Housing that Ruins Your Finances and Your Health

Of the nearly one million foreclosed houses sold by Fannie Mae, the government-run mortgage giant, since the housing bust, tens of thousands were decrepit, moldy and unfit for human habitation.

Investor groups rounded them up anyway and turned them into cash cows by using “rent-to-own” leases or “contracts for deed.” These arrangements, which are basically long-term, high-interest installment contracts, require a resident to make an upfront, nonrefundable payment upon moving in and then make monthly payments to the investors. The resident is also responsible for all repairs.

The deals are pitched as a way for the resident to eventually own a home, but most occupants, who are typically poor people of color, are forced to walk away with nothing as the costs become unmanageable. When that happens, the investors, who generally paid less than $10,000 for each house, enter into new deals with new occupants.

Read the full editorial in the New York Times