Lawmakers and housing authorities are pushing for regulators to stop investment firms engaging in what they say is a predatory business of selling run down homes “as is” through rent to own schemes, the New York Times reported.
Vision Property Management and Harbour Portfolio Advisors, which are two of the largest such firms, are facing increased scrutiny from federal regulators, the report says.
Rep. Elijah E. Cummings, D-Md., who sits on the House Committee on Oversight and Government, asked the Federal Housing Finance Agency (FHFA) last week in a letter to stop Fannie Mae and Freddie Mac from selling foreclosed homes to these companies. Other lawmakers are urging the FHFA to prohibit Fannie and Freddie from selling non-performing mortgages and houses to firms that look to resell them through a contract for deed.
“It would have to be on a going-forward basis, but we are actively looking at that issue now,” said Melvin Watt, director of the FHFA, during a Senate hearing last week.
In the last ten years Fannie Mae has sold almost 400,000 homes to investors, with around 10,000 of those properties going to companies that specialize in seller-financed transactions. Fannie stopped bulk sales of these homes back in 2014, but continues to sell individual homes to investors. In total, it’s resold 1.2 million homes since 2009.
Senator Cummings alleges that some shady investment firms have duped low-income customers into getting into rent-to-own contracts. In particular Cummings’ office has targeted Vision Property Management, which owns over 6,000 such homes. The senator has demanded to see documents from Vision about these deals since January, citing “grave concerns about the physical and financial well-being of tenants” who’ve leased their homes from the company.
But Vision Property Management hit back at the Senator’s claims through its lawyers. “The letter’s escalated rhetoric does nothing to assist Americans without access to traditional mortgage loans to achieve homeownership, which Vision works to do every day,” said the company’s lawyer Valerie L. Hletko, to the New York Times.
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