New York state officials are the latest regulators to crack down on what was once one of the nation’s biggest sellers of buy-to-buy homes.
In a lawsuit filed in Manhattan Federal District Court on Thursday, the state attorney general’s office and the Department of Financial Services claim the company, Vision Property Management, was operating an “illegal, unlicensed mortgage” business using deceptive rental contracts to sell often dilapidated homes in upstate New York.
The lawsuit argues that Vision, which is based in Columbia, SC, promotes itself as a user-friendly business that offers low-income people a chance to own property. But in reality, regulators said, the company is profiting by placing promising buyers in homes that are often uninhabitable. Tenants are required to make all repairs and make monthly payments under arrangements that are more like a mortgage than a lease.
“Vision targets vulnerable consumers who are eager to share in the ‘American dream’ of home ownership,” the complaint said.
A lawyer for Vision did not return a request for comment.
The lawsuit identified at least 150 homeowners in New York City who had contracts with Vision, which at its peak owned more than 5,000 homes across the country. It was filed more than a year after lawyers from the financial services department approached court to compel Vision to comply with an administrative request to obtain documents and business records.
“We have taken this step to protect New York consumers by putting an end to these illegal, predatory and unreasonable business practices,” said Linda A. Lacewell, Superintendent of Financial Services for New York.
The financial services agency opened its investigation into Vision after the New York Times published a series of articles in 2016 on the recovery from the crisis of so-called seller financing of dilapidated homes under deals such as rental leases with option to purchase. The series focused on a number of domestic companies that had acquired cheap foreclosed homes as a result of the crisis, including thousands of homes sold by Fannie Mae, one of the large mortgage finance companies that were checked. by the government.
Two years ago, Fannie Mae agreed to stop selling foreclosed homes to Vision and other similar businesses after being incited by Representative Elijah E. Cummings, a Democrat from Maryland and leading member of the committee of the House on government oversight and reform. Mr Cummings had sent a letter to Fannie’s regulator, the Federal Housing Finance Agency, urging it to stop home sales after The Times reported some of Vision’s business practices in Baltimore.
The lawsuit is the state’s second strong message to hire-purchase companies using aggressive tactics that some see as predatory. Last fall, the New York attorney general reached a deal with a number of trailer park operators that gave hundreds of people who have signed option leases the right to break those agreements and to recover the down payments they had made for their mobile homes. .
Other cities and states, including Cincinnati and Wisconsin, have sued Vision for its business practices in recent years. The seller-funded deals have also prompted state legislatures in Michigan, Ohio, and Illinois to consider laws to protect consumers.