University of Baltimore Journal of Land and Development


As of May 2016, the Consumer Financial Protection Bureau (CFPB) has announced an investigation into the practice of land contracts and compliance with federal truth and lending laws. The CFPB’s investigation is in response to the increasing number of reports from organizations, such as the National Consumer Law Center (NCLC), condemning land contracts for their predatory nature and disparate impact on low-income buyers, specifically those of color. Furthermore, land contracts have been labeled as “Wall Street’s Toxic Transactions” because of large wall street investment groups utilizing them for their own capital gain. Land contracts have been vilified for luring unsuspecting homebuyers into vastly inequitable, seller friendly deals with the promise of future home ownership.

While in some instances land contracts afford unscrupulous sellers the opportunity to take advantage of prospective homebuyers, they also provide an alternative avenue for home ownership. Low-income buyers, who might not otherwise receive conventional bank financing for purchasing a home, can receive seller financing and can have more influence in negotiating the terms of the agreement. The question still remains, are land contracts a viable route to homeownership or are they a risky venture that needs federal oversight to prohibit nontraditional buyers from being taken advantage of?



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