Mortgages. , if are predatory in that you miss a payment, you are evicted and you lose equity you have built. These wall street firms that bought these foreclosed properties dont want to invest anything in them. They are trying to sell them off and they cant really read them because they are in terrible shape. They cant sell them with Bank Financing because they would not be acceptable for mortgage. They sell them to people with contract for deed or rent to buy terms. It sets people up. Of whate latest chapter i would consider, a predatory lending. Host why write this story now . Are we seeing an increase in these type of loans happening in this time and what is leading to that . Firms like street vision property, harbor properties, they bought up thousands of these units and they are trying to unload them. They are aggressively trying to get people to enter into rent to buy arrangements. Now people are getting to the what, where they realize they overpaid or it has problems and they are feeling the strain. People are now at risk. I call it wealth stripping. Equity intoheir own fixing up the house and they are realizing the terms of the agreement, they dont own the house. They dont get the deed until the last payment has been made. I think it is part of what contributes to the wealth gap in this company and the racial wealth divide because these are folks that cannot get access to traditional loans. A lot of banks have left these communities in terms of making loans to small homebuyers under 100,000 loans. They are in the situation. Consumer advocates are starting to see these cases pop up over the rust belt and the south and places where there are a lot of foreclosures. Talks ofr article detroit as a place you are seeing these folks realizing they have 30 year term loans that they may not be able to keep up with and that they would lose what they have paid. Like detroit and other rust belt cities, is this where you are seeing this happen more often . Where there were a lot of foreclosures. I spent time door knocking in detroit with a group called, home savers. We were trying to understand. I talked to one woman, basically, who bought a house without a traditional mortgage. Without an appraisal, without an inspection. Now she is realizing i have a 15 Year Contract for deed, i wont actually get the title until i make my last payment. She is in this no woman possibly and. No womans land. If something goes wrong, it is the worst. It is the worst of being a tenant and the worst of being a homeowner. She was feeling that vulnerability. If she misses a payment she will lose the sweat, equity, and money she has been putting in. Host we are talking to chuck collins, the director for institute for policy program on inequality. He is here talking about contract loans and the effect on them. Who losuse if you are in the eastern time zone you can call 202 74880 00. If youre in the central or Mountain Time zones you can call 202 7488001. And if you have experience with contract loans you can call 202 7488002. Explain how a contract Mortgage Works for the viewers. Guest it is not a mortgage. It is essentially a rent to buy agreement. House, youg you this see a sign that says, rent to buy. You call the number and i send you the agreement. You make a monthly payment, you are responsible for all repairs, property taxes, back taxes, systems repairs. You are responsible for all the headaches of homeownership but you dont actually get the title until you make the last payment. Say that in the 1950s and 60s when africanamericans were excluded from being able to get fha mortgage insurance and other traditional loan products, people were pushed into these contract for deed mortgages. Rent to buy, leased to buy, there are a number of different names. People organized in chicago. Formed a Contract Buyers League which essentially pushed back and negotiated to change the terms of agreements so people could tilt equity and become homeowners. We thought it was stamped out. We thought it was gone. Now it has come back in the main difference is they are now big private wall Street Equity companies that are the loan sharks now. Is calling in from fort lauderdale. She has experience with these types of loans. I forgot to punch you in. Cindy, go ahead. Cindy, are you there . We have lost cindy. , he is go on to john calling in from california. Good morning, john. Caller hi, good morning. You say that you do not get the title from these quote unquote, predatory lenders until you make a final payment. You dont get the title on a piece of property until you make the final payment on any reputable bank. Bank of america or whatever the bank happens to be. , a lot has been publicized about pitfalls and the mortgage industry for the last 10 years since the last collapse. It sounds like youre just trying to help stupid people who are too stupid to look out for their own financial good. Guest there is a big difference here. When you buy a house you actually do get a title and mortgage and you have a claim in it. It is your property. You can turn around and sell it and get whatever funds you put in. From a very different contract for deed. The title does not pass until the end. Sayingt of what youre is true, buyer beware. I bought a house and i have to tell you, i understand the terms of my mortgage agreement. These are situations where people want to own a home. They dont have access to traditional mortgages. These banks have left these communities. You see that house and want to buy it. You call that one 800 number in South Carolina and they say, you can go in and own it all you have to do is sign this paperwork. There is no inspection. There is no truth in lending law. I think this is actually why we need a Consumer FinancialProtection Bureau to create minimal disclosure protections for this class of transaction. You cannot really call it a mortgage. There are protections for tenants and homeowners but there are no protections for these folks. Guest in your piece host in your piece a short excerpt, in 2000 nine, u. S. Census reported that 3. 