Thursday, July 13, 2017

Atlanta Legal Aid Tags National Real Estate Investor With Lawsuit For Allegedly Screwing Over 17 Would-Be Homeowners By Unloading Dilapidated, Formerly Foreclosed Homes On Them Using Predatory 'Contract For Deed' Sale Agreements

In Atlanta, Georgia, the Atlanta Journal Constitution reports:
  • A lawsuit filed in federal court accuses a Texas firm of preying on would-be homebuyers in Atlanta.

    The suit, filed in U.S. District Court, includes 17 plaintiffs, who say they were misled by Harbour Portfolio and associated companies into thinking they were becoming owners when they signed agreements that effectively made them renters.

    Harbour targeted black areas with the deals, known as “contracts for deed” or “land contracts,” which gave the plaintiffs “all of the obligations of homeownership with none of the rights,” according to the filing.

    Officials at Dallas-based Harbour declined comment Thursday.

    Several years ago, the company purchased thousands of foreclosed homes in a number of cities. They still own scores of homes in Atlanta, virtually all of them in African-American neighborhoods, according to Kristen Tullos, an attorney with Atlanta Legal Aid, which is representing the plaintiffs.

    “This is the most recent development in predatory lending,” she told the AJC. “They are targeting neighborhoods that have been hit time and time again.”
    The lawsuit cites a University of Texas study found that over the course of two decades, about 45 percent of contract for deed purchasers defaulted. Fewer than 20 percent received a deed for the property.

    In Fulton County, Harbour bought 85 properties between 2011 and 2015, according to the lawsuit. Of those purchasers, 34 have faced eviction.

    It is not the first time that the company has been called out for what critics see as predatory practices. In April, the city of Cincinnati sued Harbour, alleging that the firm owed more than $360,000 in unpaid fines, fees and violation notices.

    The city has charged the firm with failing to maintain homes, a neglect that the city says is linked to lead poising in a child.

    Last year, the federal Consumer Financial Protection Bureau filed a lawsuit in federal court against Harbour for actions in more than a dozen states. Regulators recently complained that Harbour has been complying with the subpoena too sluggishly.

    Among the plaintiffs are some who are still in the houses owned by Harbour and some who have left or been forced out, said Tullos.

    Harbour and others who use “contract for deeds” have argued in the past that the purchases typically have tainted credit histories, as well as limited or spotty income, so they are unable to get a mortgage.

    The companies have argued that the “contract for deed” is a bridge to homeownership.

    Only that, Tullos says, is not what happens. Instead, they are set-up for failure, while thinking they already own a home.

    “The companies make it difficult for aspiring homeowners to ever achieve the goal of ownership – which is what they think they are doing,” she said. “None of the people in this lawsuit understood. They believed they were becoming homeowners and they later found out they were functionally renters. That was devastating.”

    The lawsuit, argues that Harbour has violated both federal and Georgia law asks that a court order Harbour to pay damages, but does not request a specific figure. The suit also asks that the court declare the plaintiffs to be the owners of the properties where they have been living.