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Real Estate Company Continues Exploitation of African American Communities Through Fraudulent Housing Scheme

 

(marked for usage under Creative Commons license, image source - https://www.flickr.com/photos/slumtourist/31013909225) 

Homeownership is the dream of many Americans. Unfortunately, some entities have been profiting off exploiting this dream and luring many Black Americans into shady deals promising homeownership but manufactured to end in foreclosure. Vision Property Management is such an entity and continues to perpetuate the centuries old crime of exploiting Black Americans in Detroit for profit. In this blog post, I will examine the current lawsuit filed against Vision Property Management, Detroit’s history of housing discrimination, and present efforts to assist homeownership in Detroit. 

      I.          Henderson v. Vision Property Management, LLC 

On September 27, 2020, the American Civil Liberties Union Fund of Michigan, the Michigan Poverty Law Program, the NAACP Legal Defense and Educational Fund, and the National Consumer Law Center filed a 109-page lawsuit against Vision Property Management alleging that it “ensnared Black prospective homebuyers in the Detroit Area into predatory and discriminatory contracts that [were] structured to fail and replete with abusive credit terms.”[1] According to the lawsuit, Vision had been advertising its financial products as an opportunity for homeownership for individuals with income or credit barriers that made achieving homeownership difficult.[2] However, Vision’s model was structured in a way that it was virtually impossible for any of its customers to succeed as its business model consisted of selling home properties to their consumers in “extremely poor condition” to the point where many of the homeowners who would invest thousands of dollars and hours into the home to make it habitable would eventually default.[3] Bonsitu Kitaba, the deputy legal director of the American Civil Liberties Union of Michigan, observed that the “people who signed contracts with Vision were saddled with all the repairs, upkeep, insurance and taxes - all the responsibilities that come with homeownership - with none of the rights.”[4]

 

Upon the default of their properties, Vision’s customers would end up losing their entire investment and as well as any money paid under their contract.[5] In a traditional homeowner mortgage, the holder would be entitled to keep the product of their labor and financial investment in the property. However, Vision’s customers did not accrue those benefits, nor did they build up any equity and were often removed through summary eviction proceedings.[6]

 

By intentionally targeting Black neighborhoods and marketing towards Black communities, Vision is the latest perpetuator of predatory housing lending schemes in Detroit.[7] In finding real estate for its housing scheme, Vision specifically targeted property acquisitions in southeastern Michigan in predominantly Black neighborhoods including the purchase of 131 properties in Wayne County which has a 40% Black population.[8] Vision additionally marketed its services through yard signs in those neighborhoods for a “local approach intended to reach almost exclusively Black homebuyers.”[9] Vision is just another unscrupulous entity in a long line of housing discrimination and exploitation of  Black communities in Detroit. 

    II.          Detroit’s History of Housing Discrimination and Exploitation 

Detroit has had a long history of housing discrimination and exploitation of its Black residents long before Vision was even formed as an entity. In the 1920s, racial covenants restricted property ownership to White, American-born Christians, eventually at their peak reaching to cover 80% of Detroit property outside the city’s core.[10] From 1943 to 1965, there were nearly 200 Whites-Only Community associations which made mandatory memberships for homebuyers in certain neighborhoods and banned people of color from buying into the neighborhood.[11] More recently in the mid-2000s, Detroit lenders frequently extended subprime mortgages to Black applicants leading to these mortgages accounting for 75% of the mortgages issued in the city at one point.[12] However, many of these mortgages from 2011 to 2015 fell into tax foreclosure with 1 in 4 Detroit properties undergoing tax foreclosure during this time.[13] The city of Detroit has made and continues to make efforts but are they doing enough? 

 III.          Present Efforts and the Future of Detroit 

Currently, an organization charged with revitalizing Detroit’s blighted properties and addressing home ownership is the Detroit Land Bank Authority, a government agency that owns 25,000 vacant homes, 4,200 occupied homes, and 65,000 grass covered lots where homes once stood prior to the city demolishing them in “an effort to fight blight.”[14] The Land Bank is funded by a $5 million grant from Quicken Loans and takes control of Detroit real estate properties and maintains, sells or demolishes them in accordance with its mission to “return the city’s blighted and vacant properties to productive use”.[15] Since 2014, the Land Bank has sold 8,000 houses, demolished more than 14,000 structures and sold over 14,500 side lots.[16] However, reactions to the Land Bank have proved controversial as the organization has been accused by Detroit residents of neglecting the blighted properties it owns, showing favoritism to city officials and hoarding parcels of favorable land for developers instead of selling to Detroiters.[17]

