Texas firm accused of preying on black would-be homebuyers in Atlanta


Credit: BackyardProduction

Credit: BackyardProduction


A lawsuit filed in federal court accuses a Texas firm of preying on would-be homebuyers in Atlanta.

The suit, filed in U.S. District Court, includes 17 plaintiffs, who say they were misled by Harbour Portfolio and associated companies into thinking they were becoming owners when they signed agreements that effectively made them renters.

Harbour targeted black areas with the deals, known as “contracts for deed” or “land contracts,” which gave the plaintiffs “all of the obligations of homeownership with none of the rights,” according to the filing.

Officials at Dallas-based Harbour declined comment Thursday.

Several years ago, the company purchased thousands of foreclosed homes in a number of cities. They still own scores of homes in Atlanta, virtually all of them in African-American neighborhoods, according to Kristen Tullos, an attorney with Atlanta Legal Aid, which is representing the plaintiffs.

“This is the most recent development in predatory lending,” she told the AJC. “They are targeting neighborhoods that have been hit time and time again.”


In the aftermath of the housing crash, foreclosures were a virtual epidemic. Estimates vary, but experts say several hundred thousand homes in metro Atlanta went through foreclosure.

In many areas, investors swooped in to snap up the homes at bargain basement prices. Some chose to rent the houses out. Some held the homes for a time and then resold them as the market started to recover.

Harbour’s model, which was more common decades ago, in some ways is a hybrid.

So long as the residents make their monthly payments, the company receives a steady cash flow along with an interest rate that is well above the current mortgage rate. Meanwhile, the purchaser is responsible for interest, and pay taxes and insurance.

They are also typically responsible for maintenance of the home.

If they make payments all the way to the end of the contract, they will own the home. If they don’t they can be evicted and lose everything they put into it – even if they have been making regular payments for many years.

Then, they can be evicted and replaced with another “buyer.”


The lawsuit cites a University of Texas study found that over the course of two decades, about 45 percent of contract for deed purchasers defaulted. Fewer than 20 percent received a deed for the property.

In Fulton County, Harbour bought 85 properties between 2011 and 2015, according to the lawsuit. Of those purchasers, 34 have faced eviction.

It is not the first time that the company has been called out for what critics see as predatory practices. In April, the city of Cincinnati sued Harbour, alleging that the firm owed more than $360,000 in unpaid fines, fees and violation notices.

The city has charged the firm with failing to maintain homes, a neglect that the city says is linked to lead poising in a child.

Last year, the federal Consumer Financial Protection Bureau filed a lawsuit in federal court against Harbour for actions in more than a dozen states. Regulators recently complained that Harbour has been complying with the subpoena too sluggishly.

Among the plaintiffs are some who are still in the houses owned by Harbour and some who have left or been forced out, said Tullos.

Harbour and others who use “contract for deeds” have argued in the past that the purchases typically have tainted credit histories, as well as limited or spotty income, so they are unable to get a mortgage.

The companies have argued that the “contract for deed” is a bridge to homeownership.

Only that, Tullos says, is not what happens. Instead, they are set-up for failure, while thinking they already own a home.

“The companies make it difficult for aspiring homeowners to ever achieve the goal of ownership – which is what they think they are doing,” she said. “None of the people in this lawsuit understood. They believed they were becoming homeowners and they later found out they were functionally renters. That was devastating.”

The lawsuit, argues that Harbour has violated both federal and Georgia law asks that a court order Harbour to pay damages, but does not request a specific figure. The suit also asks that the court declare the plaintiffs to be the owners of the properties where they have been living.


AJC Business reporter Michael E. Kanell keeps you updated on the latest news about jobs, housing and consumer issues in metro Atlanta and beyond. You'll find more on myAJC.com, including these stories:

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