Private equity sold them a dream of home ownership. They got evicted instead

By | Published Jul 07, 2023 | Insider
Private equity sold them a dream of home ownership. They got evicted instead

Erica Hines-Denson had no idea how bad the odds against her were.

Student loans and a recent divorce had dinged her credit score. But she and her new husband, Elquinton Denson, were building a blended family and they dreamed of buying a home in the greater Atlanta area. After lenders turned them down for a traditional mortgage, a realtor told her there might be another way. Something called a lease-purchase, or rent-to-own, agreement.

“This was our way to own a home finally,” Hines-Denson said. “It was like we found a loophole.”

It took just a weekend of house hunting to find a house they loved: a stately four-bedroom, 30 miles southeast of Atlanta, with a built-in bar in the basement where they pictured hosting family and friends. Listed at $275,000, it was in their price range.

There was a catch. The couple wouldn’t be buying. Instead, a Chicago-based company called Home Partners of America would make a cash offer and rent the house back to them, with an option to buy within five years.

Home Partners supplied a lengthy agreement detailing the terms, including built-in annual increases to their rent and to the eventual purchase price. The document was more than 50 pages long; Hines-Denson said the company gave them just 24 hours to review it and sign. But the opportunity seemed too good to pass up. “You’re like, ‘Oh Lord, this is my chance,'” she said. “So you’re moving quick.”

The deal quickly turned sour. The company locked her out of the online payment portal after she missed a single month’s rent, adding hefty fees that made it impossible to catch up. After she missed a second month, the company swiftly filed for an eviction.

While a judge stayed her legal case under the federal COVID-19 eviction moratorium, the company’s management agency continued to call, Hines-Denson said, threatening to remove her belongings. In a final insult, the company kept their two-month security deposit when she and her family finally moved out.

Private equity moves in

Home Partners, which launched in 2012, now owns more than 28,000 homes nationwide. It is the largest of a handful of new companies promising “a clear path to homeownership” for families not yet ready or able to buy.

The company’s success has inspired startup competitors such as the New York-based company Landis, which boasts of investments from entertainers Will Smith and Jay-Z. Once dominated by fly-by-night operators, rent-to-own is now attracting some of the biggest players from Wall Street and Silicon Valley. Andreessen Horowitz led a Series A funding round for a rent-to-own competitor, Divvy Homes, in 2018. BlackRock and KKR purchased a majority stake in Home Partners by 2014, before private-equity giant Blackstone Group bought the company in 2021 for $6 billion.



In its marketing, Home Partners emphasizes that it offers “flexibility, choice and transparency,” providing the opportunity to “rent your dream home” without making a long-term commitment. “Home Partners has created a path to home ownership for tens of thousands of people who may not otherwise have had one,” a company spokesperson told Insider. “We are tremendously proud of our business.”

Yet Home Partners tenants, in interviews and court documents, say they got stuck in barely livable dwellings, with leaking sewage, broken air conditioners, filthy carpets, or nonworking electrical outlets. They describe being blocked from seeing home-inspection reports and facing swift eviction filings for a single late payment. One tenant filed a lawsuit claiming she suffered injuries when the ceiling of her home collapsed.

Hines-Denson said she felt like she’d been “set up to fail.”



More than 4,000 Home Partners tenants have purchased their homes over the past decade, according to a July 2022 paper from Moody’s Analytics, coauthored by an advisor to the company. But over the same time, nearly four times as many tenants — roughly 15,000 — moved out without buying.

An analysis of contracts and sales and eviction data shows that rent-to-own tenants are often left with the worst of all worlds. They have to shoulder many of the costs and responsibilities of homeownership, and the financial odds are stacked against them to end up as owners. Meanwhile, many are paying above-market rent.

“I’m very sympathetic when someone says they’ve identified a large segment of the population not being served by the current housing and mortgage landscape,” said David Reiss, the research director for the Center for Urban Business Entrepreneurship at Brooklyn Law School.

“What you don’t want to hear next is, ‘Therefore, we can do whatever we want to them.'”

High rates of eviction filings

These next generation rent-to-own companies say they’re bringing greater equity and opportunity to the housing market, leaving behind the model’s unsavory reputation. “We succeed when our residents succeed,” Home Partners declares on its website.

