Market for Fixer-Uppers Traps Low-Income Buyers

Nationwide, more than three million people are estimated to have bought a home through a contract for deed. Now complaints are piling up in cities across the country.
News Story (NATIONAL)

Matthew Goldstein, Alexandra Stevenson
New York Times (NYT)
February 20, 2016

Tags: Housing, Housing: Contract for Deed

Organizations mentioned/involved: Texas RioGrande Legal Aid (TRLA)


Dozens of these houses were scooped up after the financial crisis by investors, who then make deals with low-income home buyers unable to get traditional mortgages. The arrangement is something like buying a home on an installment plan, with a high-interest, long-term loan called a contract for deed, or land contract.

But for buyers lured by the dream of homeownership, these seller-financed transactions can become a money trap that ends with a quick eviction by the seller, who can flip the home again. Before the housing crisis, low-income buyers got too much of a house that they couldn’t afford. Now, they are getting too little of a house that they can’t afford to repair.