The Consumer Financial Protection Bureau (CFPB) has released a comprehensive report highlighting the risks and challenges associated with “contracts for deed,” a form of seller financing often used as an alternative to traditional mortgages. While these contracts can provide a pathway to homeownership for some, the report underscores the significant dangers they pose, particularly to vulnerable populations, including low-income, Black, Hispanic, and immigrant communities.
Contracts for deed are often characterized by substandard housing, inflated prices, and a lack of consumer protections. Buyers assume all responsibilities of homeownership, yet they do not gain legal title until all payments are completed, which can span decades. The CFPB’s findings reveal that many of these contracts are structured to fail, with sellers retaining all equity and payments in the event of a buyer’s default. This practice perpetuates a cycle of exploitation, where homes are repeatedly sold without necessary repairs, trapping buyers in a never-ending loop of financial insecurity.
Because of these risks, it’s more important than ever to work with a trusted real estate professional who understands the local market and is committed to protecting your interests. At MORE, REALTORS®, we pride ourselves on guiding our clients through every step of the home-buying process, ensuring they avoid predatory practices like those associated with some contracts for deed. Our agents are dedicated to providing transparent, fair, and informed advice to help you achieve your homeownership goals safely and successfully.
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