Insider, in partnership with the McGraw Center for Business Journalism, reviewed 10 years worth of property sales and court records in three of the company’s large metropolitan markets — Atlanta, Chicago, and Tampa — to find out how frequently Home Partners actually sells homes to its rent-to-own tenants.

In Chicago, the company’s oldest market, we looked at the 195 homes Home Partners purchased through 2016, where tenants’ five-year purchase window had expired. Property records show the company has sold less than a third of those homes, and not always to its tenants. Some buyers, we found, purchased the homes in traditional sales after rent-to-own tenants had been evicted.

In all three markets, Home Partners has filed for eviction against tenants in more properties than it has sold.

When presented with Insider’s findings, the Home Partners spokesperson responded, “Any implication that a resident is more likely to be evicted than to be successful in acquiring their home in our Lease Purchase program is patently false.” But the company declined repeated requests to provide its own data.

A spokesperson for Blackstone, which now owns Home Partners, said that both staffing levels and tenants’ purchase rates had increased under its ownership but declined Insider’s request to provide data for review.




Interviews with dozens of Home Partners tenants in more than 10 cities may shed light on why the deals so often fall through. Many tenants said they face pressure from realtors with a financial incentive to close the deal quickly. The company has blocked access to the homes’ inspection reports, so tenants have no idea if serious repairs are needed. And lawsuits allege that opaque contracts and absentee property managers effectively foist the responsibility for maintenance onto the tenants.

When it comes time to buy, tenants are locked into annual increases in the purchase price — and stuck lining up their own financing. Yet mortgage approval remains out of reach for many of the credit-impaired tenants that Home Partners targets.

Home Partners executives did not agree to be interviewed. In response to detailed questionsa company spokesperson disputed Insider’s findings, calling Insider’s reporting “agenda-driven.” The previous majority owners, BlackRock and KKR — which has a stake in Insider’s parent company, Axel Springer — both declined to comment for this story.

As higher interest rates cool home prices in some markets, many rent-to-own tenants are locked into an inflated purchase price.

And what about those who don’t buy? Thanks to the company’s aggressive eviction filings and steep late fees, some tenants walk away with worse credit and less savings than when they started. Many, like Hines-Denson, lose a substantial security deposit.

In 2019, the NAACP passed a resolution urging the federal government to better regulate “rent-to-own schemes” and educate consumers that “unfair clauses, terms, and provisions are included in these contracts in order to place the buyer in an inequitable position.”

Predatory rent-to-own agreements “negatively impact the economic growth and stabilization of African Americans,” according to the NAACP.

Growth fueled by securitization

Home Partners of America is the brainchild of Lewis Ranieri, the pioneering bond trader dubbed the father of mortgage securitization who, as the housing market went into freefall in 2009, confessed to feeling “guilty” for the havoc his creation had wrought.

Shortly afterward, Ranieri pitched the federal government on a possible solution: federal support for programs allowing foreclosed homeowners to pay rent on single-family homes that might otherwise sit empty, with an option to buy once their credit recovered.

Congress never created such a program, but in 2012, Ranieri seized the opportunity himself. With the former Goldman Sachs banker Bill Young, he launched Hyperion Partners, named after the Titan who ruled the stars in Greek mythology. Later renamed Home Partners of America, the company began gobbling up on the cheap the unwanted inventories of empty homes that banks had repossessed. Ranieri argued in a white paper that year that a well-designed rent-to-own program could benefit investors and the broader economy while creating “a once-in-a-lifetime opportunity to enfranchise a large number of Americans who might not under ordinary circumstances be able to afford homeownership.”

One of Home Partners’ first major markets was Chicago, where the company remains headquartered. But much of its business has shifted to Sun Belt cities such as Atlanta, Phoenix, and Tampa, Florida.

To fuel its rapid expansion, the company turned to a form of financing familiar to its founder; in 2016, Home Partners offered the first-ever bonds backed by monthly payments from rent-to-own tenants.

Home Partners’ first offering — $371 million in certificates backed by more than 2,000 rental properties across 17 states — earned AAA ratings from the bond-ratings companies Moody’s and Morningstar. The company has since issued 11 more transactions, most recently a 2022 issuance of $100 million worth of bonds, all of which earned AAA ratings for their top tranches.

