The following press release the Minnesota Attorney General, Lori Swanson, announced the filing of six new lawsuits in Hennepin County District Court against foreclosure consulting companies that charged Minnesota homeowners up to $2,375 to save their homes but failed to provide promised assistance that would help them retain home ownership.

“We do not tolerate mortgage foreclosure consultants taking advantage of struggling homeowners who are already between a rock and a hard place in the worsening mortgage meltdown,” Swanson said.

The lawsuits filed today are against: (1) National Foreclosure Relief, Inc., a Nevada corporation with a California business address; (2) Lewis Loss Mitigation, Inc. of Alabama, which also does business as Stop Foreclosure Center and Lewis and Associates Consulting; (3) D.R. Financial Services Corp. of California, which also does business as D.R. Financial and Superior Home Loans; (4) American Foreclosure Specialists, LLC, an Oklahoma limited liability company; (5) Mortgage Default Assistance, LLC, a Florida limited liability company; and (6) Home Assure, LLC, a Florida limited liability company that claims it has offices in the Empire State Building.

The suits allege that these companies used websites, targeted mailings, and/or the telephone to solicit homeowners by assuring that the companies could stop the foreclosure process. Consumers who contacted these companies were charged an immediate fee before any services were performed, in violation of Minnesota law. Homeowners have complained that these companies failed to deliver on promises of assistance after collecting these up-front fees.

The suits allege that these companies violated a 2004 Minnesota law barring “foreclosure consultants” from charging any compensation until after the foreclosure consultant has “fully performed each and every service the foreclosure consultant contracted to perform or represented he or she would perform.” The law also requires entities that charge borrowers fees to assist in stopping, avoiding, or postponing a foreclosure, to have a written contract containing certain safeguards. All six lawsuits seek injunctive relief, restitution, civil penalties, and attorneys fees.

The Minnesota Attorney General’s Office has published a consumer guide, entitled “Facing Mortgage Foreclosure,” which offers tips for borrowers facing mortgage default or foreclosure, and warns homeowners to be on the lookout for potential scams. Among other things, Swanson provides the following guidance to homeowners facing default:

• Take immediate action to contact the lender if you are having trouble paying a loan. The lender may be willing to work out a repayment plan, loan modification, forbearance, reinstatement, etc. Don’t wait to contact the lender, as delays may jeopardize your options.
• Contact a reputable mortgage counselor. Borrowers may find legitimate counselors by contacting the Minnesota Housing Finance Agency (“MHFA”) or the U.S. Department of Housing and Urban Development (“HUD”).
• Don’t agree to pay money in advance to a “foreclosure consultant.” Minnesota law bans foreclosure consultants from collecting a fee until after they deliver their services.

In December of 2007, Attorney General Swanson filed lawsuits against Foreclosure Assistance Solutions, LLC and American Housing Authority, Inc./American Housing Financial, Inc. over similar allegations. Prior to her inauguration, Swanson created a predatory lending study group that proposed legislation to reform predatory lending practices such as loans made without regard to a borrower’s ability to repay the loan and issuing adjustable rate mortgages without verifying that the borrower can pay not just the initial teaser rate, but also the fully amortized rate after the teaser period expires. The recommendations of the study group became law in 2007. Swanson has advocated for similar regulation at the federal level, testifying before the United States House of Representatives Financial Services Committee and the Board of Governors of the Federal Reserve System.

Homeowners who feel they have been taken advantage of by a mortgage foreclosure consultant who did not provide promised services for which the homeowner paid money may file a complaint with the Attorney General’s Office by calling 1-800-657-3787 or 651-296-3353. Consumers also may download a Consumer Complaint Form from the Attorney General’s website by clicking here and returning the completed form to: 1400 Bremer Tower, 445 Minnesota Street, St. Paul, MN 55101-2131.

In the following press release the FBI in Cincinnati, Ohio announced that Randall L. Webb, age 50, of Springboro pleaded guilty in United States District Court here today to mail fraud for soliciting homeowners who were in danger of losing their homes through foreclosure, and falsely promising them he could provide affordable solutions and assistance to enable the homeowners to keep their homes and not put them in a more difficult position.

