Financial regulators in New York are scrutinizing a revival in seller-financed deals for marketing inexpensive homes to lower-income people who cannot get a mortgage, the New York Times reported on Saturday. The New York State Department of Financial Services on Friday subpoenaed four investment firms that either are involved with seller-financed deals or provide financing for such deals. The firms receiving subpoenas from New York regulators are Battery Point Financial, New York Mortgage Trust, Apollo Residential Mortgage and an affiliated entity of Apollo Global Management. The nation’s top consumer regulator, the Consumer Financial Protection Bureau, recently began an informal inquiry into seller-financing arrangements, which are commonly referred to as contracts for deeds. The bureau has assigned two enforcement lawyers to research the seller-financing market and determine whether the terms of some deals violate federal truth-in-lending laws. Contracts for deeds and other forms of seller financing have been in resurgence after the financial crisis, which created a large supply of cheap foreclosed homes for investors to buy and left many potential homeowners unable to qualify for a mortgage. Proponents contend that a contract for deed can provide an alternative route for lower-income borrowers to buy a home.
