Thursday, July 13, 2017

National Real Estate Investor That Uses Predatory 'Contract For Deed' Business Model To Flip Dilapidated, Formerly Foreclosed 'Money Pits' Onto Unwitting Homebuyers Now Faces Add'l Scrutiny By Peddling Its Crappy Contracts To Receive Installment Payments Onto Unsuspecting Investors

From a recent story in The New York Times:
  • [L]ed by Charles A. Vose III, Harbour [Portfolio Advisors] once owned more than 7,000 homes in over a dozen states, but more recently it has been selling off the contracts for deeds it signed with borrowers over the last six years.

    Harbour’s business practices were featured prominently in a front-page article in The New York Times last year. Subsequently, the federal Consumer Financial Protection Bureau began an investigation into the firm’s use of contracts for deeds to sell formerly foreclosed homes “as is.”
    ***
    Those familiar with Harbour’s activities say it now owns fewer than 1,000 homes, having sold most of its homes and contracts to a wide array of investors, including hedge funds, small investment firms, mom-and-pop investors and even one Bitcoin entrepreneur from Canada, Haseeb Awan, who referred to his small investment in contracts for deeds as “gambling money.”

    Harbour has used Incenter, a service provider to mortgage lenders and an affiliate of the Blackstone Group, to assist with the sales.

    Cincinnati is not the only city struggling to follow the daisy chain of property title ownership. The firm bought homes from the government mortgage finance firm Fannie Mae in other cities, too.

    Robert A. Cutler, who runs Hamilton Green Crest, a small investment fund in Westport, Conn., says he now regrets buying a contract for deed from Harbour.

    In May 2016, Mr. Cutler bought a contract in Atlanta for a home Harbour sold on an installment plan for $41,000. Mr. Cutler and his firm are included in a lawsuit filed earlier this year by the Atlanta Legal Aid Society, contending that Harbour had targeted African-American communities to sell contracts for deeds on homes at inflated prices. (Ms. Hletko said there was “no basis for that deplorable allegation” in the lawsuit.)

    We thought we had done enough due diligence on this, but obviously we were wrong,” said Mr. Cutler, a corporate lawyer who added he had little prior experience with contracts for deeds. “We had no idea they were pushing properties on people with oppressive terms.”

    Legal Aid lawyers say that the woman living in the home, Anita Jordan, 39, was confused as to whom to make payments to when she received a letter last September from Mr. Cutler’s firm saying it had officially acquired the contract she signed with Harbour in August 2012. Mr. Cutler, who paid Harbour $16,000 for the contract, said he now believed he was misled by Harbour and an independent broker peddling the contract.

    [A Harbour attorney] said that buyers of Harbour contracts were “sophisticated real estate investors who are fully informed about the properties and transactions.”

    A representative for Incenter declined to comment.

    Nicholas Press of Clark Partners in San Diego, a small residential investment firm that is the current owner of [another] contract in Cincinnati, said he was looking to reverse the deal.

    Mr. Press, who bought a half-dozen contracts in March, said he faulted Park Street Group, a firm in Michigan, which sold him the contracts, for not being upfront with the looming problems facing Harbour in Cincinnati and elsewhere.

    I want my money back,” Mr. Press said. “I think Harbour is doing damage to low-income borrowers.”

    Mr. Press said he made numerous requests to Park Street to complete the necessary paperwork to record the deed of sale and transfer of the contract.

    David Prentice, who co-founded Park Street and also operates under the name DMP Holdings, said he was merely serving as middleman between Harbour and buyers — taking temporary title to contracts and homes before reselling them. He said he was no longer selling Harbour contracts or homes.
For more, see How a Home Bargain Became a ‘Pain in the Butt,’ and Worse. land contract for deed rent-to-own

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