Vision Property Management has already run into trouble in Wisconsin and New York, with each state claiming that the company’s rent-to-own business model is actually a scam designed to prey on low-income individuals who want to buy a home.

And now, the company has another state to deal with:
Pennsylvania.

Pennsylvania Attorney General Josh Shapiro announced this
week that his office is suing Vision Property Management for allegedly using
misleading ads and dangling the promise of homeownership in order to trick
hundreds of people into signing rent-to-own contracts with the company.

“The suit alleges that Vision utilizes misleading sales
tactics to lure consumers into entering ‘rent to own’ agreements on foreclosed
houses that are in serious disrepair,” Shapiro’s office said in a statement. “Unbeknownst
to the consumers, the agreements provide no ownership rights, consumers face
immediate ejection if they fall behind on payments, and the agreements
unlawfully attempt to make the consumers responsible for expensive repairs
required to make the houses habitable.”

According to Shapiro’s office, Vision owns thousands of
foreclosed homes across the country, including more than 600 in Pennsylvania.

The state’s lawsuit claims that Vision targets low-income
residents who want to own a home but cannot obtain a conventional mortgage and
entices them with a “rent-to-own” program where the renter will have the
opportunity to rent a home and eventually buy it when they are ready.

But, as with Wisconsin and New York previously, Pennsylvania
claims that the properties are in poor condition and Vision’s agreements
stipulate that the renter must pay for those repairs themselves.

“The homes are in disrepair, often with missing pipes and
appliances, leaking and damaged roofs, mold, insect infestations, and
malfunctioning plumbing, among other problems. Vision does not disclose any
defects to consumers prior to entering the agreement,” Shapiro’s office stated.

“As a result of Vision’s misleading sales tactics, consumers often do not understand that the paperwork Vision requires them to sign places all of the burdens of homeownership on them, despite the existence of a landlord who owns the property,” Shapiro’s office continued. “Consumers endure great expense and inconvenience to repair the homes, but they have no ownership interests.”

According to Shapiro’s office, even if the renter pays their
rent consistently, they still only receive an “option” to buy the house at the
end of their lease term, typically above market price.

Beyond that, if the renter falls behind on their payments,
Vision allegedly evicts them from the house, then turns around and enters into
another “rent to own” agreement with another family, “thus continuing an
expensive and harmful cycle.”

According to Shapiro’s office, Pennsylvania residents “typically
spend less than two years in the ‘rent to own’ Vision homes that they thought
they had purchased, spending large amounts of time and money fixing up the home
that they cannot recover because they have no equity rights.”

Shapiro also sued Vision’s CEO and owner, Alex Szkaradek; chairman and owner, Antoni Szkaradek; and dozens of affiliated companies allegedly used by the Szkaradeks to acquire foreclosed homes and enter into the “rent to own” contracts with Pennsylvania residents.

“Vision Properties and its owners and affiliates take
advantage of lower-income Pennsylvanians who face barriers to owning a home,” Shapiro
said in a statement. “The company uses misleading sales tactics to lure
consumers into ‘rent to own’ agreements through which they incur significant,
unexpected costs and often never end up owning their homes. Our Bureau of
Consumer Protection is filing suit today to put an end to these predatory
tactics and deliver results to the hundreds of Pennsylvanians who Vision
Properties harmed.

The lawsuit alleges violations of the Consumer Protection Law, the Pennsylvania landlord-tenant law, the Loan Interest and Protection Law, and several other statutes, seeks to prevent Vision from engaging in these alleged practices, and aims to require Vision pay restitution, civil penalties and costs.

“When consumers face discrimination in seeking to buy a home
or apply for a mortgage because of their race, ethnicity, or other factors,
they are sometimes forced to seek out alternative methods such as ‘rent to own’
or ‘for sale by owner’ agreements,” Shapiro said. “Unfortunately, many of these
agreements are actually scams, like the ones organized by Vision Properties. We
will continue to stand up for the civil rights of all Pennsylvanians and work
to put an end to institutional racism in housing practices.”

Source: HousingWire Magazine

The housing market is signaling there will be an economic recession by the 2020 election, according to Benn Steil, director of international economics at the Council on Foreign Relations.

“Looking back at the years preceding the 2008 financial crisis, a critical warning sign was the surging gap between the growth in home prices and household income,” Steil wrote in a blog post with former CFR analyst Benjamin Della Rocca on the think tank’s website. “Today, a parallel dynamic is playing out.”

In 2018, as in 2005, housing-price growth began slowing, with significant price drops occurring in several major markets, the post said, linking to a story on New York home prices in “near free-fall” from earlier this month.

Household income has been growing, but it hasn’t come close to keeping up with the increase in home prices. For example, the median annual household income in August rose 1.3% from a year earlier, Sentier Research said earlier this month. That compares with the 4.7% gain in the U.S. median home price in August from a year earlier, using data from the National Association of Realtors.

“The trend-line in existing-home sales growth has also been down since 2015, tipping into negative territory at the start of last year,” the post said. “Similar drops have preceded nearly every recession since 1970,” it said.

“When income fails to keep pace with home prices, the latter must fall back,” the post said. “Falling home prices, in turn, drive down household spending by way of the so-called wealth effect – that is, consumers cut spending when their assets fall in value.”

A slowdown in consumer spending, which accounts for about 70% of GDP, points to an economic contraction. Economists define a recession as two subsequent quarters of negative GDP.

“If these trends continue, we should expect broad falls in home prices beginning by mid-2020, which will, in turn, drag down household spending against a darkening economic backdrop,” the post said. “Growth has been slowing, with Trump’s tariff war hitting exports. Manufacturing is contracting. Retail sales, excluding autos, have stalled. Consumer confidence is falling.”

The Federal Reserve probably doesn’t have enough power to stop a recession, the authors said. When the economy slows, the Fed cuts its benchmark rate to make it cheaper to borrow and encourage economic growth. But, the rate already is so low it probably won’t be enough to help, the blog post said.

“If we are really on the cusp of a recession it will likely take more than 175 basis points of easing to prevent it – and that is all the central bank has to play with before we’re back to the zero lower bound,” they wrote. “At that point, applying monetary stimulus becomes considerably more challenging.”

Source: HousingWire Magazine

I am a review appraiser for the largest lender in the US. I have reviewed a number of bifurcated reports and most of the time I recommend a product upgrade due to poorly selected comps or poorly collected data – think partly below grade being included in GLA. Most Realtors are not versed in FNMA lending guidelines as they relate to appraisal. I’m not sure if appraiser’s are being conservative in fear of liability. More often then not, the values are low and the borrower suffers. If me and most of fellow reviewers are recommending product upgrades, where’s the time saving? They are actually taking more time with an additional cost. Why isn’t anyone talking to the end users?

Source: Working RE Magazine

Great article, bravo. I will go into a different business rather than do bifurcated work!
Scot
sbcappraisal@gmail.com

Source: Working RE Magazine