New York Times Sees Malfeasance in Contracts for Deed

Contracts for deed are gaining popularity at investment firms that scooped up swaths of foreclosed properties during the Great Recession. The risk for buyers, however, smacks of the same misdeeds that created that historic crisis in the first place.

1 minute read

May 5, 2016, 6:00 AM PDT

By James Brasuell @CasualBrasuell


Foreclosure Sign

taberandrew / Flickr

The editorial Board of The New York Times raises alarms about the growing prominence of contracts for deed—a Depression-era financial arrangement with roots in racist housing policy.

The editorial follows a recent report in The Times by Alexandra Stevenson and Matthew Goldstein, finding contracts for deed "increasingly being used by investment firms that have bought thousands of foreclosed homes and want to sell them to lower-income buyers 'as is,'" according to the editorial.

Contracts for deed make gouging possible, because unlike traditional mortgages, there is no appraisal or inspection to ensure that the loan amount is reasonable. They also let an investor swiftly evict buyers for missed payments, rather than giving them time to catch up, as required under a mortgage. And they usually require the buyer to pay hefty upfront fees. Unlike a rental security deposit, however, the fee is almost never refundable.

The editorial compares contracts for deed to the subprime loans of the housing bubble leading up to the Great Recession. After making it clear that contracts for deed only help investors, while "nearly always" inflicting harm for borrowers, the editorial calls for the Consumer Financial Protection Bureau to "assert its authority over these contracts…"

Friday, April 29, 2016 in The New York Times

View form second story inside Southdale Mall in Edina, Minnesota with escalators and model cars parked on downstairs floor.

The Mall Is Dead — Long Live the Mall

The American shopping mall may be closer to its original vision than ever.

March 21, 2024 - Governing

View of Austin, Texas skyline with river in foreground during morning golden hour.

The Paradox of American Housing

How the tension between housing as an asset and as an essential good keeps the supply inadequate and costs high.

March 26, 2024 - The Atlantic

Houston, Texas skyline.

Report: Las Vegas, Houston Top List of Least Affordable Cities

The report assesses the availability of affordable rental units for low-income households.

March 22, 2024 - Urban Edge

Close-up of hand holding charging cable moving toward charging port on electric car.

Undoing Biden's EV Rule

The partisan divide over how government should reduce greenhouse gas emissions was on full display after the Biden administration finalized its emissions standards rule for light and medium duty vehicles on March 20.

9 minutes ago - Office of U.S. Senator Dan Sullivan

Aerial view of high-rise buildings on waterfront in Boston, Massachusetts

Boston Moves Zoning Reform Forward

The ‘Squares + Streets’ plan creates form-based zoning templates for neighborhoods that promote mixed use and denser housing near transit.

1 hour ago - The National Law Review

Aerial view of Anchorage, Alaska downtown with mountains in background at golden hour.

Anchorage Leaders Debate Zoning Reform Plan

Last year, the city produced the fewest new housing units in a decade.

March 28 - Anchorage Daily News

News from HUD User

HUD's Office of Policy Development and Research

Call for Speakers

Mpact Transit + Community

New Updates on PD&R Edge

HUD's Office of Policy Development and Research

Urban Design for Planners 1: Software Tools

This six-course series explores essential urban design concepts using open source software and equips planners with the tools they need to participate fully in the urban design process.

Planning for Universal Design

Learn the tools for implementing Universal Design in planning regulations.