Gregory G. Lockhart, United States Attorney for the Southern District of Ohio; Habbo G. Fokkena, United States Trustee, Region 9, (Ohio/Michigan); Keith L. Bennett, Special Agent in Charge, Federal Bureau of Investigation, Cincinnati Field Division; and Gerald A. O’Farrell, Assistant Inspector In Charge, U.S. Postal Inspection Service, announced the plea entered today before Senior United States District Judge Walter Herbert Rice.

Judge Rice set Webb’s sentencing for February 4, 2008, at 11 a.m. Mail fraud carries a maximum possible sentence of 20 years imprisonment, although the advisory sentencing guidelines issued by the U.S. Sentencing Commission, which the Court must consider at the time of sentencing, are expected to call for a lower sentence. Webb also agreed to make full restitution to victims. At the time of the plea agreement, the loss was estimated at $5,000.

According to a statement of facts filed with the plea agreement, Webb sent flyers under the name “American Foreclosure Group LLC” to homeowners in the Dayton and Cincinnati areas offering to help them save their homes from foreclosures and sheriff’s sales. Webb met with homeowners who responded to his ads and promised to help them save their homes in exchange for a fee of between $600 and $700 that he collected up front. Webb instructed the homeowners not to contact their mortgage companies, and that he would instead contact and negotiate with the mortgage companies on behalf of the homeowners. Upon payment of Webb’s fee by the homeowners, he would typically cause to be prepared and filed a bankruptcy petition on behalf of the homeowners, sometimes without the knowledge or consent of the homeowners, and without taking other substantial measures to prevent foreclosures or otherwise assisting the homeowners avoid foreclosure. Webb promised at least one homeowner that he would seek to create new payment plans with the homeowner’s mortgage company and make mortgage and arrearage payments on the owner’s home loan with money provided to him. Webb failed to forward the funds to the mortgage company.

“Scams like this prey on people when they are most vulnerable,” Lockhart said. “Homeowners facing these dire straits are urged to consult with an attorney experienced in bankruptcy and foreclosure matters.”

The U.S. Trustee Program maintains an Internet hotline for reporting suspected fraud involving bankruptcy. Members of the public can report suspected bankruptcy fraud via email to USTP.Bankruptcy.Fraud@usdoj.gov. The U.S. Trustee Program is the Department of Justice component that promotes and protects the integrity of the bankruptcy system.

Lockhart commended the cooperative investigation by agents of the FBI and Postal Inspectors, as well as Special Assistant U.S. Attorney Dean P. Wyman from the U.S. Trustee’s Office, who assisted with the prosecution of the case.

Resources:
Press Release

In the following press release Maryland Attorney General Douglas F. Gansler announced that the Consumer Protection Division has filed a complaint in Baltimore City Circuit Court against a group of individuals and companies alleging they violated numerous laws in the course of providing services to homeowners who were facing foreclosure.

The complaint names Michael K. Lewis, Earnest Lewis, Cheryl Lynn Brooke, Winston Thomas, and two companies, In the House Technologies based in Upper Marlboro and Cornerstone Title & Escrow based in Laurel. The Division alleges that the defendants market their services to homeowners who are facing foreclosure or are in foreclosure, falsely promising that they can help save the consumers’ homes. Instead of helping homeowners retain title to their homes, the defendants attempt to take title and then strip the equity out of the properties by charging the homeowners numerous undisclosed fees.

After the defendants purportedly take the title to the homes, they charge the homeowners rents that are substantially higher than their previous mortgage payments. As a result, the homeowners find it exceedingly difficult to rebuild their credit and save amounts sufficient to retain their homes. The scheme results in homeowners losing both their homes and the vast majority of equity they had accumulated.

The complaint seeks to stop the defendants’ unlawful practices and impose fines for violations of the Protection of Homeowners in Foreclosure Act and the Consumer Protection Act. It also was filed to ensure that the original homeowners retain title to their homes and to provide restitution for homeowners who were harmed by the defendants’ actions.

