Portfolio solutions, bulk sales of bank-owned properties, and the reemergence of racially exploitative land contracts

Abstract

Since the onset of the foreclosure crisis, scholars have examined large-scale investor acquisition of mortgage-reverted properties in numerous U.S. housing markets. This work is generally framed by an interest in the massive shift from homeownership to rentership and the implications of this transition for low- and moderate-income households and neighborhoods subject to the lingering effects of the crisis. This article extends this literature by examining the national geography of contract-for-deed sales initiated by large-scale investors acquiring properties from federal foreclosure inventories. Contract-for-deed sales are historically associated with exploitative high-cost transactions targeting credit-starved communities of color, but researchers have noted their return in places hit hard by foreclosures. Drawing on a national dataset of real estate transaction records, we track the size and location of these contract-for-deed dealers' inventories. We then restrict our analysis to properties sold by Fannie Mae to known contract sellers to address the question of whether these sales were disproportionately concentrated in cities and neighborhoods with large numbers of Black inhabitants. We find race is a significant predictor of metropolitan level foreclosure sales to contract sellers and that predominantly Black neighborhoods saw a disproportionate number of foreclosures sold to contract sellers.