When Lester Shreffler's rent to EasyKnock went up, he fell behind and received a notice to vacate. He and his daughter scrambled to find this rental home in Farmersville, Texas. His lease is up at the end of July, and he's not sure where he's going to go next.The home where Lester Shreffler raised his daughter is full of memories — throwing her a birthday pool party, fixing his 1977 Jeep together in the driveway, heading up the street to her elementary school for lunch.
Stretched thin making monthly payments and putting his daughter through college, he was overwhelmed with credit card debt. He tried to refinance his mortgage but didn't qualify because of bad credit. While the homeowners turn into tenants once they sign the sale-leaseback, we're referring to them as"homeowners" in the rest of this story to avoid confusion and simplify language.
As home prices nationwide have gone up dramatically since the start of the pandemic, the amount of equity that people have in their homes is rising, and many homeowners want to access that increased value. But for people with bad credit or low incomes, loans are often inaccessible. EasyKnock, as well as other companies with similar products, offer sale-leaseback deals as an alternative that doesn't have to follow the regulations that apply to lenders.
When a homeowner sells to EasyKnock, any remaining mortgages are paid off, and the homeowner receives a portion of the equity in cash — up to 75%. The homeowner also keeps a financial stake in the property.Some consumers have the option to buy the house back. Alternatively, the homeowner, now a tenant, can recoup some of the proceeds by directing the company to sell the house to someone else.
The company has expanded its reach through a partnership with LendingTree, the online loan marketplace, which refers people who don't qualify for its services to EasyKnock. His house was integral to his retirement plan. He intended to pay off the mortgage by the time he left his job, so he could sell the house and use the equity to purchase the marina.
Some people don't get 100% of their home's value, according to allegations by state attorneys general and NPR's analysis of records obtained from documents filed as part of lawsuits against EasyKnock. In late May, the Michigan attorney general's office sent EasyKnock a cease and desist letter alleging that homeowners don't understand the transaction and the losses they could incur. It claimed EasyKnock had"misleading marketing.
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