National Asset Advisors also began sending him letters threatening to deport him. At the time, Smith had a heartbreaking realization: she hadn`t bought her house at all. The document she signed was not a traditional mortgage, as she had believed, but a “contract for the deed” – a type of seller-financed transaction in which buyers have no equity in the property until they pay for it in full. Since Smith didn`t really have a deed for the house or any of the rights normally granted to homeowners, she and her mother could be evicted without foreclosure proceedings, losing the thousands of dollars they had already spent to renovate the house. For consumers like Smith, Illinois law offers little recourse. In the event of a default, there is nothing to prevent contract sellers from putting all the money a customer has put into payments and repairs in their pockets and moving on to the next buyer. The state is extending concrete protections to contract buyers: those who have been under contract for more than five years and who owe less than 80 percent of the original purchase price cannot be rejected without a foreclosure lawsuit, says Daniel Lindsey, an attorney with the Chicago Legal Assistance Foundation who reviewed the contracts of the three companies for the reader. But anyone who defaults in advance — or unexpectedly finds themselves on the hook for thousands of dollars in repairs — is out of luck. Basic consumer fraud protection measures apply – if a company has lied about the condition of a home, for example – but instead of going to court to prove it, many contract buyers simply leave. In other words, the basic conditions that led to the sale of the contract have never changed. “We never really mentioned that there was a racist divestment,” says Satter, whose coates quotes extensively from the 2009 book.
“For most of the 20th century, we only had a back and forth between the absence of a loan and the predatory loan.” One of the first things a sales contract should do is to clearly identify the parties involved, who are usually just a buyer and seller. Full names and contact information must be provided to all parties involved. Some parts of the UCC define the different types of sales contracts, which must be in writing. In addition, each state will have its own form of fraud law. It`s impossible to determine exactly how often such sales take place because the state of Illinois doesn`t require them to be publicly registered — individual sellers have used contracts for deeds for years to sell a small number of homes on terms that can be detrimental to buyers. But through a review of deed records and Cook County interviews, the reader identified three out-of-state companies that began selling homes through contracts in the wake of the Chicago foreclosure crisis: Harbor Portfolio Advisors, Vision Property Management, and Battery Point Financial. a New York-based company founded by a former goldman Sachs mortgage broker and apparently $40 has attracted millions of dollars in private equity funding. Copies of the contracts that the reader has received and reviewed by housing experts and lawyers show that they have significant similarities that can stack cards against clients from the get-go.
The three companies identified in the study require customers to purchase the properties “as is” and make all repairs in addition to paying property taxes and home insurance. Although they take responsibility for the owners, customers do not enjoy the same protection. Under federal regulations established by the Consumer Financial Protection Bureau (CFPB) in 2013, banks cannot forcibly lock in homeowners until they are 120 days late in their mortgage payments. Illinois law also requires banks to file a lawsuit for foreclosure. But contract sellers, depending on the agreements, can often put a customer in default as soon as a single payment is missing. The west side of Chicago, where Carolyn Smith lives, is quickly becoming a local epicenter of this new wave of contract sales. Fifty years ago, it was also the base of operations of the Contract Buyers League. (1) Unless the context provides otherwise, the terms “contract” and “agreement” in this section are limited to those relating to the present or future sale of goods. The “contract of sale” includes both a current sale of goods and a contract for the sale of goods at a later date. A “sale” is a transfer of ownership from the seller to the buyer at a price (articles 2 to 401). A “current sale” is a sale made by concluding the contract. .