The nation’s top consumer advocacy watchdog, the Consumer Financial Protection Bureau (CFPB), is intensifying its investigation into high-interest seller-financed home sales.
This type of home sale typically targets low-income buyers unable to acquire a traditional mortgage. The CFPB announced Monday (Nov. 15) that it has called upon Harbour Portfolio Advisors of Dallas and National Asset Advisors of Columbia, SC, two major companies offering these types of contracts, to comply with a civil investigative demand for documents.
The CFPB has been investigating seller-financed home sales (specifically contracts for deed sales) since earlier this year to determine whether they violate federal truth-in-lending laws. Recent research showed that an average 20,000 homes have been sold through contracts for deed since 2009. This statistic could be much higher, though, since not every state requires this type of transaction to be on public record.
Earlier studies suggested that seller-financed home sales were predatory in nature and built to fail. Harbour Portfolio bought more than 6,700 single-family homes, many from mortgage finance firm Fannie Mae, for under $10,000 following the 2008 financial crisis. Harbour Portfolio Advisors sells the homes as-is.
The CFPB recently hit five years active in the beginning of October. It was originally signed into effect as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act introduced by the Obama administration. Trump’s presidential nomination calls into question the future of the CFPB and many of the other financial reform regulations in Dodd-Frank.
The CFPB’s Consumer Complaint Database has logged over 638,757 complaints in the five years since it first went live. Ninety-seven percent of filed complaints have received timely responses.