SPRINGFIELD, Ill. – Aspiring homeowners will receive better protection against predatory lending practices under legislation sponsored by state Rep. Jehan Gordon-Booth, D-Peoria, which recently passed the Illinois House of Representatives.
“Homeownership is a vital key to a family’s success and stability,” Gordon-Booth said. “Having a secure place to call home makes it easier for kids to be successful in school and helps parents keep a steady job. Rent-to-own contracts can make homeownership more attainable for people who have struggled financially in the past, but it’s important to make sure these families aren’t getting scammed by predatory sellers.”
As a result of the foreclosure crisis, there has been a surge in “rent-to-own” housing contracts across the county. As an alternative to purchasing a home with a mortgage, which often requires a high credit score, homebuyers enter into agreements directly with a seller who may accept lower credit scores. While this model gives individuals the opportunity to purchase a home who might not have had the ability otherwise, these contracts are prone to predatory practices such as evicting the homebuyer after a single missed payment or including ballooning payments in the contract, which could quickly lead to default.
Gordon-Booth’s Senate Bill 885 would require sellers to lay out the payment schedule in their contracts with homebuyers as well as outline each party’s responsibility for repairs, taxes and insurance payments. The legislation also expands protections against foreclosures and prohibits sellers from instituting prepayment penalties.
“A person who wants to provide good opportunities for their family and is willing to work for that stability shouldn’t have to worry about being the victim of greedy business practices,” Gordon-Booth said. “I am proud to have worked with community members and advocates on this vital measure and urge the Governor to side with working families and sign this bill into law.”