There’s good reason those deals are attractive to investors, according to a 2021 ratings report on Home Partners’ bonds. The Home Partners spokesperson said the company offers “locked-in rents that at times are significantly below market rents.” But the ratings report, from Morningstar, says that in Home Partners’ rent-to-own properties, “contractual rents are usually higher than market rents.” The company’s tenants are unlikely to leave, according to the report, since “moving from a house may be more difficult than moving from an apartment.”

A Fast Company investigation last year into Home Partners competitor Divvy found that company also charged above-market rents — with a markup as high as 43% in some cities.

One ratings firm, Kroll Bond Ratings Agency, declined to rate Home Partners’ first transaction in 2016 and instead issued a report warning that the deals could be risky for investors due to “a possibility that these purchase options could subsequently be found to violate consumer protection and/or predatory lending laws.”

A regulatory gray area

So far, no courts or regulators have made such a determination about the Home Partners model, though a pending lawsuit in Minnesota claims that the company’s lease terms run afoul of state law. Some smaller rent-to-own companies in Michigan, Pennsylvania, and Ohio have run into legal trouble and been sued, accused of using deceptive contracts or failing to disclose the dilapidated state of the properties.

A group of former rent-to-own tenants in Minnesota are seeking class action status to sue Home Partners over alleged deceptive practices in their agreements. Minnesota State Court


The rent-to-own industry as a whole currently falls into a regulatory gray area, with fewer consumer regulations and legal protections than either standard landlord-tenant relationships or conventional mortgage lending. And unlike home sales, no public body records or tracks the “right-to-purchase” agreements signed by Home Partners tenants; the agreements even include a clause prohibiting their recording in public records. So it’s difficult to say even how widely the model is used.

According to a first-of-its-kind national survey by Pew Charitable Trusts last year, roughly one in five Americans has used a mortgage alternative at some point in their lives — including rent-to-own arrangements. The survey found that Black and Hispanic households are more likely than white ones to rely on alternative home financing.

In fact, alternative-home-financing models are deeply connected to historical inequities in the housing market — in particular, the legacy of redlining, which forced African Americans and others excluded from mortgages into predatory-lending arrangements. During the 1950s and 1960s, speculators took advantage of Black homebuyers by selling them homes “on contract,” retaining the title to the home until it had been paid for in full. That day rarely came, thanks to high interest charges and hidden fees.

Rent-to-own, a cousin of this infamous contract-sales model, has thrived amid persistent racial disparities in access to credit. Long the domain of scammers and schemers — including a Florida real-estate guru who was investigated in the mid-2000s after being accused of refusing to sell homes to people who had paid thousands of dollars under rent-to-own contracts — rent-to-own gained momentum as the credit market tightened in the wake of the financial crisis.

“Rent-to-own has this really sordid history,” said Reiss. “It’s an area of the housing market that remains underregulated. That’s part of the attraction for many operators.”

Inside a rent-to-own deal 

“Do you want to become a homeowner, but you have some obstacles standing in your way?” a Dallas-Fort Worth realtor asks in a YouTube video posted two years ago. “I have a solution for you!”

Dozens of similar videos by real-estate agents advertising the Home Partners program, some with tens of thousands of views, hint at how the company finds its customers. Home Partners has invested heavily in recruiting and training real-estate agents from the get-go, and they now generate a substantial portion of its leads, a former employee said. Most of the Home Partners tenants who spoke to Insider and the McGraw Center said they were referred by agents; others were drawn in by web searches or ads on social media.

Prospective customers apply through the company’s website. Following a recent change to the program, applicants must have a minimum credit score of 620. That’s slightly higher than the 580 minimum score, considered a “fair” credit record, required for Federal Housing Administration-backed loans — a popular choice with first-time homebuyers due to the lower credit and down-payment requirements. But Home Partners’ other eligibility criteria, related to debt-to-income ratio and past bankruptcies, are more flexible than those used by many traditional lenders and the FHA.

Once approved, tenants get a “budget” to look at for-sale homes, based on how much Home Partners believes they can afford in rent. (The company considers rent payments amounting to 40% of a tenant’s monthly income to be affordable, though the FHA considers anything above one-third to be unaffordable.)

From there, tenants go through a process that looks a lot like traditional homebuying, touring homes with real-estate agents until they find one they like.

But the agent represents Home Partners, not the tenant, and Home Partners makes the offer. Since Home Partners pays cash, the offers are often accepted quickly.

