The Wall Street Journal quotes Peter Schweizer’s Do as I Say, Not as I Do:
Clyde Soapes was a grain-elevator operator from Texas who heard about the lots in early 1980 and jumped at the chance to invest. He put $3,000 down and began making payments of $244.69 per month. He made thirty-five payments in all—totaling $11,564.15, just short of the $14,000 price for the lot. Then he suddenly fell ill with diabetes and missed a payment, then two. The Clintons informed him that he had lost the land and all of his money. There was no court proceeding or compensation. Months later they resold his property to a couple from Nevada for $16,500. After they too missed a payment, the Clintons resold it yet again.
Soapes and the couple from Nevada were not alone. More than half of the people who bought lots in Whitewater—teachers, farmers, laborers, and retirees—made payments, missed one or two, and then lost their land without getting a dime of their equity back. According to Whitewater records, at least sixteen different buyers paid more than $50,000 and never received a property deed.
Compare that with this anecdote (also in the quoted article) from nearly 20 years earlier. Tell me how it’s any different:
In 1961, a black man named Clyde Ross undertook to purchase a house in North Lawndale, on the West Side of Chicago. Coates explains what Ross had to do in lieu of getting a mortgage [which banks at the time wouldn’t underwrite for black neighborhoods]:
Three months after Clyde Ross moved into his house, the boiler blew out. This would normally be a homeowner’s responsibility, but in fact, Ross was not really a homeowner. His payments were made to the seller, not the bank. And Ross had not signed a normal mortgage. He’d bought “on contract”: a predatory agreement that combined all the responsibilities of homeownership with all the disadvantages of renting—while offering the benefits of neither. Ross had bought his house for $27,500. The seller, not the previous homeowner but a new kind of middleman, had bought it for only $12,000 six months before selling it to Ross. In a contract sale, the seller kept the deed until the contract was paid in full—and, unlike with a normal mortgage, Ross would acquire no equity in the meantime. If he missed a single payment, he would immediately forfeit his $1,000 down payment, all his monthly payments, and the property itself.