Investment firms revive a home sale contract with a racist history

The Times has an exposé today, by Matthew Goldstein and Alexandra Peterson, of predatory investment firms that buy up foreclosed homes, mainly in midwest rust-belt cities as well as in the south, and sell them in uninhabitable condition at huge markups to unsophisticated buyers.

The chief vehicle for exploitation is a sub rosa mode of sale known as a "contract for deed" that leaves actual ownership of the property in the seller's hands while imposing onerous responsibilities on the buyer. Here is how the contract is structured by the largest buyer of foreclosed houses from Fannie Mae's bulk sale program from 2010-2014,  Dallas-based Harbour Portfolio Advisors:

More than a dozen Harbour contracts reviewed by The Times — including Ms. Howard’s — all ran for 30 years, carried a 9.9 percent interest rate and required buyers to bring their property into “habitable condition” within four months. The contracts also contained an arbitration clause to settle disputes between seller and buyer, a stipulation that consumer advocates contend strips buyers of the right to litigate onerous clauses in a courtroom.

Provisions in a contract for deed are enforceable as long as they do not conflict with state law. The home dweller has more limited protections than a person buying a house with a mortgage, and evictions are quicker than a foreclosure. The residents are typically responsible for repairs and paying all property taxes, but the legal title under a contract for deed does not transfer until the final payment is made — an end result that rarely happens.

Nationally, the Times cites an estimate that more than 3 million people have bought homes through a contract for deed.  And that exploitative vehicle has a racist history. Thomas Sugrue, in The Origins of the Urban Crisis: Race and Inequality in Postwar Detroit (1997) details the many means by which Detroit's African American population was shut out of the housing market and shut into islands of concentrated poverty.  This kind of contract has pride of place in the narrative:

Detroit's destruction began in its heyday

Thomas J. Sugrue's The Origins of the Urban Crisis: Race and Inequality in Postwar Detroit (1997) is a great book -- and in some ways a simple one.  It provides extensive, fine-grained documentation of two or three (depending on how you count) relentless forces that destroyed Detroit.

The first was the hemorrhaging of manufacturing jobs that was in full flow by the early fifties, and could only have been stemmed by national industrial policies unthinkable in the United States: a rollback of Taft-Hartley's enablement of state right-to-work laws; a German-style role for labor in corporate management; legal restrictions on companies' right to lay off workers or move manufacturing operations as they saw fit.

The second was the vicious, rooted, legally codified and government-sanctioned racism that kept African Americans at the bottom of the labor totem pole, consigning them to the hardiest, dirtiest, poorest-paying and least secure factory jobs and excluding them skilled crafts, retail service and a host of other occupations.

Romney's quicksilver Detroit turnaround

Can anyone stand yet another picking over Romney's actual position(s) regarding the Detroit bailouts?

Despite the reams that have been written, what Romney actually recommended in his now-famous Nov. 2008 op-ed and in subsequent elaborations remains elusive -- as is generally the case when you're dealing with a consummate bullshitter. Still, I've combed some of  his pronouncements from November 2008 through June 2009 and would venture to clarify a few points:

1) Romney never called for the liquidation of GM or Chrysler. That much should be obvious -- though his call for a "managed bankruptcy" to commence immediately upon the companies running out of money following their request for government aid in November 2008 would probably have led to liquidation.

2) By pronouncing "Detroit needs a turnaround, not a check," Romney set up a  false choice. As the event proved, GM and Chrysler both needed both -- first one, and then the other.

3) In calling for a "managed bankruptcy" in his November 2008 op-ed, Romney did not explicitly recommend a privately funded turnaround.  Rather, with a calculated vagueness that has since become numbingly familiar, he left unstated how and by whom the companies' continued operations would be funded.