Moreover, if he or she falls behind on the payments, the buyer can be evicted.
The company can then quickly make a similar arrangement with a new “buyer.”
"These land contracts are built to fail, as sellers make more money by finding a way to cancel the contract so as to churn many successive would-be homeowners through the property," the report said. "This is a significant difference from the mainstream home purchase market, where generally the buyer and the seller both have the incentive to see the transaction succeed."
Atlanta-based attorney, Sarah B. Mancini, who works part-time with the center, said she has a number of clients who have complained of being taken advantage of by the set-up. A teleconference call to one client arranged with a reporter on Wednesday was abruptly ended when the client said authorities had arrived to evict him.
Harbour is not the only large investment firm employing the technique, but it is one of the largest, with business in at least a half-dozen states, including Georgia, and thousands of properties. However, the center says the technique is not well-regulated and there are few numbers available showing just how widespread it is.
Companies that engage in it look for areas with depressed home prices, according to the report. And they target “buyers” who have bad credit history or modest income and are unlikely to get the chance to purchase a home with a more traditional down-payment and mortgage.
“The common theme that land contracts were being sold predominantly to borrowers of color,” according to the center’s report.