Why a housing scheme founded in racism is making a resurgence today

[Recursion]

https://www.washingtonpost.com/news/wonk/wp/2016/05/13/why-a-housing-scheme-founded-in-racism-is-making-a-resurgence-today/

The Rutgers historian wrote the book on an obscure form of predatory lending from the mid-20th century that victimized black home buyers when banks would not lend them mortgages. Her book, "Family Properties," came out in 2009, on the heels of the housing crash. And as she traveled the country talking about it — about families defrauded from the homes they thought they owned, about sellers who promised home ownership but collected deposits and evictions instead — people kept approaching her.

"Pretty much everywhere I go, people say 'I’ve been hearing about this,'" Satter says. "Contract" selling is making a comeback.

In this model, buyers shut out from conventional lending are offered an alternative: They can make monthly payments on a home directly to the seller, instead of a bank, with the promise of receiving the deed only once the property is entirely paid off, 20 or 30 years down the road. In the meantime, they have few of the legal protections of a typical home buyer but all of the responsibilities of one. They don't build equity with time. They can be easily evicted. And if that happens, they lose all of their investment.

According to the Detroit Free Press, more homes were bought in Detroit last year using such "land contracts" or "contracts for deeds" than conventional mortgages. In a series of recent stories, the New York Times has reported that Wall Street is now betting on this market, with investors buying foreclosed homes by the thousands and selling them on contract. Earlier this week, the Times reported that the Consumer Financial Protection Bureau is now investigating the practice's resurgence, although it is not by definition illegal.

I still think, all told, housing policy is the key instrument of white supremacy in the US (if I were forced to pick one). Yes, yes, there are lots of twists and turns and nooks and crannies, but that's what it's been about since about WWII.

[raging moderate]

1. Yes, very true!

There are various whites who have some kind of burning mission to keep Black people from getting away with something. They seem to be constantly on the lookout for the possibility that this may be happening. If challenged on this delusion, they say nasty lies which I won't repeat here, smirking with a superior smile and angry eyebrows. Even my facial expression when they say these things is an affront to them. With my bachelor's in anthropology, I know pertinent facts which contradict these lies, but they never listen. You guys are not paranoid. If I were Black, I think I would have been one of those very angry people, and by now I would be rocking in a corner with my thumb in my foaming mouth, shrieking every time somebody approached me. I don't know how you stand it.

[dembotoz]

2. always wondered about land contract deals

like the old "rent to own" deals

sounded so good in the beginning but less good later.

if ya can't get a mortgage, options are fewer

[ToxMarz]

3. Unfortunately if you can't qualify for a mortgage you probably can't afford the property

Contracts for land/deed are useful tools for people who can afford them. But there are no safeguards as barriers to prevent unqualified individuals to enter into them and are ripe for abuse. I know someone who bought a property this way and the seller would not cash his payments and then try to foreclose. He had to hire an attorney to send his payments every month to prove he made them.

[Recursion]

4. The white side of my family were Sooners who were given free land.

Or, rather, would have been, if they had played by the rules, but took it anyways, and still got to keep it.

I'm going to put this in bold because I think it's important:

There are more foreclosed vacant housing units in the state of Florida than there are homeless families in the U.S.

There is no reason to not have a new "housing rush".

[Bluenorthwest]

5. And you can't qualify for a mortgage if you are racially red lined no matter what you can afford.

This was actual FHA policy, mortgages to whites only. Additionally there were restrictive covenants in many places that served the same function.
Then there are other laws which favor the current ownership paradigm like Prop 13 in California, which was racist six ways to Sunday but which most people did not recognize as such.

[Recursion]

8. ^^ Great point

It was literally that explicit

[bbgrunt]

6. well, I bought my house with a land contract. I wasn't aware at the

time of the downside, I just figured it was a more direct way of paying for the house allowing the previous owner to gain the interest payments instead of the bank. It also allowed us to negotiate price and interest rate. Of course I employed a lawyer to oversee the details.

So, land contracts may not always be a bad deal, but the downside liabilities should certainly be known.

[wildeyed]

9. That makes me sick.

Making ridiculous profits on the backs of poor people, desperate for a home. Disgusting. The rental market is so tight where I live. I could see how people would be enticed into this kind of thing.