5 Million People got their homes through a land contract, more than 4. 5 of all homeowners. You are talking about responsibilities of the buyers. The frayingke financial liability from the seller. Do these contracts provide rights to these buyers . Guest they are all different. Most of these are subject to state and local laws so it is like a patchwork that is hard to understand. I should say there is nothing inherently predatory about a land contract or a contract for deed. I come from michigan. In the midwest people sell cabins up north on land contract because there is no traditional lenders in that market. That is not uncommon. What we do need is, if people rulesthere should be some governing these kinds of agreements. So that people do not have the wealth that they have stripped away. That is the fundamental concern we have. Some sellers are happy to see people fail and turn these properties. People and a putting thousands of dollars and to bring the systems up to code and then they miss a payment. Having your car repossessed. There are less protections than a mortgage, truth in lending disclosure. You are in the Eastern Central region, 202 7488000. Mountain and pacific regions, 202 7488001, and if you have had experience with these types of contracts, call 202 748 8002. We have tommy from tennessee. Good morning. Caller good morning. I have a question about the reverse mortgage scam that has been running on tv for the last nine years. I feel like it is a scam created by the government to convert homes and 2 homes into public housing. I would like your input on this subject. Im worried about anything that involves the government. Guest tommy, i am not familiar with that situation. Reverse mortgages also refers to people who own a home but they get an annuity so they can have income as they grow older. Im not familiar with how that is being converted to public housing. I am not sure that is happening on a large scale. Issues of these rent to own situations, you talk about the need for regulation. We had dodd frank in the aftermath of the housing bust in the mid to thousands. Do the regulations that were put in place to address ballooning other variable rate mortgages that we saw, do they apply to these kind of contracts . Really. Ot it is a separate category. Out of dodd frank, we created a Consumer FinancialProtection Bureau. Which i think is investigating this. They have not issued any new rules. Different jurisdictions, the city of cincinnati, ohio is suing harvard portfolio because they are seeing so many of these contract for deed mortgages. They see that people are getting wealth stripped away from them. Cities, some states, the state of michigan is looking into it. It would help if the Consumer FinancialProtection Bureau ued over arching pursuit over arching Consumer Protections around these arrangements. Host what can they do . These people have the right to enter into contracts. What could they do . Could it be more Disclosure Requirements . Taking the sellers from so many rights away or tying the hands of the people who are buying . What regulations are we talking about . They could definitely require more transparency and disclosure. They could require some assessment or appraisal. That is one of the things, people are buying houses, maybe they are being told it is worth 10,000 but they get in there and they realize the systems are broken down. Acquiring some kind of inspections. The same kind of protections in the truth in lending law that many homeowners get when you sit down and get a mortgage. That would be helpful. You could also say, a contract that extends past a certain time , you should have a point in which people can build equity. After five years you begin to get equity stakes. What i saw in detroit was that people were making improvements. They were taking their paychecks and fixing up houses as if they were tenants, that they could lose it all. From anthony is calling mount sinai, new york. Good morning. Caller good morning, thank you so much for the opportunity. Mr. Collins, perhaps you could do further research. We have a hud program. It is longstanding. From my understanding, it is in total of more than 30 billion a year is dumped into that program. We are society of 350 Million People. To have 30 billion a year being channeled into these various political organizations that seem to abscond the money. If you did the research, you would see in 2004, president george bush had pardoned a mortgage scam or who was fleecing the hud program for a lot of money. Broken of staff has had broken the pardon. Chuck hasnt to see if done any research on this topic. About the rent to own deeds. Lets talk. Guest anthony, i see what youre saying. I would probably agree with you. People who have broken the law, and this is challenging. You have companies that have been engaged in predatory practices. Why is it that the government is selling properties to people who have fleeced people in the past . Some oversight there would make sense. Host a lot of these Property Owners are equity firms. Owns this who property and how they came to own this property and who is doing the selling . Guest essentially large wall street companies. One out of South Carolina is a big one. Harvard portfolio out of texas, apollo capital out of st. Louis. They are trying to make money. By buying up thousands of foreclosed properties, they will appreciate or something will happen. They are stuck with properties that are in terrible condition. Realizing is, how do we unload these properties we bought without having to invest any more capital . This is their path. They should either fix them up and sell them off in terms of, sell a structurally sound viable house to people , this third path to shift the responsibility and burden onto low income people who are trying to buy a house. Host we saw