[Marxism] Seller-Financed Deals Are Putting Poor People in Lead-Tainted Homes
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Tue Dec 27 11:30:12 MST 2016
NY Times, Dec. 27 2017
Seller-Financed Deals Are Putting Poor People in Lead-Tainted Homes
By ALEXANDRA STEVENSON and MATTHEW GOLDSTEIN
BALTIMORE — A year after Tiffany Bennett moved into a two-story red
brick house at 524 Loudon Avenue here, she received alarming news.
Two children, both younger than 6, for whom Ms. Bennett was guardian,
were found to have dangerous levels of lead in their blood. Lead paint
throughout the nearly 100-year-old home had poisoned them.
Who was responsible for the dangerous conditions in the home?
Baltimore health officials say it was an out-of-state investment company
that entered into a rent-to-own lease with the unemployed Ms. Bennett to
take the home in 2014 “as is” — chipping, peeling lead paint and all.
Ms. Bennett, 46, and the children moved out, but they should never have
been in the house at all. City officials had declared the house “unfit
for human habitation” in 2013.
Throughout the country, tens of thousands of rundown homes have been
scooped up by investment companies that have offered high-interest
financing or rent-to-own deals largely to poor people. Many of these
homes were foreclosed on during the housing crisis.
These investors, however, often put no money toward renovation, or for
fixing lead paint problems. The low-income buyers and renters are forced
to make all repairs. When there are serious problems with the homes,
victims can be required to sign confidentiality agreements to keep them
quiet in a settlement after they have been compensated, as happened in
Ms. Bennett’s case.
As a result, seller-financed housing contracts have aggravated a
persistent problem of lead poisoning among young children in this country.
About 535,000 children a year nationwide test positive for lead in their
blood, which can cause brain damage and other developmental delays.
Problems with lead-tainted water in Flint, Mich., put the issue on the
map. Yet exposure to lead paint in aging and poorly maintained homes
remains the biggest source of poisoning.
It is not known how many homes nationwide are in seller-financed
contracts, and not every state requires that such contracts be recorded.
Still, health officials say they are increasingly seeing a connection
between homes that are in seller-financed contracts and lead-poisoning
“Unfortunately they have this contract which removes the actual owner of
the home from the liabilities of fixing the home and requires these
people who have no money to fix their own home,” said Dr. Jennifer
Lowry, chief of toxicology in the pediatrics unit of Children’s Mercy
Hospital in Kansas City.
Dr. Lowry said she had seen an increase in patients with lead poisoning
who live in homes bought through a seller-financed contract on both the
Missouri and Kansas sides of the city.
“What I care about is this kid who has elevated blood levels and yet I
can’t get anybody to fix the home,” she said.
Ms. Bennett entered into a rent-to-own contract with Vision Property
Management of Columbia, S.C., one of the biggest players in this
Vision failed to register the property with Baltimore housing officials
after buying it in 2014 from Fannie Mae, the government-controlled
mortgage finance firm. It then ignored the city’s previous building code
violation, according to public records reviewed by The New York Times.
The details of Ms. Bennett’s situation were pieced together through
interviews with public officials, court records and documents provided
through public records requests to various city and state agencies. Some
of the documents were redacted to protect the privacy of the children.
In many cases, families who had been affected by lead poisoning declined
to comment when reached, citing concerns about reprisals.
Baltimore has fined Vision more than $11,300 for failing to register 43
homes in the city, a requirement that applies to all landlords. State
lead investigators visited at least two other Vision homes earlier this
year but could not physically enter and inspect them.
A representative for Vision said that the company “does not comment on
the specific details of matters pertaining to tenants or properties” and
that noted the matter with Ms. Bennett had been resolved.
Vision, which was featured in a front-page article in The Times, manages
more than 6,000 homes across the country through nearly two dozen
limited liability companies.
When it came to fixing the lead issues in Ms. Bennett’s home, Vision did
not respond to the city’s request in late 2015. The company has argued
its contracts put all responsibility for repairs on its tenants.
In most cities and states, landlords are required to keep the properties
they rent in habitable condition. Some legal experts say seller-financed
contracts like those used by Vision may violate that requirement and
could be unenforceable in housing court.
Baltimore, as a matter of law, requires landlords to ensure that a home
is fit for human habitation, and building officials said that includes
rent-to-own landlords. But homes that are leased in rent-to-own deals
can fall through the cracks because the city has so many abandoned and
Jason Hessler, deputy assistant commissioner for Baltimore Housing,
said, “The house was in violation at the time it was sold by Fannie Mae
to Vision and was supposed to be unoccupied until approved by the
building department.” But he added that unless it was obvious that
someone had moved into a house without the department’s permission,
building inspectors might not know.
For many poor families who want to own a house and cannot get a
mortgage, nontraditional housing transactions like Ms. Bennett’s have
become their only option. Some do not understand what they are signing.
Dr. Lowry says that many of the families she works with do not speak
English and thought they were buying a house outright. She was one of
several housing officials and doctors who discussed the problems caused
by seller-financed deals at a recent conference on childhood lead
poisoning in Washington.
