Back in November, the Consumer Financial Protection Bureau filed a lawsuit against one of the nation’s largest providers of seller-financed homes after it failed to comply with a subpoena to turn over documents related to home foreclosures. This week, a judge upheld the Bureau’s authority to request the documents from Harbour Portfolio Advisors.
A Federal District Court in Detroit issued a 12-page decision [PDF] directing Dallas-based Harbour Portfolio Advisors to comply with the CFPB’s request for documents and other information related to its investigating into housing finance.
The case against Harbour began back in Sept. 2016 when the CFPB began looking into whether financing offered by the company and others like it — referred to as an “Agreement for Deed” — were in violation of federal leading laws.
An Agreement for Deed is a written agreement to purchase a residential property, where the seller agrees to deliver a deed to the purchaser upon full payment of the purchase price.
This so-called rent-to-own policy, the New York Times reports, became popular during the housing crisis when it was difficult for consumers to obtain mortgages and alternative lenders stepped in to fill the gaps.
Harbour Portfolio bought nearly 7,000 properties from Fannie Mae after the housing crisis, paying roughly $10,000 or less for each, the New York Times found in an investigation. The company then turned around and sold the properties “as is” at a rate four or five times higher than the purchase price.
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