Top educator puts a spotlight on top Hip-Hop moguls, but does she have the facts all the way straight?
She just might.
Jay-Z and Will Smith’s latest investment says that it has a plan that will help poor people become homeowners through a unique and innovative rent-to-buy model. However, a top Black academic says that she has a “reasonable doubt” regarding the venture, claiming that they are offering a Rags to Riches (ala “Fresh Prince to Bel Aire” level) dream that will ultimately exploit those who currently are living in a “hard knock life.”
Nikole Hannah-Jones, the new Howard University Knight chair in race and journalism, took to social media to blast Landis Technologies, Jay-Z’s Roc Nation and Will Smith’s Dreamers VC homeownership program, calling it “predatory” in nature.
“Credit counseling is not what will take low-income renters to homeowners, wealth will,” Hannah-Jones tweeted. “All this program does is charge struggling people additional fees for being poor, which is what every other predatory lender does.”
However, the CEO of Landis Technologies says that she is misinformed about the program that the two rappers dumped $165 million into. Cyril Berdugo stated that in defense of the initiative, “A lot of the things that were said are not true.”
“We really care about financial literacy and financial inclusion for our clients … we are the company that makes people reach homeownership,” he continued by stating that the firm had already “made the decision to never charge for coaching or counseling or anything like that.”
But is this just a quick cover-up statement to protect the two Hip-Hop moguls?
According to the website Landis Technologies’ principal aim “helps renters transition to homeownership.”
Under the “About” section, a page that says at the top “We’re here to help,” the company lays out its plan.
It explains that Landis allows its “customers to select their dream home and rent it for up to 2 years while they get ready for a mortgage,” further stating, “We also offer tools and incentives to our customers to improve their credit and build up their down payment.”
Further down it states that it makes money from the rent that is paid to them on the dream home “and the appreciation of the house during the rental period.”
“To make sure we’re always on your side, we don’t talk any commissions or fees from our agents. We also never sell your data to anyone,” the site says. This is probably where the double talk begins for critics like Hannah-Jones as the company never shares how they will make money on the rent.
Traditionally companies with the “rent-to-own” payment structure are considered to have what is called predatory lending practice, believing that they offer an “unfair or abusive loan or credit sale transaction of collection practice. New York State Department of Financial Services considers these programs as no better than payday loans, title loans, and refund anticipation loans, a practice that it doesn’t currently allow. It also has a warning about “Home Equity Programs” and “Rent-to-Own” models.
The Landis website also notes that this program is not in New York, a state with more rigid laws about exploitative rent-to-own models.
Hopefully, Berdugo is right, and more conversation needs to be had.