The New York Department of Financial Services is deciding whether lease options (a.k.a. “rent-to-own) should be highly regulated or even banned in that state as “predatory lending.”
Last year, the Wisconsin Department of Justice sued Vision Property Management and its various affiliates for using “misleading and deceiving business practices to induce Wisconsin consumers to lease, rent, or purchase uninhabitable properties,” in violation of the state’s landlord-tenant and mortgage banking laws.
At issue is whether rent-to-own operators are “targeting vulnerable consumers, playing on their desire to achieve homeownership to get them to sign onerous and illegal home finance agreements that often do not lead to homeownership.”
According to the New Yor Department of Financial Services, by offering a “hybrid agreement” that is neither a mortgage nor a lease, some rent-to-own operators are offering contracts that don’t carry the traditional consumer protections of a mortgage or a lease.