At The State Of Memphis Housing Summit, housing and bankruptcy experts warned that increasing property values are attracting more predators to some Memphis neighborhoods.
The annual summit, held virtually on Thursday, was hosted by the City of Memphis and featured a combination of national experts and Memphians working to improve the city’s housing.
Here are some of the numerous ways lower-income residents can be cheated and how to be careful:
- Be skeptical of those “We Buy Houses” signs, calls and texts that have become increasingly prevalent in the city, said Daryl Smith, senior attorney for the Western District of Tennessee’s Chapter 13 bankruptcy trustee. These companies convince people who are behind on their mortgage, elderly or otherwise don’t know the true value of their home to sell to them at less-than-fair prices. “All of them aren’t a scam, but the majority of them are, like nine out of ten,” he said.
- Millions of Americans are discovering that buying homes with loans that aren’t mortgages has its downsides, said Tara Roche, a policy analyst for The Pew Charitable Trusts. Such loans often mean unforeseen costs and cut the tenants off from federal and state assistance, such as Emergency Rental Assistance. “A lot of wealth-stripping goes on,” she said.
- In rent-to-own agreements in particular, predatory real estate investors write contracts that make it easy for renters to lose their investments in the homes, Smith said. Particularly in up-and-coming neighborhoods, the contracts include clauses that allow eviction after a single missed rental, home insurance or property tax payment — even though those latter two costs are usually a landlord’s responsibility. That allows property owners to void the existing renter’s possible build-up of equity and start renting the same home to someone else.
- Stay away from rent-to-own agreements unless they have a short term and you know for certain you’ll be able to afford all the payments, Smith said. “If you default, there’s no recourse if you don’t have the title,” he said.
- A rise in out-of-town property owners who obscure their identities is another danger, said Heights CDC director Jared Myers. As a community leader, he said it’s quite frustrating to not be able to talk to some property owners on the phone about code violations or other issues. He’s hoping the city or state will be able to force purchasers of property to accurately identify themselves, as opposed to using a one-time company name.
Jacob Steimer is a corps member with Report for America, a national service program that places journalists in local newsrooms. Email him at Jacob.Steimer@mlk50.com
This story is brought to you by MLK50: Justice Through Journalism, a nonprofit newsroom focused on poverty, power and policy in Memphis. Support independent journalism by making a tax-deductible donation today. MLK50 is also supported by these generous donors.