PsychoRooksNov 25, 2022
ProPublica

A few years ago, some lending firms began offering an “interest free” way to buy a home. Word spread in #Minnesota’s #Somali community.

But "contract for deed" or seller financing lacks protections for buyers. Until final payment is made, the seller holds the deed & can cancel the contract if the buyer falls behind. If that happens, the buyer forfeits all $$ they’ve put in. The seller could then evict the buyer after as little as 60 days.

By @lussenpop & Joey Peters

https://www.propublica.org/article/how-contracts-for-deed-put-families-at-financial-risk?utm_medium=social&utm_source=mastodon&utm_campaign=mastodon-post

Real Estate Investors Sold Somali Families on a Fast Track to Homeownership in Minnesota. The Buyers Risk Losing Everything.

For Somali Muslim families in Minnesota, a contract for deed seems like an easier path to homeownership. But predatory practices and poor regulation can make it a financial trap rather than a good deal.

ProPublica
Nov 22, 2022 at 9:59pmWeb
Show threadGordon1956Nov 22, 2022
@ProPublica @lussenpop The rip off system, only in America. Christ, you'd think Trump wrote the rules.
Show threadSusan [email protected]Nov 22, 2022

@ProPublica @lussenpop Wow. High risk, but also very high reward. If you know you can pay "the base rent" for sure for 30 years.

Considering that by eliminating interest you halve the long term cost of the mortgage, it's a risk that some might find worth taking.

Show threadJonathan RNov 22, 2022

@ProPublica @lussenpop

Thank you for covering the latest version of this type of predatory capitalism.

Show threadKay DubNov 22, 2022
@ProPublica @lussenpop That’s awful! Predatory indeed.
Show threadSriram "sri" Ramkrishna - 😼Nov 22, 2022
@ProPublica @lussenpop What a damn scam. :( :(
Show threadDiane BeanNov 22, 2022
@ProPublica actually under a normal mortgage contract, if you default you loose your money. Nothing gimmicky. Even what your talking about just just like a mortgage, you have to go to court to get the eviction. They are probably a lot faster at it than a mortgage Co.
Show threadDr. D. Elisabeth GlasscoNov 25, 2022
@dianebean @ProPublica yes, I think this is an important distinction that needs to be made by ProPublica. One is where big banks do the lending, and the other, individual homeowners. It’s basically rent to own.
Show threadjosh buermannNov 25, 2022

@dianebean @ProPublica

With a mortgage contract you can sell the home and recover some or all of your equity even in foreclosure. That's not possible in a contract-for-deed, even before the numerous predatory practices outlined in the article.

Show threadPatty Bluebird 🦩Nov 25, 2022
@ProPublica @lussenpop We just sold a house to a buyer who went through the USDA. I had a lot of hoops to jump through re: necessary repairs but the seller didn't have to make a down payment.