Resources:
Press Release

In the following press release Texas Attorney General Greg Abbott (pictured left) today obtained a temporary restraining order and asset freeze against an unlawful Texas-based foreclosure rescue operation targeting struggling homeowners in the state and across the country.

According to court documents, Southern Residential, LLC, and its director and manager, Edward Casey, fraudulently advertised that the company could save homeowners from imminent foreclosure. The enforcement action also names affiliated defendants National Homeowners Assistance, Stephanie Casey, Matthew Casey and Linda McCann. Under the temporary restraining order, the defendants must stop falsely soliciting distressed homeowners immediately. Although the order only applies in Texas, homeowners nationwide are protected by the asset freeze.

“At a time when regulators, policy makers and stakeholders are working to help struggling homeowners, a few unscrupulous operators are scheming to profiteer at homeowners’ expense,” Attorney General Abbott said. “These defendants charged large fees and failed to deliver on their false promises. This court order shuts down an unlawful scheme to defraud Texas homeowners.”

Attorney General Abbott added: “Homeowners facing difficulty making their monthly mortgage payments should be wary of mortgage rescue scams. Schemes offering too-good-to-be-true solutions are usually just that. Texans who fall behind on their payments should contact their lender directly to work out a resolution.”

According to the attorney general’s enforcement action, homeowners who were delinquent on mortgage payments responded to the defendants’ television and newspapers advertisements. The defendants also advertised online through various Web sites, including House911.com and Stop911.com. The company’s so-called “stop foreclosure specialists” boasted that their established relationships with mortgage lenders and banks nationwide could stop the foreclosure process. The defendants also told homeowners that they would only accept clients whom they could help.

Homeowners who contacted Southern Residential and its affiliates were pressured to sign contracts and pay fees of up to $2,000 immediately. Under the contract, Southern Residential strictly prohibited homeowners from contacting their mortgage lenders. After homeowners paid the fees, many never heard back from the defendants’ representatives.

Others complained that Southern Residential’s “renegotiations” with lenders required immediate, upfront balloon payments totaling tens of thousands of dollars. Despite the defendants’ promises, many homeowners lost their homes to foreclosure or went into bankruptcy.

The attorney general’s legal action prohibits the defendants from making false representations to homeowners and deceiving potential clients about the services they provide. The state estimates that Southern Residential receives between $100,000 and $150,000 per month in fees paid by homeowners facing foreclosure. To protect funds already paid by homeowners, the court froze a trust fund and several bank accounts that belong to the defendants.

The Attorney General seeks court-ordered restitution for homeowners who were harmed by the defendants’ acts, as well as civil penalties of up to $20,000 per violation of the Texas Deceptive Trade Practices Act. Additionally, the Attorney General requests up to $5,000 per violation for the defendants’ failure to register their business as one that conducts telephone solicitations.

Attorney General Abbott reminded the company’s customers that they should not wait for Southern Residential to contact them about the status of their mortgages. Homeowners need to call their lenders immediately and ask what preventative measures, if any, the defendants have taken on their behalf.

The Office of the Attorney General is engaged in a variety of efforts to protect Texas homeowners. Last week, Attorney General Abbott secured a temporary injunction against Foreclosure Assistance Solutions, a Florida-based “foreclosure rescue” scheme that targeted Texans who fell behind on their mortgage payments.

In September, Attorney General Abbott launched the Texas Residential Mortgage Fraud Task Force, a partnership that involves key state regulatory agencies to take a proactive stance towards tracking and prosecuting mortgage fraud.

This month, Attorney General Abbott urged three of the largest mortgage lenders and servicing companies doing business in Texas to take steps to address the high foreclosure rates in the state. In meetings with EMC Mortgage, Countrywide Mortgage and Litton Loan Servicing, he outlined five measures that the companies should implement to restore borrowers’ financial stability, including stepping-up efforts to convert adjustable rate mortgages to fixed-interest loans; subjecting more delinquent loans to mitigation first rather than immediately submitting them to an antagonistic collections process; improving communication and outreach with consumers; waiving penalties and fees while companies work with troubled homeowners; and promptly addressing complaints filed against them with the Office of the Attorney General.

