Indiana has seen a resurgence of rent-to-own housing contracts and housing organizations are advising buyers to beware.
Rent-to-own homes often target buyers who couldn’t otherwise qualify for a mortgage. Sellers hold onto the title of the home and collect payments. If the buyers fall behind, they can be evicted and lose their money.
Fair Housing Center of Central Indiana executive director Amy Nelson says the most recent housing crisis forced many homeowners into rentals.
“And that’s why the rental market has gotten more expensive,” says Nelson. “And some though, couldn’t get into rentals, and so that’s where some of these transactions have started to occur.”
Some of these rent-to-own housing contracts have been challenged in court the last few years for allegedly marketing towards minority neighborhoods. The session at this year’s state civil and human rights conference focused on how communities could monitor and investigate questionable rent-to-own practices.
Nelson says her organization filed two federal lawsuits against companies they allege targeted minority neighborhoods.
“Basically they’re targeting the same communities with these land contracts who have been targeted before with other forms of predatory transactions,” says Nelson. “The victims gain no equity from their down payments, their monthly payments, or the improvements they make. They stand to lose everything if they don’t stay current.”
She says each lawsuit includes nearly 1,000 single family homes in the Indianapolis area. The class-action suit asks for monetary damages and an injunction against similar rent-to-own practices.
Last session a bill to establish protections for buyers of rent-to-own homes passed the Indiana House, but died in the Senate.