To close the deal, tenants must sign a lease to rent the home for at least a year, plus a separate “right to purchase” agreement outlining the opaque process the company uses to determine a tenant’s ultimate purchase price, which rises each year. With a home closing on the line, tenants who spoke to Insider felt pressure to sign quickly.


One of the final pages of Hines-Denson’s 50-page right-to-purchase agreement specifies how her purchase price would escalate each year. Courtesy of Erica Hines-Denson


JoAn Carrasco, a Home Partners tenant near Atlanta, said that on the day of her 2019 move-in, she arrived to find the basement flooded; soon after, she also discovered mold in the walls. She asked the real-estate agent she was working with for a copy of the home-inspection report, but she wasn’t permitted to see it. She wasn’t the buyer — Home Partners was.

Carrasco’s agent worked for the brokerage Coldwell Banker, an early partner of the rent-to-own company — a fact that its agents don’t always disclose.

While Home Partners doesn’t pay agents directly, there’s a clear financial incentive for them to steer customers who would most likely end up in renting its way. Agents can make a small commission on apartment rentals, typically a month’s rent, but sales commissions are generally higher: about 3% for the buyer’s agent. For a typical Home Partners home — valued at $410,000, according to a pool of homes securitized in 2021 — that comes out to about $12,000. So the opportunity for a quick sale from a client who wouldn’t otherwise qualify for a mortgage is attractive.

“Their turnaround time is pretty fast, so we get to flip a contract pretty quickly,” said Rick Bolivar, an agent who covers the Tampa, Sarasota, and St. Petersburg metro areas and has been referring clients to Home Partners for about two years. “From a self-serving standpoint, that’s great, because that’s the jingle in your jeans.”

The lightning-fast process doesn’t always benefit tenants. While real-estate agents often refer clients who have been turned down for a mortgage to Home Partners, some tenants said they were rushed into the program even though they may have qualified for a conventional mortgage.

The Home Partners spokesperson denied that the company’s relationships with real-estate agents conflict with tenants’ interests and said the company does not condone high-pressure sales tactics.

Kristy Lane, a Home Partners tenant outside Dallas, said that when her realtor recommended rent-to-own, she was intrigued since she hadn’t managed to save for a down payment. She later discovered that she might have qualified for down-payment assistance through a Texas state program for first-time homebuyers.

Such assistance programs vary widely by state and locality, creating a “confusing landscape” for homebuyers, said Bruce McClary, a senior vice president at the nonprofit National Foundation for Credit Counseling. He said buyers should always speak to a nonprofit housing counselor who can advise them of these options.

Lane learned more about assistance options only once she became a realtor herself. After moving into a Home Partners property in November 2019, Lane, newly pregnant with her third child, decided to study for her license. She got it just before her daughter’s birth.

Lane went on to promote Home Partners to several clients. But once the company increased its credit-score minimum to 620 — the same minimum score required to apply for down-payment assistance in Texas — Lane began to question what benefits the program actually provided.

Many applicants with that score would also qualify for FHA-backed loans, she said.

Lane also grew frustrated with what she saw as the company’s laissez-faire approach to maintenance, which she said left her with a broken air conditioner in 105-degree Texas heat at one point. Home Partners initially told her repairing it was her responsibility, she said, and so she paid out-of-pocket to have it fixed. After a week spent calling and emailing the company, it credited her account for the cost of the repair, Lane said.

In another instance, a former tenant in Pennsylvania said that after months of back-and-forth, she successfully pressed Home Partners to reimburse her $4,000 she spent replacing filthy carpeting, which her realtor had told her the company would do.

In return, Home Partners asked her to sign a release form, provided to Insider, agreeing not to disparage the company and waiving all claims related to the condition of the property. The tenant refused and soon moved out.

Shifting the burden of home repair

While landlord-tenant laws vary by state, almost all put the burden on landlords to maintain basic standards for their tenants, from providing heat, hot water, and electricity to remediating toxic exposure such as lead or black mold. When they fail to do so, many states allow tenants to withhold rent or sue for damages. Some cities also impose fines.

But Home Partners’ agreements are far less straightforward. Its leases and purchase agreements stipulate the company is leasing the property “as is” and that the “Tenant will be responsible for the maintenance needs of the Premises.” Yet the company also says it will cover repairs “as otherwise required or specified by Applicable laws.” This contradictory language leaves individual tenants like Lane without clear standing when they seek basic repairs.