Earlier this year, Attorney General Abbott secured $21 million in restitution for Texas homeowners who were harmed by lending giant Ameriquest Mortgage Co. That case resolved allegations that the company and its affiliates did not clearly disclose certain terms to homeowners, including unpredictable adjustable rates.

Homeowners who believe they have been harmed by this or similar fraudulent businesses may call the Office of the Attorney General’s toll-free complaint line at (800) 252-8011 or file a complaint online at www.oag.state.tx.us .

Resources:
Press Release
Attorney General’s lawsuit against Southern Residential
Temporary restraining order against Southern Residential
Southern Residential TV Commercial

In the following press release The Texas Attorney General, Greg Abbott announced that the 408th District Court has issued a temporary injunction against a Florida-based “foreclosure rescue” scheme. Under the court order sought by Texas Attorney General Greg Abbott, Foreclosure Assistance Solutions, LLC of Florida, and its principal operators, Herb Zerden and Adolfo Quintero, as well as J.W.W. Services, Inc. of California and owner John Woodruff, are prohibited from targeting and deceiving Texans who fall behind on their mortgage payments.

Last September, the Attorney General obtained an emergency restraining order and froze assets belonging to Foreclosure Assistance Solutions and its various operators. The temporary injunction issued this week extends the initial order, securing approximately $750,000 in fees that the defendants charged more than 700 Texans who paid for its services. The monies will remain frozen pending further orders from the court.

“This court ruling prohibits these unscrupulous ‘services’ from unlawfully preying on struggling homeowners,” Attorney General Abbott said. “Texans who fall behind on their mortgage payments should be very wary of anyone promising to save their homes for a large fee. We will remain vigilant and will take aggressive enforcement action to protect Texas consumers.”

According to the Attorney General’s enforcement action, the defendants mailed cards and letters to homeowners who were facing foreclosure because of delinquent mortgage payments. The defendants’ promotional materials boasted established relationships with mortgage companies and banks nationwide. These purported relationships, Foreclosure Assistance Solutions claimed, would enable it to persuade lenders to refrain from foreclosing on its customers.

Homeowners who responded to Foreclosure Assistance Solutions were pressured to immediately sign a $1,200 contract. Once Foreclosure Assistance Solutions received its fee, company representatives rarely interacted with clients. When homeowners repeatedly called the company seeking information or action, they were ignored. Because the terms of the company’s customer contract strictly prohibited homeowners from directly contacting their mortgage companies, Foreclose Assistance Solutions’ inaction worsened the situation for many homeowners.

The temporary injunction prohibits the defendants from continuing to target and mislead troubled Texas homeowners.

The court’s order also requires that Foreclosure Assistance Solutions disclose important account information to its Texas customers. Specifically, the defendants must provide each of its customers with a written statement describing every contact the company’s representatives had with the customer’s mortgage company. The disclosure statement must include the specific dates of contact, the mortgage company representative with whom they spoke, and the results of the contact. If Foreclosure Assistance Solutions representatives learn they cannot prevent a home from going into foreclosure, the company is obligated to notify the home owner within 48 hours. Foreclosure Assistance Solutions must also provide refunds to any of its existing customers it is unable to help.

The Attorney General reminded the company’s customers that they should not wait for Foreclosure Assistance Solutions to contact them about the status of their mortgage. Homeowners need to call their lenders immediately and ask what preventative measures, if any, the defendants have taken on their behalf.

The pending legal action seeks court-ordered restitution for homeowners who were harmed by the defendant as well as civil penalties of up to $20,000 per violation of the Texas Deceptive Trade Practices Act. Additionally, the Attorney General has requested up to $5,000 per violation for failure to register as a business that conducts telephone solicitations.

The Office of the Attorney General is engaged in a variety of efforts to protect Texas homeowners. Last month, Attorney General Abbott launched the Texas Residential Mortgage Fraud Task Force, a partnership that involves key state regulatory agencies to take a proactive stance towards tracking and prosecuting mortgage fraud.

