[co-author: Stephanie Kozol]*

On June 13, Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra provided the CFPB’s semiannual report to Congress, which included concerns about predatory house-flipping practices by companies like HomeVestors. Afterwards, Senate Subcommittee on Housing, Transportation, and Community Development Chair Tina Smith (D-MN) and Senate Ranking Member Lummis (R-WY) sent a letter to the National Association of Attorneys General (NAAG), requesting a coordinated effort to prevent cash homebuyers from entrapping sellers into unfair contracts.

HomeVestors is accused of targeting and deceiving elderly, infirmed, and individuals close to poverty into selling their homes at prices far below market value and using sales contracts difficult to rescind. In their letter, the senators suggested that states create a “cooling-off” rule that would provide homeowners a time frame to exit a contract. The senators also asked the AGs to partner with local officials to make it simpler for homeowners to view real estate records online.

Why It Matters

Since the 2008 financial crisis, regulators have scrutinized the real estate industry more heavily, particularly mortgage lenders. As such, this senators’ letter to the state AGs may signify a new wave of regulatory scrutiny in the real estate industry focused on companies involved in the cash homebuying industry.

*Senior Government Relations Manager