A 2019 Home Partners lease shows that the home is being rented “as is,” a clause that lawsuits allege shifts responsibility for repairs onto the tenant. Home Partners lease obtained by Insider


The legality of as-is agreements has been challenged in multiple courts. In a 2020 appeals court ruling in Texas, a judge upheld the clause that Home Partners tenants rented their homes “as is” and ruled that the company wasn’t liable for a mold problem in one of its homes.

But a lawsuit pending in Minnesota state court claims this language amounts to an “elaborate” and “extralegal” effort to unlawfully shift the burden of repairs onto tenants. The suit — brought last March by three former rent-to-own tenants in Minnesota, all of whom claim they paid above-market rent for homes where the company did not perform basic repairs — seeks certification for a class action covering all Home Partners tenants in Minnesota.

One of the plaintiffs is also seeking the return of his $5,940 security deposit, which the complaint says Home Partners kept to put toward the cost of remediating water damage in the house — a problem a court filing says he did not cause and reported repeatedly to the company’s maintenance team during his tenancy. A company spokesperson said the claims in the case are “without merit.”

Home Partners filed a motion to dismiss, defending the legality of its leases and asking the judge to prevent the case “from ballooning into a needlessly complex and costly dispute” that risked invalidating some 3,000 leases in the state.

The judge denied the motion in January.

In May, three former and current Home Partners tenants in Colorado filed another proposed class action lawsuit, this one alleging that the company had improperly withheld security deposits, failed to perform necessary repairs, and wrongfully filed for eviction. One couple alleges that when Home Partners failed to repair a nonfunctioning furnace during winter, the temperature inside their home dropped to 28 degrees, forcing them to rush their infant to the hospital.

“We vehemently dispute these claims and look forward to having these matters settled in a court of law,” the company’s spokesperson said. “We always have been and always will be fully committed to promptly addressing any maintenance issues in our homes.”

As of 2021, Home Partners was the second-largest owner of single-family residences in the Twin Cities, a study by the Minneapolis Federal Reserve found.

A review of Minnesota court records by Insider and the McGraw Center revealed that, since 2018, nearly 50 additional tenants in the state have sued Home Partners or its property-management subsidiary, Pathlight Properties. In one case, a tenant’s home was declared uninhabitable by the city of Apple Valley after inspectors found it lacked running water and had sewage leaking onto the floors.

It’s not just tenants who say they are unaware of the problems lurking in their homes. A former Home Partners employee who worked on acquisitions for the company spoke to Insider on the condition of anonymity because they still work in the industry. That former employee said the pace of the company’s purchases in recent years made it difficult to review inspection reports thoroughly before putting in an offer — meaning the company itself might not know what shape some of its homes are in.

That’s what a former Home Partners tenant in Broward County, Florida, alleged when she sued the company over injuries she sustained when the ceiling of her home collapsed in 2018. Home Partners settled the lawsuit in 2021 for an undisclosed amount.

The Home Partners spokesperson said that the company does not purchase homes without thoroughly reviewing inspection reports and that it assumes all the home’s liabilities, including responsibility “for major repairs and maintenance.”

Hidden costs

Housing experts said that many problems rent-to-own tenants face trace back to Home Partners’ 50-page lease and “right to purchase” agreement — the document Hines-Denson said she had only 24 hours to review.

The Home Partners spokesperson described its agreements as “clear and transparent” and said renters receive a sample contract once they’re approved for the program and are encouraged to review it with an attorney. (Hines-Denson said she couldn’t recall receiving one and could find no record that a sample contract was sent.)

Sarah Bolling Mancini, a staff attorney with the National Consumer Law Center who reviewed a company contract for Insider, said the length and legalese of the contract contradict the company’s stated goal of helping borrowers failed by traditional lending. “It should be expected” that many people won’t fully understand it, she said.

While traditional mortgage agreements are subject to federal and state regulations that typically impose plain language disclosures and review periods, Home Partners’ are not.

Mancini, who represented low-income clients in a class-action suit against Vision Property Management, a now-defunct rent-to-own operator, looks for several common red flags in alternative home-financing contracts. Among them: Are up-front fees refundable if the tenant fails to buy? How much more will tenants have to pay for the house than what the company spent to acquire it?

