Should rent-to-own programs be considered predatory lending? That’s the question the New York Department of Financial Services is investigating, HousingWire staffer Ben Lane reports.
The financial regulator issued a warning about the risks of rent-to-own contracts, wherein a company will buy a property, rent it to a resident to allow the resident to build equity, and then eventually sell it to the resident, Lane notes.
According to the NYDFS, it is currently investigating whether alternative home purchase agreements, such as rent-to-own, lease-to-own or land installment contracts, currently being offered in New York are actually “unlicensed, predatory mortgage lending.”
While its investigation is ongoing, the NYDFS is warning consumers to be wary of rent-to-own and other similar programs.
“Alternative home purchase agreements often are being marketed to financially distressed consumers, promising a path to homeownership, but putting consumers at risk without the protections of a mortgage,” NYDFS Superintendent Maria Vullo said.Read More