Attorney General Lockyer Cautions Homeowners to Check Quick-Sale Promises to Protect Credit
Complaint filed against Federal Housing Relief Inc. for alleged consumer fraud.
(Los Angeles) - Attorney General Bill Lockyer today filed a lawsuit against Federal Housing Relief Inc. in Los Angeles County for a home buying operation that allegedly bilked California homeowners out of hundreds of thousands of dollars.
The lawsuit seeks an injunction against Federal Housing Relief Inc., and $1 million in civil penalties and restitution for consumers who sold their residential real property through the Los Angeles purchasing operation. The lawsuit filed in Los Angeles County Superior Court also names the company's president, Joel Ruiz, and vice president, George Oliver.
"Homeowners should be wary of companies that promise to 'save your credit' through hastily arranged purchase agreements," Lockyer said. "Emerging home-buying scams are preying on homewoners in financial distress. These questionable operations can lead to homeowners having their credit hurt, rather than saved."
According to the lawsuit, Federal Housing Relief Inc. offered through advertising in the PennySaver, billboards and direct mailings to homeowners to purchase unwanted property and encouraged homeowners to contact them to "save your credit." State investigators found that when homeowners responded to the promotional materials Federal Housing Relief convinced the homeowners, who are usually in financial distress, to sign agreements in which they sold their property to Federal Housing Relief for only $1. In some instances, the homeowner's property was acquired for use by tenants who paid rent but not the mortgage payments.
In bringing the action, the Attorney General cautioned that homeowners simply cannot walk away from their financial obligations to their lenders as easily as these home-buying scams lead them to believe. Homeowners should be aware that their credit rating could be jeopardized if they sell their homes without first making sure their lenders will allow the new buyer to assume responsibility for the mortgage payments. Homeowners also should be certain that any financing arrangements by the new buyer will completely pay off the homeowner's loan.
In the Los Angeles case, Federal Housing Relief and its officers allegedly misrepresented:
1. That when consumers sell their homes to Federal Housing Relief, it takes responsibility for their loans or finds new buyers to take responsibility for their loans, when in fact the homeowner consumer is still liable on the loans;
2. That homeowners who contact them regarding their unwanted property can "save" their credit, when in fact such is not true;
3. That they will buy unwanted property for the reasonable value of the property, when in fact such is not true since defendants pay only one dollar to homeowners who deed their property to them;
4. that Federal Housing Relief is a government agency or is in some way affiliated with the government, when in fact such is not true.
The complaint also alleges that defendants falsely state in their contracts that homeowners who deed their properties to them will receive a certain monetary payment from the sale of their property, in an amount such as ten thousand dollars, when in fact such is not true.
Additionally, the complaint alleges that the company:
1. violated the Equity Purchaser's Act in that their contracts fail to provide homeowners the required notices of cancellation, defendants take unconscionable advantage of homeowners in foreclosure by misrepresenting to them the amount of proceeds they will receive from the sale of their property, and defendants charge homeowners unreasonably high fees if they do not leave their residences when required under the contract to leave;
2. violated the Credit Services Act by advertising their services as a credit services organization without being registered with the Department of Justice and without first having obtained a surety bond in the principal amount of one hundred thousand dollars.