WCP: Predatory Lenders Making American Nightmares From American Dreams
Posted in Visiting Scholars | Tagged Affordable Housing, Akron, Foreclosure Crisis, Foreclosures, Great Recession, John Russo, Philadelphia, Rent-to-Own Contracts, Sherry Linkon, Wade Rathke, Wall Street, WCP, Working-Class Perspectives
As if losing their homes during the foreclosure crisis was not cruel enough, working-class families are now being lured by predatory lenders into deceptive rent-to-own contracts. As Wade Rathke explains in this week’s Working-Class Perspective, these deals deceive aspiring home owners into a nightmare of dilapidated housing without basic utilities, where banks that refuse to fix problems and their savings are eventually lost.
“A Harbour Portfolio buyer spoke to us from her couch, where she was recovering from a fall on a faulty stairway in Pittsburgh. In Akron, another Harbour Portfolio purchaser told us about the ceiling in the shower falling on his sister, leaving her unable to work. A Vision Property Management family in Pittsburgh told us of moving into a house after signing the papers only to find that it had no plumbing or electricity. They were forced to “camp” in their house for six months. Vision’s callous indifference to the deplorable condition of the housing stock meant that one Youngstown family had been forced to move to a second Vision house because their first was ordered demolished by the city! Many of the buyers were on Social Security or Veterans payments. Meanwhile, one Harbour buyer was having problems getting the contract in his name — even though the payments were made from his pension.
Sadly, this story from Philadelphia is typical, as the organizing team’s notes reveal:
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. They both worked: he as a landscaper and she worked at a hotel doing housekeeping. . . . 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. The 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 because of huge issues 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 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.
At the end of our visits with working families, we often left people enraged by anger salted with tears.”