This month, Attorney General Abbott urged three of the largest mortgage lenders and servicing companies doing business in Texas to take steps to address the high rate of foreclosures in the state. In meetings with EMC Mortgage, Countrywide Mortgage and Litton Loan Servicing, he outlined five measures that the companies should implement to restore borrowers’ financial stability, including stepping-up efforts to convert adjustable rate mortgages to fixed-interest loans; subjecting more delinquent loans to mitigation first rather than immediately submitting them to an antagonistic collections process; improving communication and outreach with consumers; waiving penalties and fees while companies work with troubled homeowners; and promptly addressing complaints filed against them with the Office of the Attorney General.

Earlier this year, Attorney General Abbott secured $21 million in restitution for Texas homeowners who were harmed by lending giant Ameriquest Mortgage Co. That case resolved allegations that the company and its affiliates did not clearly disclose certain terms to homeowners, including unpredictable adjustable rates.

Homeowners who believe they have been harmed by this or similar fraudulent businesses may call the Office of the Attorney General’s toll-free complaint line at (800) 252-8011 or file a complaint online at www.oag.state.tx.us .

Resources:
Press Release
Attorney General’s lawsuit against Foreclosure Assistance Solutions
Temporary restraining order against Foreclosure Assistance Solutions
Temporary injunction against Foreclosure Assistance Solutions
Brochure: Avoid Home Buying Scams
Video of Foreclosure Assistance Solutions website
Sample Mailer

The new act was initiated by Madigan in 2006 and became law in January 2007. It prohibits mortgage rescue companies from requiring payment from consumers prior to completing all the terms of a rescue contract. It also requires rescue businesses to fully disclose to a homeowner the exact terms and nature of the proposed rescue services and their rights to cancel the contract.

Madigan’s suit alleges that Florida-based Mortgage Assistance Solutions, LLC, and its managing member Michael Thomas Stoller, of Beverly Hills , California , defrauded desperate Illinois homeowners who enrolled in its “Fresh Start” program by falsely promising to negotiate with the homeowners’ lenders to reduce their mortgage payments or save their homes from foreclosure. The company requires an upfront enrollment fee but, in the end, provides homeowners with little or no help.

“The last thing financially-pinched consumers on the verge of losing their homes need are so-called ‘rescue’ firms that do little more than separate homeowners from their money,” said Attorney General Madigan. “We worked hard to draft this new law to protect homeowners from unscrupulous businesses engaged in mortgage rescue fraud.”

Madigan’s complaint describes how the defendants, in some cases, solicit homeowners by taking advantage of their fear of losing their homes with postcards that read, “YOU WILL LOSE YOUR HOME IF YOU DON’T CALL NOW!!!!” When contacted by potential customers, Mortgage Assistance Solutions refuses to discuss the specific programs available until they receive a $1,200 payment from the homeowners.

Allegedly, the defendants claim they can obtain a better deal from lenders than the homeowners can obtain on their own. Once homeowners make this payment and execute a “Fresh Start” mortgage service agreement, the company generally fails to contact the homeowners’ lenders to work out forbearance agreements in a timely fashion, leaving the homeowners in worse financial shape than before.

In addition to violating the Mortgage Rescue Fraud Act’s provision that businesses cannot charge consumers before completing all of the terms of a rescue contract, the complaint alleges that the company is violating other provisions of the act by failing to provide homeowners with (1) full disclosure of the exact terms and nature of the proposed rescue services and (2) notice of their right to cancel the contract. The lawsuit also alleges that the defendants violate the Consumer Fraud and Deceptive Business Practices Act by misrepresenting that they can save homeowners’ homes from foreclosure when, in fact, Mortgage Assistance Solutions generally fails to follow through and work out forbearance agreements with mortgage lenders.

The Attorney General is asking the court to order restitution for the defrauded homeowners and to order the defendants to stop all deceptive business practices. The suit also seeks a civil penalty of $50,000 and additional penalties of $50,000 for each violation found to have been committed with the intent to defraud.