Seller-financed deals, which include contracts for deed and rent-to-own
leases, are loaded with risk. They lack basic consumer protections, and
residents can be easily evicted since the title to a home is not
transferred until the final payment is made.
The Consumer Financial Protection Bureau has begun to investigate
whether some companies are taking advantage of consumers. State
regulators in Wisconsin, New Mexico and New York have begun their own
inquiries, while officials in Minnesota and Missouri have issued
Poor families that buy or rent one of these rundown homes often find
themselves with another problem: Because they do not technically own
their house, they are ineligible for any state or local grants to help
defray the cost of removing lead paint.
Kendra Harrell, 23, moved into a Vision home in Baltimore with her
mother in 2014 on a rent-to-own contract. Ms. Harrell, who has two young
children, estimated that she had paid more than $1,000 to repair the
home, which still has a leaking roof.
A rowhouse at 524 Loudon Avenue was found to have lead paint. It is
being renovated and is listed for rent. Credit Matt Roth for The New
“Pretty much everything is on me,” said Ms. Harrell, who works as a
cashier at a local Home Depot.
Now she worries about the chipping paint on the banister in the home,
which was built in 1915, adding that her son had tested positive for
lead while living in another house. “I figured maybe I could try to get
someone out to break off the paint and paint over it,” she added.
In New York State, some grants provided to residents in rural
communities to eliminate “critical health and safety threats” from
homes, including lead paint, specifically exclude anyone buying a home
with a contract for deed.
A lead-safe program in Columbus, Ohio, is open only to property owners —
again shutting out people buying homes through a contract for deed or a
signing a rent-to-own lease.
Katarina Karac, an assistant city attorney for Columbus, recently helped
one woman who bought a home with a contract for deed get the seller to
apply for a lead paint removal grant. Ms. Karac said the woman, who has
three young children, had applied at least twice to the lead-safe
program and was rejected because she did not legally own the home.
“She was lucky enough the property owner was willing to work with her,”
she said. “I can’t imagine someone in her position ordering a lead test,
and if lead is found, asserting a claim against the owner.”
In Michigan last month, a special lead-poisoning task force set up by
the governor after the water crisis in Flint recommended a one-time lead
inspection, the results of which property owners must disclose to buyers
and renters. The proposal stipulated that the requirement could not be
“waived in the event of a sale through land contract.”
In Ms. Bennett’s case, Baltimore’s health department sued a limited
liability company tied to Vision in December 2015 for failing to
promptly comply with an order to eliminate the lead paint condition in
Many of Vision’s homes were bought cheaply from Fannie Mae and had been
empty for years. Vision bought the house at 524 Loudon Avenue from
Fannie for about $5,000.
Ms. Bennett, who paid a monthly rent of $440, sued Vision after learning
the children were poisoned by lead. She declined to talk about her
situation, citing a confidentiality provision in the settlement of her
lawsuit. She left the house in November 2015 as part of a settlement
Lead poisoning has been particularly acute in Baltimore because of its
aging housing stock. The city has about 40,000 abandoned homes; on some
streets the vacant, rundown homes outnumber the occupied ones.
Maryland’s environmental agency says some 1,100 children age 6 or
younger tested positive for elevated lead levels in the city of
Baltimore in 2015.
“This is something that everyone has an obligation to fix — certainly
the landlord has an obligation as well,” said Dr. Leana Wen, Baltimore’s
And the company has violated rules in other cities.
In 2012, legal aid lawyers in Minnesota sued Vision on behalf of a
couple with four children and two grandchildren, contending the company
knowingly sold them, through a contract for deed, a home in Minneapolis
that the city determined had a “severe” lead paint problem. Conditions
in the home, which Vision bought from Fannie Mae, were so bad that the
city posted a “do not occupy” warning notice on the house.
But the couple, Charles and Leona Rush, claimed they did not see any
warning sign when they bought the house. In court papers, Vision
disputed the Rushes’ claim. The company’s lawyers argued that “unless
plaintiffs closed their eyes as they entered the property, they saw the
bright green lead hazard sign.”
The lawsuit ended with a confidential settlement.
Ruth Ann Norton, who heads the Green & Healthy Homes Initiative, a
Baltimore-based nonprofit that promotes national policies to combat
childhood lead poisoning, says the federal government can do more to
make sure homes with lead paint problems are not dumped onto the market.
Fannie Mae sold some 900,000 foreclosed homes after the crisis.
Peter Bakel, a Fannie spokesman, said, “Fannie Mae has policies in place
designed to ensure compliance with applicable laws regarding lead paint
disclosures and remediation.”
Ms. Norton’s group is proposing that government housing agencies be
required to eliminate dangerous lead conditions in vacant and foreclosed
homes before putting them on the market.
“We should not allow houses to go on the market that will poison
children,” said Ms. Norton, whose organization provided assistance to
Vision has since washed its hands of the Loudon Avenue home. The company
settled with Baltimore health officials by paying a $10,000 fine in
October and sold the house last summer.
The house is being renovated, but a sign posted in the dirt yard
advertised the house as “FOR RENT!!!”
Susan C. Beachy contributed reporting.
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