For far too many individu- als in our state and region, pursuing the American dream too often descends into living an American nightmare.
That’s because the house they occupy never becomes their home.
Unfair and sometimes racist practices tied to Land Installment Contracts, or LICS, too often target the poorest and most vulnerable individuals among us with false hopes of home ownership.
Here’s how Ian Beniston, executive director of the Youngstown Neighborhood Development Corp., described land contracts: “It’s basically a scheme, particularly in distressed neighborhoods. You get individuals [who] generally aren’t likely to get a bank loan, so they think this is their only opportunity [to become a homeowner], and they are preyed upon.”
The predators, profiting from the wreckage of the housing foreclosure crisis, purchase homes for as little as $3,000, then sell them through land contract for sometimes ten times that amount. The tenant then may typically pay $3,000 down and $200 monthly for 10 or more years before ever gaining a deed and any equity.
In addition, the tenant also is strapped with the costs of bringing the home up to code, which can result in tens of thousands of dollars in additional expenses.
Too often, however, the vendee misses a payment or two, and the owner ends up evicting the tenant, pocketing his or her ill-gotten gains and starting the greedy unethical cycle all over again.
Sadly, the scope of this sleaze is monumental in Ohio, where Ohio Policy Matters recently reported 47,600 land contracts in effect.
Disturbingly, the group ranks the Mahoning Valley as among the hardest hit areas for such exploitative predatory home-selling practices.
Trumbull County, the 15th largest county in the state by population, ranks first among all 88 counties with 2,707 documented land contracts. Mahoning County, ranking sixth with 1,622 land contracts, has more of them than Cuyahoga County, which has more than five times Mahoning’s population.
FIGHTING LAND-CONTRACT ABUSES
Clearly, a hub of consumer financial abuse is one distinction the Valley can do without and should actively work to lose.
For the past several years, the YNDC and the Alliance for Congregational Transformation Influencing Our Neighborhoods (ACTION) have been doing just that. They’ve been in the trenches to raise awareness of the problem and to challenge some of the most prominent predators that have bought cheap and often substandard houses in the Valley and then marketed them on land contracts.
About 45 ACTION and YNDC representatives and supporters recently traveled to Columbia, S.C., to the headquarters of Vision Property Management, one of several companies that National Consumer Law Center has identified as one of the leading land-contract purveyors in the nation. Once they arrived, company officials refused to sign an agreement to protect land-contract tenants in Youngstown from eviction.
In the wake of such intransigence, the problem festers. Not only do many land contracts exploit buyers, they also have contributed to worsening urban blight as some out-of-state landlords invest nothing in maintenance.
Land contracts also historically have had a decidedly repugnant racist edge. ProgressOhio reports that from the 1930s to the 1960s, the U.S. government barred black people from receiving federally backed home loans and mortgages, so many fell victims to deceitful and unprincipled land-contract traps.
Rose Carter, executive director of ACTION, believes present-day land contracts still ooze of racism by often targeting minority communities in inner cities for the bulk of their unsavory shenanigans.
Given the litany of ills associated with many – but in fairness, not all – land contracts, it’s encouraging to see state Rep. Michele Lepore-Hagan, D-58th of Youngstown, step up to the plate and address the problems statewide via her bill called The Fair Lending Through Land Contracts Act (HB 368).
“My bill will stop the type of exploitation and manipulation that is wrecking families and destroying neighborhoods while preserving the opportunity for homeownership,” Lepore-Hagan said.
Specifically, it would require sellers to correct all code violations, pay outstanding fines and fees and maintain habitable conditions throughout the term of the contract.
Provisions of the bill have the support of the National Consumer Law Center, Other states have enacted similar reforms, and the federal Consumer Financial Protection Board is considering stronger regulation of land contracts nationwide. As such, we hope the new leadership in the Ohio House acts early this fall to pull the land-contract bill out of committee and onto the floor for swift and needed bipartisan passage.