total lack of compliance with local laws or contractual ethics of any kind whatsoever.

We discussed the lawsuit filed in Cincinnati, Ohio by that city to try and collect $335,000 in fines and penalties from Harbour Portfolio, the Dallas-based private equity vulture financier of contract-for-deed sales, and whether or not the company would run from the business. We made plans to challenge any application that the principals might make to acquire banking assets in Arkansas with our organizational allies there.

Where there was no question was that these companies had to be stopped. On the way to the airport, I read a report from Craig Robbins of Action United in Philadelphia who had been part of our recent doorknocking teams in Pittsburgh, Akron, and Youngstown. On a recent call, we had asked him to jot down any stories that we could put on the Home Savers Campaign website from the visits he was making with Vision Property Management, the South Carolina based rent-to-own predator. I opened the email and here is what I read:

Maria Rodriguez and her husband “purchased” the house at 917 Sanger St., in the Frankfort section of Philadelphia for $65,500, almost 4 years ago. Their credit was not that good, so Vision seemed like a good way to pursue their dream of home ownership. They both worked: he as a landscaper and she worked at a hotel doing housekeeping. Contract was signed on 9/1/13 w/BAT Holdings 8, LLC. They put down $2000, plus $465 as the monthly lease payment, $105 for real estate taxes, $30 for general liability insurance, or $2600 as an initial payment and $600 a month. Contract runs until August 2020. $57.06, +2000 initial option, of the monthly payment is credited toward the purchase price. Maria and her husband have put about $25,000 in the property-huge issues when moving in like unpaid water bills, no heating or electrical system. They believed that at the end of the contract, in 2020, they would own the property and get the deed. Instead, they will have paid $6,793 toward the $65000 house price. On Aug 30, 2020 they have 3 options: give Vision a check for $58,206; walk away, or they can convert to seller financing with a new contract for the remaining $58K. Like all the Vision properties people we’ve talked to, this was a total surprise.

Change the names and the listing price and this is the story of Vision – and many companies like it – all over the country. They have to be stopped.

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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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