To attain the dream of home ownership, many lower income Americans may take risks to buy a home, maybe taking on a home with serious defects in hopes of fixing it up. Unfortunately, there are companies out there looking to take advantage of this hunger for ownership, according to an in-depth New York Times report from Matthew Goldstein and Alexandra Stevenson.
Dozens of these houses were scooped up after the financial crisis by investors, who then make deals with low-income home buyers unable to get traditional mortgages. The arrangement is something like buying a home on an installment plan, with a high-interest, long-term loan called a contract for deed, or land contract.
But for buyers lured by the dream of homeownership, these seller-financed transactions can become a money trap that ends with a quick eviction by the seller, who can flip the home again. Before the housing crisis, low-income buyers got too much of a house that they couldn’t afford. Now, they are getting too little of a house that they can’t afford to repair.