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Legislation, Activists Target Predatory Land Contracts - The Business Journal

Legislation introduced by state Rep. Michele Lepore-Hagan would target predatory land contracts that often leave would-be home buyers without the rights and protections of holders of traditional mortgages or leases. It’s a problem that plagues inner-city neighborhoods here and across the country where out-of-town companies offer “lease option purchase contracts” that often contain deceptive — and extremely costly — home repair agreements, activists say. Lepore-Hagan, D-58 Youngstown, says her legislation would require property owners to correct any code violations and pay any outstanding taxes, fines or fees on a property before entering into a land contract agreement. It also would require the seller to be responsible for insurance premiums and a home inspection. “When there are predatory situations like this, we have to help people,” she says. The legislation has five cosponsors, including state Reps. Michael O’Brien, D-64, Warren, and Glenn Holmes, D-63, McDonald. The Fair Lending Through Land Contracts Act, which Lepore-Hagan introduced Oct. 2 and will discuss at a news conference tomorrow, was referred Tuesday to the Financial Institutions, Housing and Urban Development Committee. The press event will take place at 226 E. Lucius Ave., which is pictured above. The property is owned by Vision Property Management of South Carolina and is dilapidated to the degree that a tree is growing through it. The issue of predatory land contracts was highlighted earlier this week in a post on the Working-Class Perspectives blog co-authored by Gary Davenport, project director at the Mahoning County Land Bank, and Wade Rathke, founder of Acorn. The post discussed efforts by organizers with the Acorn Home Savers Campaign to work with Vision Property Management, which has come under fire nationwide, and address predatory land contracts. Vision operates in more than a dozen states and was the subject of several New York Times stories last year detailing problems with its rent-to-own program. Following the articles, Fannie Mae announced it had stopped selling properties to Vision. Just yesterday a court in Wisconsin effectively ended its right to operate in that state. The company did not respond to The Business Journal’s request for comment Wednesday. “This is the follow-up to the foreclosure crisis,” Davenport said. Companies purchased properties and entered into agreements with buyers to purchase them with no appraisal at prices often 10 times or more higher than what they purchased them for, and priced so homeowners are underwater from the time they start. To read the full story from The Business Journal, click here.