Now that Bellingham has taken on the task of registering and inspecting rentals in Bellingham, tenants face yet another threat, that of rent-to-own.  This is not a new or a poor concept per se.  In fact, I was involved in some reputable uses of this method of buying a home when I was a real estate agent in Columbia, Maryland around 1980.  Those were the good old days of mortgage interest rates in the low 20% range.  VA and FHA loan rates hovered around 17%.  These percentage rates are not typographical errors.  Surprised?  But I have digressed... 

Interest rates are historically low now but salaries are often insufficient to meet the criteria for home ownership.  Rent-to-own methods that I dealt with long ago are now being remolded into schemes by financial sharks that are created to ensure that the unsuspecting tenants will fail to perform and loose their house and their money.  In a 28 January ProPublica article entitled Rent-to-Own: Walls Street's Latest Housing Trick, journalist Jesse Eisinger exposes this dark niche of exploitation.  He writes:

"Rent-to-own schemes have long exploited the poor. Naturally, marketers address that problem with euphemisms. Today, it's called lease purchase. The arrangements work in myriad permutations, but the basic deal is that a person rents a home and pays for an option to buy it at a later date. All the panelists [at a recent housing finance conference in Arizona]  hailed the product, calling it a "yield enhancer" that would increase profits. In a standard lease, one panelist explained, the owner covers costs like taxes, maintenance cost and insurance. With lease purchase, the renter pays those expenses. And it's easier to evict because the occupant has only a rental agreement. It's not a foreclosure proceeding against an owner, after all.

No doubt some of our more stellar landlords in Bellingham might latch onto this scheme to help pay for  repair costs that rental inspections may require.  Poorly informed or unsophitsicated renters may find themselves targets of landlords who would take advantage of them.

Eisinger continues: "Yet even if rent-to-own is a small, dark corner, there are some important lessons to be drawn. The first, obvious one is that someone should look out for renters in markets where people might take advantage of them. That's where the Consumer Financial Protection Bureau comes in. As it happens, the very thing Republicans would like to do now that they control Congress is gut this fledgling agency."  It is incumbent on the city of Bellingham provide information about these schemes, possibly within the context of information to be given to each tenant as part of the new rental inspection ordinance.