CFPB Releases Warning and Report about Contracts for Deed

The Consumer Financial Protection Bureau (CFPB) issued an Advisory Opinion, a Report, and a Consumer Advisory about Contracts for Deed.

Under contract for deed deals (also called “land contracts”), the seller agrees to turn over a home’s deed only after the buyer completes a series of payments. The CFPB said that investors are “setting borrowers up to fail” using “predatory products.” The major thrust of these multiple actions is to highlight the issue and to warn investors of legal responsibilities under the Truth in Lending Act (TILA), including the borrower’s ability to repay the loan, provide informative and accurate disclosures, and limit balloon payments.