Individuals Are Taking Dangerous Risks To Buy Homes
The simple act of purchasing a home is becoming risker and more dangerous, find out why.
This article is more than 2 years old
Just like most industries in America, the housing industry has suffered. But this has made a complicated situation for home buyers, with few affordable, available properties on the market today. Americans are putting themselves in risky positions for buying a home in 2022, trying to fight the unreasonable difficulty of procuring available housing.
As housing has gone up exponentially in this economy, specific unreliable contracts have started regaining popularity when buying a home. This agreement is called a land contract and was widely popularized in the mid-20th century. Used as an alternative for Black Americans to gain property without going through banks who notoriously denied them mortgages, the contract became a nefarious way to extract money through a third party. These alternative deals can threaten the security of families purchasing houses through unsupervised payments from a mortgagor to the land contractor.
Land contracts have regained popularity due to the high investment in buying a home. The land contract agreement caused a nightmare situation for one Ohio family where their home was suddenly foreclosed. When purchasing the house through this alternative agreement, the Strayer family agreed to pay $350 a month to the seller until the home was paid off. But one morning, the family awoke to the town’s sheriff declaring that their home was foreclosed.
It turns out that the initial seller was pocketing the Strayer family’s monthly payments. Since the Strayer family didn’t own the property, a more profound issue unfolded about how difficult it would be to regain their house. Buying a home through financial alternatives is incredibly risky for these reasons. Trusting a third party to deliver your mortgage payments to the bank could lead to unfortunate circumstances like losing your property.
As inflation rises, buying a home will continue to be an unattainable venture for most Americans. When this disparity occurs, land contracts start to regain traction, luring in those without much financial security. This risky practice often significantly affects people of color and those in rural areas, continuing decades of disenfranchisement from the government and outdated policies. 20% of all mortgage borrowers have used a financial alternative, and 7 million Americans are currently within land contracts today.
Peggy Lee, an attorney for an Ohio legal service, stated the land contract’s precarious nature for Ohio residents. When people buy a home within the state through an alternative agreement, it’s often not protected. Verbal agreements are not recognized legally in the state, which is typical for a land contract proposal. Lee also explained that many contracts go through “handwritten notes that wouldn’t pass muster.” With those financially crunched trying desperately to own property, alternative arrangements are undeniably appealing but often take advantage of those most vulnerable.
With higher costs for buying a home, many Americans are stuck between a rock and a hard place to find affordable housing. It’s no wonder people all over are resorting to risky contracts to obtain shelter for themselves and their families. If housing prices continue to skyrocket and affordable buildings aren’t constructed in time, the market could continue its meteoric ascension to universally unaffordable prices.
