Consumer Agency Cracks Down on Seller-Financed Home Sales

A federal regulator plans to take a tougher stance on seller-financed home sales, applying similar consumer protection rules to traditional mortgages. The Consumer Financial Protection Bureau (CFPB) issued an advisory opinion, warning sellers against predatory practices commonly found in the contract for deed market. Contract for deed sales, prevalent in low-income neighborhoods with limited access to mortgages, involve multiyear installment contracts with high interest rates and burdensome repair responsibilities for buyers. The CFPB clarified that these sales are subject to federal truth and lending laws, necessitating proper risk disclosure and buyer assessment. The CFPB also highlighted abusive practices and discriminatory targeting in these transactions. A proposed bill seeks to provide additional protections for contract for deed buyers.