Home Partners requires tenants to pay a security deposit equivalent to two months rent. Such deposits must be refunded under landlord-tenant law, except to cover unpaid rent or physical damages caused by the tenant. But Home Partners claims the right to retain the deposit for those purposes or “any other reason permitted by Applicable Law” — and requires tenants to submit to binding arbitration for any disputes over the deposit.

Tenants do not know exactly what their ultimate purchase price will be when they sign the agreement. The agreements include fixed annual purchase price increases of up to 5%. But Home Partners also passes on its closing costs and something called “make-ready costs” to the home. While tenants receive cost estimates prior to signing, tenants don’t learn the final “make-ready” costs until after closing.

In theory, the “make-ready” costs include only cleaning and renovations needed to make the home habitable, plus special requests from the tenant. But some tenants told Insider they ended up with a hefty price tag and little explanation.

One Georgia tenant requested blinds, a shower door, and the repair of a fireplace insert for a 15-year-old house she said was otherwise in “immaculate” condition. She expected the bill to come to no more than a few thousand dollars; Home Partners added nearly $17,000 to her purchase price and refused to give her an itemized breakdown.

The purchase price for a tenant often spikes in the first year, after Home Partners adds on acquisition and “make ready” costs. In this 2022 agreement, a Georgia tenant had nearly $17,000 added to her purchase price. Home Partners right-to-purchase agreement obtained by Insider


When Home Partners bought Hines-Denson’s Atlanta-area home for $270,000 in cash, she understood her purchase price would go up each year. But she acknowledges that she didn’t read the lengthy agreement to the end. The final page, she discovered later, said her purchase price would immediately jump by nearly 12%, to $302,300, once the company’s closing and acquisition costs were added on. That’s the price she’d have to pay for the home during the first year of her lease, from October 2018 through September 2019, a period during which median home-sale prices in her county rose by just 3.3%, according to data provided by Redfin, a national real-estate brokerage. That hike risked pushing her purchase price above the home’s assessed value — and lowering her chances of qualifying for a mortgage.

Hines-Denson, now 43, discovered soon after her October 2018 move-in that her elegant house was full of problems. The electrical outlets in the upstairs bedrooms didn’t work, and the downstairs ones stopped working, too. The family ended up stringing an extension cord from a working outlet in the backyard to run their indoor appliances. Hines-Denson, a nurse, said she and her husband, a truck driver, ended up spending about $3,000 to have an electrician rewire the house after a maintenance visit failed to solve the problem and further requests to Home Partners were ignored.

The couple didn’t worry too much about the cost at the time, because they still planned to buy the house. Before the first year of their lease was up, they’d already begun conversations with mortgage lenders. They were all discouraging. Hines-Denson was working on paying down student loans from her nursing degree, and the couple’s credit scores were improving. But they couldn’t qualify for a loan large enough to fund the $317,000 purchase price their agreement had jumped to in the lease’s second year.

A dream ends in eviction

Former employees familiar with the company’s underwriting process told Insider and the McGraw Center that when Home Partners determines the amount it will spend purchasing a house for a tenant, it considers only a tenant’s ability to pay monthly rent. It doesn’t assess the tenant’s ability to qualify for a mortgage at the higher prices baked into the contract.

The longer tenants take to buy, the more they have to pay — meaning tenants who need a few years to fix their credit or save for a down payment are at a significant disadvantage.

The Home Partners spokesperson denied the company fails to consider customers’ ability to get a mortgage and said the company examines customers’ debt-to-income ratio and takes steps to help tenants strengthen their credit.

After being turned down for a mortgage in year two, Denson suffered a debilitating stroke. Hines-Denson had to reduce her hours at work to care for him, and the couple’s financial stress mounted. In December 2020, they missed a rent payment.

By then, the third year of her lease, their rent had climbed to $2,110, due the first of each month, plus a 10% late fee if rent wasn’t paid by the fifth. As soon as they missed that deadline, Hines-Denson said, she was locked out of the virtual tenant portal where she made rent payments. When she contacted Pathlight, the Home Partners subsidiary, to arrange to catch up, she was told the company had already sent her case to their attorney.