With tens of thousands of Illinoisans poised to lose their homes in the collapse of the subprime mortgage industry, Attorney General Madigan has worked aggressively on several fronts to protect consumers from the devastating results caused by predatory lending and other forms of mortgage fraud. Madigan’s office has sued seven mortgage rescue companies to stop deceptive practices and successfully participated in three multi-state settlements against major subprime lenders Household Finance, Ameriquest and First Alliance Mortgage Company. To date, she has obtained more than $600 million in enforcement actions against these lenders.

Madigan played a principal role in working to pass the High Risk Home Loan Act of 2003 and drafting the Mortgage Rescue Fraud Act of 2006. Earlier this year, she announced a comprehensive strategy to address the looming home foreclosure crisis in Illinois . As part of this strategy, the Attorney General initiated new legislation, Senate Bill 1167, to enhance homeowners’ foreclosure rights and tighten controls on brokers and lenders. Earlier this summer, the general Assembly passed SB 1167, and it is currently awaiting action by the Governor. Also, in July, Madigan’s office hosted a statewide home ownership preservation summit bringing together more than 100 participants from the mortgage lending industry, consumer advocacy groups, and government agencies to identify problems and look for solutions to mortgage foreclosures.

Madigan urged Illinois homeowners who are unable to make their mortgage payments to contact their lenders as soon as possible to work out a plan to avoid foreclosure. With the rise in foreclosures nationwide, many lenders have set up special units to assist borrowers in trouble. Madigan warned that the longer consumers delay, the greater the chance of losing their homes to foreclosure.

In addition, Madigan’s office has compiled the guide, “Predatory Home Loans: A Guide to Prevention and Rescue Resources.” With editions tailored for the Chicago area and Downstate Illinois, the guide lists many of the HUD-approved counseling agencies in the state. Homeowners can obtain a copy of these free guides by visiting the Attorney General’s Web site at www.illinoisattorneygeneral.gov or by calling the Consumer Fraud Hotline at 1-800-386-5438 (TTY 1-800-964-3013). Using the information in this guide, homeowners should seek out one-on-one assistance to help them save their homes.

In the following press release Massachusetts Attorney General Martha Coakley has filed a proposed settlement with the U.S. Bankruptcy Court in Boston with five mortgage lenders that funded loans which facilitated fraudulent foreclosure rescue transactions orchestrated by Brockton attorney Alec Sohmer. The Attorney General, together with the Chapter 7 trustee in Sohmer’s bankruptcy case, have requested bankruptcy court approval of the settlement, which impacts 26 residential properties that are part of Sohmer’s bankruptcy case. On Monday, the Attorney General filed a Motion to Amend the Complaint to add the closing attorney who conducted the transactions, another attorney who referred distressed homeowners to Sohmer in exchange for a fee, and a mortgage broker who arranged financing for many of the deals.

“These fraudulent foreclosure rescue transactions never would have occurred without the participation of mortgage lenders and closing attorneys that represented mortgage lenders,” said Attorney General Martha Coakley. “This settlement is designed to return homeowners to their financial position before Sohmer arranged foreclosure rescue transactions that stripped their home equity and required payment of Sohmer’s fees and high settlement costs.”

Four professionals were named in Monday’s Motion to Amend the Complaint, whose participation was essential to the continuation of Sohmer’s scheme:

• Andrew Palmer , a Norwell attorney who closed all the transactions, drafted false Housing and Urban Development Settlement Statements depicting false information about the transactions, and collected attorneys fees and title/closing insurance commissions for each closing.
• Shaun Ellis, of Sagamore, is a Sandwich-based attorney who referred clients to Sohmer and accepted referral fees and/or other benefits from Sohmer for the referral of clients who ended up victimized by Sohmer transactions.
• Edward de la Flor , of Londonderry, New Hampshire, is the primary mortgage broker.
• Carteret Mortgage Corporation, based in Centerville, Virginia, with offices in Boston and Charlestown, is the mortgage broker/originator and de la Flor’s employer. The corporation originated and brokered many of the loans involved in the Sohmer transactions. Both Carteret and de la Flor profited from the transactions by collecting closing points, commissions, yield spread premiums, sales bonuses and other fees.

