The phase after that will probably include pitchforks. Jesus. That's mafia-level stuff. I bet since the owner can't foreclose, if you package these, they could make for high class tranches. I do hope they are creating CDO's with these, selling them to pension funds, and then taking swaps against them. That'd be great. Fantastic stuff. Fuck.The firm says on its website that it is “creating investments to capitalize on the next phase of the U.S. mortgage” market.
In April 2011, Harbour sold a contract for deed on the house for $36,300, according to public filings. Under the terms of that deal, the 24-year-old woman who now lives in the house is required to pay 10 percent interest or a monthly base payment of $314 — a sum that does not include property taxes, insurance or any outlays for repairs or renovations.
The incentives here are so perverse that it puzzles me that they could be legal. Consider the used car market, which has gone through this type of "financing". Seller prefer for buyers to default, because they can collect, say, 20% of the car's value, then resell it at maybe 5-10% depreciation, rinse and repeat. The sums that some dealers can collect on a single, shitty old car can be many times what the car is actually worth. Now consider the same with housing, but with the "bonus" (from the seller's perspective) that houses don't always depreciate. Some do, while others gain astronomical value. If, for example, a neighborhood gentrifies, that $30,000 house could be worth $300,000. Does anyone think in such case that the "homeowner" is ever going to be able to capitalize on the appreciation? Call me a cynic, but I highly doubt it. In theory, each seller could wait until a house is 50%, 60% or 99% paid off then come up with a reason to evict or convert to rent, and then "sell" the house to the next poor bastard. These people, being largely poor, will doubtlessly have limited access to the courts, and will therefore also likely have little recourse no matter if the eviction/conversion was legal. This could get ugly for a lot of people really fast. (Apologies for all the quotes, but I can't in good conscience use actual, commonly accepted terms for what these people are doing.)
The earlier link in your article is straight-up nightmare fuel. One of the larger firms in this market, Harbour has bought more than 6,700 single-family homes in Ohio, Michigan, Illinois, Florida, Georgia, Pennsylvania and a handful of other states since 2010 — most of them from Fannie Mae, according to the mortgage finance firm and the foreclosure research firm RealtyTrac. Ten of the more than 50 homes Harbour bought in Akron have been torn down after being condemned and two others are slated for demolition, Mr. Groeger said.One of several firms Mr. Groeger’s office has fielded complaints about is Harbour Portfolio Advisors of Dallas.