Local housing authorities and lawmakers are pushing for greater action from housing regulators against several investment firms they say are engaging in predatory business practices by selling rundown homes “as is” through rent-to-own or other seller-financed transactions known as contracts for deed.
Two of the largest firms, Vision Property Management and Harbour Portfolio Advisors, are facing increased federal and regulatory scrutiny, The New York Times reports.
Rep. Elijah E. Cummings, D-Md., who sits on the U.S. House Committee on Oversight and Government, urged the Federal Housing Finance Agency (FHFA) last week to stop Fannie Mae and Freddie Mac from selling foreclosed homes to these firms. Other lawmakers are urging the FHFA to prohibit Fannie and Freddie from selling nonperforming mortgages and houses to firms that look to resell them through contract for deed.
Melvin Watt, the FHFA’s director, said at a Senate hearing last Thursday that the housing agency would act to limit such sales. “It would have to be on a going-forward basis, but we are actively looking at that issue now,” Watt said.
Over the last decade, Fannie Mae has resold about 400,000 homes to investors, and more than 10,000 of those homes have been sold to firms that specialize in seller-financed deals. Fannie ceased such bulk sales in 2014. However, firms continue to purchase individual homes from Fannie Mae in the open market. Since 2009, Fannie Mae has resold 1.2 million homes.
Cummings accuses some companies of duping low-income consumers into rent-to-own contracts. His office has been targeting Vision Property Management, a rent-to-own company based in Columbia, S.C., that owns more than 6,000 homes nationwide. Cummings says his office has been demanding documents from Vision since January and has written its chief executive citing “grave concerns about the physical and financial well-being of tenants” with leases from Vision.
However, Valerie L. Hletko, a lawyer for Vision, said “the letter’s escalated rhetoric does nothing to assist Americans without access to traditional mortgage loans to achieve homeownership, which Vision works to do every day.”
Source: “Housing Regulator Is Pushed to Crack Down on Sales of Foreclosed Properties,” The New York Times (May 11, 2017)
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