Under the terms of the proposed lender settlement, filed late last week, the lenders will pay restitution to the homeowners victimized by Sohmer’s fraudulent scheme by reducing the outstanding mortgage liens on the homeowner’s properties. As a result of these transactions, 26 homeowners transferred title of their homes to Sohmer. Under the terms of the agreement, the original homeowners can reclaim their property by paying a reduced mortgage obligation instead of the inflated mortgage loan arranged by Sohmer. In total, across 26 properties, the settlement would provide approximately $1 million in reduced mortgage obligations.

The lenders agreeing to the settlement to date are: First Horizon Home Loans; Option One Mortgage Corp.; Wells Fargo Bank, N.A.; America Brokers Conduit; and Ocwen Loan Servicing, LLC. Additional lenders may participate in advance of an October 15th hearing before the Bankruptcy Court.

Assistant Attorneys General Christopher Barry-Smith and Jacqueline Welch of Attorney General Martha Coakley’s Consumer Protection Division are handling this matter with the assistance of Liam Lowney and Ashley Cinelli of the Victim Services Division, financial investigator Christine Murphy, and paralegal Yolanda Kruczkowski.

Resources:
Press Release

In the following press release North Carolina Attorney General Roy Cooper today announced the end to a scheme by a Charlotte company that promised to buy homes from people who needed to sell quickly but instead left them vulnerable to foreclosure.

“This scam hurt both homeowners and people who hoped to become homeowners,” said Cooper. “We’ve put a stop to their phony ‘We Buy Homes’ promises so no more consumers will be caught up in this scheme.”

Under a consent judgment approved today by Wake County Superior Court Judge Kenneth Titus, Cooper has put a stop to a scheme by Charlotte Home Solutions and its manager William Keaton that purported to buy homes and then resell them to buyers with poor credit. Keaton is barred from operating this “We Buy Homes” scam and must pay the state $100,000 if he fails to comply with today’s judgment. Cooper previously won a consent judgment against Keaton’s partner Steven Huff in May. Huff is barred from operating a similar scheme and must pay the state $50,000 if he does not live up to the terms of the judgment.

As alleged in Cooper’s complaint, Keaton along with Huff and David McBride began doing business as Charlotte Home Solutions in September 2002. Keaton and his partners advertised their business through signs, mass mailings to targeted neighborhoods and a website that promised to buy consumers’ homes. However, rather than purchasing houses outright, Charlotte Home Solutions convinced homeowners to sign title to their homes to a trust controlled by the partners. Because Charlotte Home Solutions didn’t assume the mortgage on the property, the original homeowner unknowingly remained responsible for mortgage payments on the house.

Cooper contends that Charlotte Home Solutions then advertised these homes for sale to consumers with bad credit, offering them an option contract to rent a home until they could qualify for financing. Purchasers had to pay a substantial deposit that was non-refundable in addition to monthly rent payments. However, many of these tenants were never able to get a loan to buy a home. Despite the fact that Charlotte Home Solutions collected rent money, they failed to make mortgage, tax and homeowner’s association payments on the homes, leading in some cases to foreclosure proceedings against the original owners. When the homes were foreclosed on, the tenants were also forced to leave and lost their deposit and their option to purchase a home.

The North Carolina Real Estate Commission also joined in the complaint and consent judgment against Keaton, who was practicing real estate without being properly licensed. Legislation backed by Cooper that is currently pending in the North Carolina General Assembly would put controls on similar “We Buy Homes” operations to help protect homeowners and homebuyers from falling prey to these types of schemes.

“People who are trying to sell their home or who are looking to put a roof over their family’s head need protection from these kinds of unfair schemes,” said Cooper.

Pictures of Keaton, Huff and “the staff” of Charlotte Home Solutions can be seen in the attached Matthews County Chamber of Commerce Newsletter that was issued in August 2005.

Resources:
Press Release