Monday, May 29, 2017

Fannie Mae Joins Battle Against Rent-To-Own, Contract For Deed/Land Contract Rackets; Says It No Longer Sells Foreclosed REOs To Nationwide Outfit Accused Of Using Abusive Deals To Dupe Naive Aspiring Homeowners Into Buying Dilapidated Money Pits

The New York Times reports:
  • One of the biggest firms in the rent-to-own home business is now on the federal government’s do-not-sell list.

    Fannie Mae, the government-controlled mortgage finance giant, said on Tuesday [May 23] that it had stopped selling properties to the firm, Vision Property Management, after conducting a review of the firm’s rent-to-own program, which operates in more than a dozen states.

    The mortgage finance company will also impose restrictions on future sales of foreclosed homes to firms that engage in abusive forms of seller financing — which includes selling homes on either rent-to-own leases or in long-term installment agreements known as contract for deed.

    The policy change by Fannie could put a big crimp in the business model of certain investment firms that have sprouted up since the financial crisis. These firms buy foreclosed homes on the cheap and sell them to people unable to qualify for a conventional mortgage.

    A series of articles in The New York Times last year detailed abuses with rent-to-own leases and contract for deed sales. The articles illustrated how people across the country were being duped by the promise of owning a home without realizing the hidden cost of repairs and sometimes overdue fines owed to municipalities.

    Housing advocates have criticized the seller-financed business for fostering abusive practices that take advantage of poor people and contribute to neighborhood blight.
    ***
    Vision has come under scrutiny in recent months for what regulators and senators have called its predatory lending practices in real estate. The South Carolina firm bought thousands of foreclosed homes from the government, turning around and reselling these often rundown homes “as is” to aspiring homeowners.

    In a pattern first reported in The Times, Vision and other firms often spend no money on renovating the foreclosed homes, putting the onus on the tenants to bring the property up to code or lose their contract. In several cases where lead paint was present in a property, Vision failed to disclose the hazard, [...].

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