4 ms·

This is interesting. A quick search turned up an article [1] that outlined some of the difficulties with lease-to-own residences I wasn't aware of. However, the

This is interesting. A quick search turned up an article [1] that outlined some of the difficulties with lease-to-own residences I wasn't aware of. However, the CFPB is likely on the losing side if the leases are structured as short-term rentals, terminable at any time, as Rent-A-Center has done [2]. This type of consumerism is likely to be self-correcting over generations of time; I'm seeing far less participation by Millenials and younger generations for this consumerism than older generations, by simple virtue of the fact that they are quite drained of financial resources and growth potential by the time they graduate. If this trend is real and continues, then the velocity of money could seem great while juiced by the Fed, then drop like a cliff function when demographic realities trump monetarism and lack of fiscal policy changes in the US. [1] http://www.mhmarketingsalesmanagement.com/home/featured-articles/april-2011/1539-is-lease-to-own-a-safe-harbor-from-the-safe-act http://www.mhmarketingsalesmanagement.com/home/featured-arti... [2] http://www.huffingtonpost.com/2012/02/03/rent-a-center-cfpb-richard-cordray_n_1250033.html http://www.huffingtonpost.com/2012/02/03/rent-a-center-cfpb-...

sokoloff 11y ago
No, I think it's much worse than that. There's a general sentiment that triple penalties are applicable (or a danger at least) if a seller is remiss in qualifying the lessee/optinee at the time the contract is struck. The idea being that if a few years down the road, the lessee can't qualify for a mortgage and loses all their option premium money, they've been taken advantage of. So, the only safe thing is to underwrite the lessee for a mortgage at the time the contract is written. Hint: most of these people can't qualify for a mortgage, otherwise they'd just buy outright.
- toomuchtodo 11y ago
  Franky, the FHA should be writing mortgagees, not Joe Sixpack Seller Financing. Seller financing is more often than not used just as rent-to-own furniture stores are: rent seeking of the poor, with them losing their entire invested amount when they hit a financial hiccup.

sokoloff 11y ago

No, I think it's much worse than that. There's a general sentiment that triple penalties are applicable (or a danger at least) if a seller is remiss in qualifying the lessee/optinee at the time the contract is struck. The idea being that if a few years down the road, the lessee can't qualify for a mortgage and loses all their option premium money, they've been taken advantage of. So, the only safe thing is to underwrite the lessee for a mortgage at the time the contract is written. Hint: most of these people can't qualify for a mortgage, otherwise they'd just buy outright.

toomuchtodo 11y ago
Franky, the FHA should be writing mortgagees, not Joe Sixpack Seller Financing. Seller financing is more often than not used just as rent-to-own furniture stores are: rent seeking of the poor, with them losing their entire invested amount when they hit a financial hiccup.