Hines-Denson and her husband missed the January payment, too. She had the rent, though not enough to cover all the fees. But the company would not accept partial payment, she said. Within three weeks, Home Partners filed for eviction, seeking nearly $6,000 for two months of unpaid rent and fees, according to eviction paperwork filed in court. By the time they pulled that money together, another month’s rent, plus fees, was due.

Though they were granted a stay of eviction in February under the federal COVID moratorium, Hines-Denson said Pathlight began calling her repeatedly, suggesting that they move out. “They told me, ‘This way you don’t have to worry about anybody coming to your door and putting your things outside,'” she said. “I’m thinking about my kids at this point.”

Hines-Denson and her family moved out in mid-March 2021. A few weeks later, she was astonished to receive a call from Pathlight’s realtor asking her for photos of the home’s interior so they could re-list it. By April, another family was renting the home she and her husband had hoped to buy. In December, that family was evicted, according to Henry County court records.

Hines-Denson told Insider that Pathlight made a verbal agreement to drop the eviction suit and not pursue the unpaid rent if she moved out within 30 days. Still, the company retained her $3,900 security deposit for unspecified damages and reported the eviction to credit agencies.

Hines-Denson’s eviction case was one of more than 50 Home Partners filed in Henry County between September 2020 and June 2021, while the federal eviction moratorium was in place. As of publication, Home Partners had filed for eviction against more than half of the 430 properties it had purchased in Henry County through the end of 2021, the last year for which county sales data is available.

The Home Partners spokesperson said that the company’s policies on security deposits and attorneys’ fees follow the law, that evictions are “a last resort,” and that its eviction moratoriums “in many cases exceeded federal and local requirements.” According to the spokesperson for Blackstone, which acquired the company in 2021, “During the pandemic, Blackstone recognized that many were experiencing extreme hardship and chose not to make a single eviction for non-payment across our U.S. rental housing portfolio,” though Home Partners eviction filings resumed late last year in the counties Insider examined.

After leaving their Home Partners property, Erica Hines-Denson and her family spent three months staying with friends and family. They finally secured stable rental housing last summer, and her husband has recovered enough that they are both back at work full time.

But their plan to buy their own home is back at square one.

Hines-Denson at home with with her husband and youngest son in Hampton, Georgia Irina Rozovsky for Insider

Steep odds of success

How common is Hines-Denson’s story?

Until last year’s report from Moody’s Analytics, Home Partners had never revealed how many of its renters had become owners.

That report was authored by two former Treasury Department officials who are now advisors to Home Partners of America and its rent-to-own competitor Trio. In it, they presented data for the first time showing how many renters successfully purchased homes through each company and how many had moved out without purchasing.

In analyzing Home Partners tenants who moved in during 2020, for example, the report noted that 513 had purchased their homes by the end of 2021, while 843 moved out without buying. Moody’s calls this a “success rate” of 38% — and says this is double the success rate of tenants who entered the program prior to 2018.

But that 38% number leaves out all the tenants who were still renting after year one.

“What is the number of people who have attempted to go through this program, gotten to the end of their original term, and still haven’t exercised their option to buy?” asked Mancini, the National Consumer Law Center attorney. The companies, she said, are the only ones who know.

That opacity is especially important given that Trio has gained access to low-interest federal FHA loans, typically reserved for individuals and nonprofits, on the basis of its claimed success in turning tenants into homeowners. Trio did not respond to requests for comment.

Michael Stegman, a Home Partners advisor who coauthored the Moody’s report, spoke to Insider and the McGraw Center about the data and defended its underlying methodology.

Capturing how likely tenants are to succeed in purchasing is “not a straightforward exercise,” said Stegman, a visiting professor at Duke University’s Sanford School of Public Policy. Since tenants have up to five years to purchase, he argued, looking at those who exit the program each year, whether by buying or moving out, is the most straightforward way to measure success.

To get a better idea of the longer-term picture, Insider and the McGraw Center examined nine years worth of property-sales records in the Chicago metro area, one of the company’s first major markets.

From 2012 through 2021, Home Partners purchased 333 properties in Cook County, according to public records. By the end of 2021, the latest year for which county sales data is available, the company had sold 76 — less than a quarter — of those properties to new owners. But Home Partners filed for eviction more often — filing against tenants in 107, or nearly a third, of those homes.

