By Alexandra Stevenson and Matthew Goldstein | The New York Tomes
Seller-financed home sales are “toxic transactions,” a prominent national consumer law organization said on Thursday as it released a report and called for greater federal and state oversight of the sales.
In its report, the National Consumer Law Center said that many of the contracts in such transactions were “built to fail” and were predatory in nature — benefiting sellers at the expense of lower-income and minority buyers who could not qualify for mortgages.
Such a transaction, called a contract for deed or land contract, is similar to buying a home on an installment plan, with a high-interest, long-term loan. For buyers lured by the dream of homeownership, the transactions can turn into money pits that result in a quick eviction by the seller, who can then flip the home again, an investigation by The New York Times found earlier this year.
