Many aspiring homeowners see a land contract as the answer to their prayers, although mortgage experts and lawyers say they almost always result in financial calamity.
“Land contracts and leases with an option to buy are both costly and destructive detours that diminish the likelihood that consumers entering these contracts will ever own a home,” said Sarah B. Mancini, co-director of advocacy for the National Consumer Law Center.
“We estimate that more than half of these transactions fail. Indeed, we believe that these transactions are designed to fail.”
She testified before the Senate Banking Committee’s Subcommittee on Housing, Transportation, and Community Development on July 11.
Land contracts, contract for deed, and lease with an option to own arrangements disproportionately target low-income minority home buyers who typically can’t qualify for traditional mortgages, Ms. Mancini and other witnesses said.