 Another organization working to assist the Detroit community is the United Community Housing Coalition (UCHC). The UCHC is a 501(C)(3) nonprofit organization working to provide housing assistance to low income residents in Detroit.[18] Since 2015, the UCHC has run its Housing Defense Legal Clinic which provides free legal representation for low income tenants and has presented more than 1,000 households each year since 2017.[19] The UCHC additionally partnered up with Michigan Legal Services in 2017 to create the Right of First Refusal program which exercised the city’s option to purchase foreclosed homes back from Wayne County before they went off to auction.[20] Through the program they were able to purchase 80 tenant owned homes for the occupants and sell them to the occupants at cost ranging from $2,500 – $5,500.[21] 

 According to an analysis conducted by The Detroit News, roughly 1 out of every 5 of the city’s rentals face evictions which translates to roughly 30,000 annual evictions every year.[22] This statistic did not improve with the COVID-19 pandemic and Detroit had to issue a temporary ban on evictions in order to lessen the burden on Detroit renters. In July 2020, the state of Michigan implemented a $50 million Eviction Diversion Program intended to assist landlords receive payments for back rent and allow tenants to remain in their home.[23] Participating landlords who allowed their tenants to remain would be eligible to receive a lump sum payment of up to 90% of owed rent provided they forgave any late fees and dismissed up to 10% of the owed rent.[24] Although not long term solutions, programs implemented by the city of Detroit such as the Eviction Diversion program are welcome steps towards the solving of housing issues across the city. 

Homeownership is unfortunately still a dream for many Detroiters. Although there are many community organizations working to make that dream a reality, it is just as important to provide community education and awareness regarding real estate lending red flags and exploitative actor awareness. Increased education and awareness around housing deals that seem too good to be true and other deceptive homeownership practices would decrease the number of Detroiters who fall victim to predatory companies and face evictions and foreclosures each year. Hopefully, as the city of Detroit and its community organizations make further progress with regards to breaking down barriers to home ownership and provide increased community education and awareness on exploitative housing practices, predatory companies such as Vision Property Management will no longer be able to prey on victims throughout the Detroit community and make homeownership much more than just a dream for many Detroit residents.

By Jason Kim

[1] Corrado Rizzi, ‘A False Promise’: Vision Property Management Preyed Upon Black Detroit-Area Homebuyers, Class Action Alleges, ClassAction.org (Sep. 30, 2020), https://www.classaction.org/news/a-false-promise-vision-property-management-preyed-upon-black-detroit-area-homebuyers-class-action-alleges.

[2] Id.

[3] Id.

[4] Adrienne Roberts, Class Action Lawsuit Claims Firm Targeted Michigan Black Would-Be-Homebuyers, Detroit Free Press (Sep. 29, 2020, 5:24 PM), https://www.freep.com/story/money/business/michigan/2020/09/29/class-action-lawsuit-vision-property-management/3575256001/

[5] Corrado Rizzi, ‘A False Promise’: Vision Property Management Preyed Upon Black Detroit-Area Homebuyers, Class Action Alleges, ClassAction.org (Sep. 30, 2020), https://www.classaction.org/news/a-false-promise-vision-property-management-preyed-upon-black-detroit-area-homebuyers-class-action-alleges.

[6] Id.

[7] Id.

[8] Adrienne Roberts, Class Action Lawsuit Claims Firm Targeted Michigan Black Would-Be-Homebuyers, Detroit Free Press (Sep. 29, 2020, 5:24 PM), https://www.freep.com/story/money/business/michigan/2020/09/29/class-action-lawsuit-vision-property-management/3575256001/

[9] Corrado Rizzi, ‘A False Promise’: Vision Property Management Preyed Upon Black Detroit-Area Homebuyers, Class Action Alleges, ClassAction.org (Sep. 30, 2020), https://www.classaction.org/news/a-false-promise-vision-property-management-preyed-upon-black-detroit-area-homebuyers-class-action-alleges.

[11] Id.

[12] Id.

[13] Id.

[14] Tom Perkins, The Detroit Land Bank And Its Many Controversies, Explained, Curbed Detroit (Apr 30, 2020, 10:02 AM), https://detroit.curbed.com/2020/4/30/21166791/detroit-land-bank-authority-vacant-house-for-sale.

[15] Id.

[16] Id.

[17] Id.

[21] Id.

[22] Joel Kurth, One in Five Detroit Rentals Face Eviction. Time to Call in the Lawyers?, Bridge Michigan (Mar. 12, 2019), https://www.bridgemi.com/detroit-journalism-cooperative/one-five-detroit-rentals-face-eviction-time-call-lawyers.

[23] Sarah Rahal, Detroit Offering Housing Assistance as Eviction Efforts Resume, The Detroit News (Aug. 26, 2020, 4:15 PM), https://www.detroitnews.com/story/news/local/detroit-city/2020/08/26/detroit-offering-housing-assistance-eviction-efforts-resume/3444465001/.

[24] Id.

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