To understand Home Partners’ success rate in more detail, Insider and the McGraw Center decided to find out what happened with 195 of those 333 Home Partners properties — the homes purchased before the end of 2016, where the five-year window to buy had already expired.

Home Partners had resold just 58 of those 195 homes — or 30% — by the end of 2021.

What’s more, when we canvassed those 58 properties, we learned that many of the sales were not to rent-to-own tenants.

While many homeowners were unavailable or declined to speak, at least 10 had purchased from Home Partners through conventional sales — after the original Home Partners tenants were evicted, moved out, or otherwise failed to buy.

That leaves Home Partners’ success rate in Cook County for this period no higher than 48 out of 195, or 25%.


Three former Home Partners employees, all of whom left the company within the past two years, said that the actual success rates discussed at internal meetings were far lower. “There was kind of an unwritten rule,” said one of the employees who worked directly with Home Partners customers. “The people who have the most success are the people who only need one year to buy.”

One of the conventional buyers, William Titus, paid $210,000 for a home in Elgin, Illinois, in 2018; Home Partners said the company took a loss on the property because it had been left in such bad condition. Home Partners had bought it for $320,000, and the rent-to-own tenant would have had to come up with $364,500 to buy, according to documents filed in a Home Partners’ eviction suit.

The tenant had vacated the home after its faulty heating system resulted in her treatment for carbon-monoxide poisoning, according to a court filing. Home Partners continued to pursue her for unpaid rent and late fees until the case was settled in late 2018.

Thirteen of the 58 purchasers Insider canvased confirmed they were successful rent-to-own buyers. Most had bought in their first or second years of renting. Some were new to the city and weren’t ready to commit to a neighborhood yet; others chose rent-to-own because they needed another year or two to repair their credit following a short sale or to finish paying off student loans but otherwise had solid finances.

One homeowner, Matthew Phelps, 53, successfully saved for a down payment and purchased his home in the final year of his agreement. He said Home Partners had been flexible when it came time to buy, and the program was “a good option for middle-class families.”

His experience puts him in the minority among Home Partners’ renters. In six Atlanta metro-area counties where sales data was available, Home Partners had sold just 17% of the 528 homes whose five-year purchase window had expired by the end of 2021. In Tampa, Home Partners had sold 34% of the 237 homes it purchased in that time frame. In both cities, it’s unclear how many of the purchases were by rent-to-own tenants as opposed to conventional buyers.

Tampa data shows that at least seven of the 80 sales Insider and the McGraw Center identified were to LLCs registered to separate addresses, indicating the buyer didn’t live at the property.

The track record of several other major rent-to-own operators also appears overstated. Trio cites an 85% success rate in its marketing materials. But Insider’s review of property-sales data in Atlanta, one of its largest markets, found that Trio’s success rate was no higher than 45%.

A cooling market

Some of those successful buyers likely benefited from several years of rapidly rising home prices that eclipsed their contractual increases — a hot market driven in some localities by the flood of investors like Home Partners.

Anyone trying to buy a home in Chicago in 2020 — where median home-sale prices leapt 15.1% between January 2020 and January 2021, according to real estate brokerage Redfin — would have been happy with the 5% annual increase written into Home Partners’ agreements.

When home prices are rising quickly, locking in a purchase price through a rent-to-own contract might make financial sense, Daryl Fairweather, the chief economist for Redfin, said.

But now interest rates are rising and the housing market has slowed down, including a cooling of interest by institutional investors. Fairweather said that means it’s an especially disadvantageous time for potential buyers to turn to rent-to-own. When prices are falling and rent increases are slowing down, she said, “I don’t think there’s an advantage to locking anything — you’d be better off saving that money and buying later.”

Insider recently spoke with the Georgia tenant who complained of Home Partners adding nearly $17,000 to her purchase price for improvements and repairs. That charge meant she’d have to pay nearly 13% more than Home Partners did to buy during her first year. Meanwhile, median home-sale prices in her county rose by just 2.3% over the same period.

She tried to exercise her right to purchase in December anyway, and paid to have the house appraised. The appraisal came in nearly $27,000 below the purchase price in her contract. Home Partners refused to budge on the price, she said. For now, she’ll continue renting as a regular tenant.

“Purchasing is just not a realistic option,” she said.

KKR has a stake in Insider’s parent company, Axel Springer.

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