with the risky loans that were being issued in , that led to as housing bubble. Danger withimilar this, the proliferation of these types of contracts . Could that have an impact on the market . Guest it could if there is an economic bump in the road. Many people would not be able to hold onto their homes. There would be a turnover. Symptom of a is a bust or the aftershock of the bust. If you go to places like youngstown, ohio or acheron, see, or detroit, you will hundreds and hundreds and thousands of vacant or foreclosed operatives. Foreclosed properties. They are sitting there in the systems are getting worse. What do we do with that stock . Isconcern is the burden being shifted onto the same people who were preyed upon by past predatory lenders. In this case, you will pay to fix up the house and if you miss the payment, we will take that wealth and go on. That is the thing that should be stopped. Host kim is calling in from barstow, california. The morning. Caller good morning and thank you for cspan. The thing i am curious about is, how do Insurance Companies work and this type of loan house . Can people get insurance and if they do, do the Insurance Companies pay for something they find down the road . That is my question. Guest that is a great question. Many of these properties are uninsured. If you get a traditional mortgage, your lender will require you ensure the house so , they will bewn able to recover the asset. In this case, the properties are not insured often. Betweenn this gray zone having a landlord who takes responsibility for fixing the property and ensuring the property and being a homeowner or you actually have the title indeed and you can get a loan from a credible lender. In that gray zone, there are all kinds of risks. There is no insurance in some cases. A lot of times people get into these houses and discover huge system problems. Or that the house is even, there on the house for back taxes but it wasnt disclosed because there was no Proper Research on it. Someone could think they have a claim on the house but then the sheriff comes and says there is another lien on the house and you will have to pay it if you want to stay. That is what i saw in detroit. Clean up that middle zone. Host another excerpt from your for deeds,tracts sellers receive an income stream from Rundown Properties that would be unthinkable with traditional mortgages and unsuitable for renting because of code violations. In the most predatory scenario, sellers unload dilapidated houses on unsophisticated buyers with a contract for deed locking them into an inflated Purchase Price and high Interest Rate after paying out tens of thousands of dollars for repair, defaulting buyers lose their equity. Talk about the pricing of these. What theases, worth property was purchased for and what it is worth . Imagine, vision property will buy up thousands of properties through the bulk program may be costing 3000 per house and they will sell it for 20,000 with this contract for the red with this contract for deed. The resident never gets an appraisal so we dont know what it is worth. I use that phrase unsophisticated but in some ways most of us, i was not as sophisticated when i bought a house. It is a complicated process. Most people have a Real Estate Agent who says, you should get an appraisal, make sure the price is right, get an inspection, make sure the systems work. Then it you close on the property. That is not happening in this case. There is no one looking out for the potential buyer. Host gregory is on the line from indiana. You have experience with this type of contract, gregory. Wondering, myjust question is, going back to 2008 when the financial crisis hit, why are some of these Companies Considered too big to fail . Why should the taxpayers bail them out when they are thieving and lying and they got themselves into the situation in the first place. Thank you. Guest gregory, i share your frustration there. Banks, wells large fargo and what they are still doing to rip off their own customers. Some of these players made these bad loans. We the taxpayer, then, had to bail them out and pick up the pieces from this foreclosure crisis. This is another piece we are having to pick up from the crisis. Fannie mae ended up with lots of these properties. They are under pressure to recoup losses. Theyre selling them off in bulk. Unfortunately they sold them back to some of the same predatory actors that helped contribute to the economic meltdown in the first place. That is the cycle we have to get out of. It would be great if we had firsttime Homebuyers Program in this country where, just like after world war ii, people could get a low interest mortgage, fixed rate, be able to purchase a home. People who are aspiring to homeownership dont have to go into this predatory market just to simply own a home. Fromis what we got away and i think you are right. As taxpayers we are paying again and again and in the end we may and up paying to fix up these properties that are blighting communities across the country. Host is there any legislation proposed to address this . States. Couple of illinois and michigan have been exploring the impact of this and looking. Local jurisdictions and state laws is where a lot of property law lives. Important. Be ohio, cincinnati, is trying to clamp down on this. It is up to local jurisdictions. That is a patchwork. That is where the needs to be some National Oversight and at least acknowledgment. Host the federal level, has there been any attempts in the congress to try to address this . Guest congressman Elijah Cummings has tried to do hearings. To try to get the Consumer FinancialProtection Bureau to provide oversight. It is a place where, there is a vacuum. Calling in from pennsylvania, you have experience with this type of contract . Caller hi, thanks for taking my call. Guestly appreciate your shedding light on this. I think that i have Family Members, now that you are mentioning