Friday, December 10, 2004

Real estate scam hits Texas

150 homeowners allegedly defrauded of mortgage payments

The Texas Attorney General's Office is seeking a restraining order and asset freeze against a company that has allegedly defrauded more than 150 homeowners by keeping their mortgage payments.

Consumers in the Dallas-Fort Worth and Houston areas reported to the Office of the Attorney General that City Mortgage Services Inc. (which has no affiliation to CitiBank or CitiMortgage) and its principals, Gustavo Duarte and Alfredo Mendez, pocketed thousands of dollars that should have been forwarded to the mortgage companies financing the consumers' homes.

The company, which had offices in Dallas, Houston and Austin, shut down abruptly earlier this year, leaving consumers owing their mortgage companies substantial amounts of money in missed payments and late fees, the office announced.

"Brazen schemes like these will not be tolerated in Texas," said Attorney General Abbott. "City Mortgage systematically victimized these Hispanic families by exploiting their dreams of home ownership. I am committed to ensuring this scam doesn't hurt any more Texas consumers."

According to the lawsuit, City Mortgage dispatched teams of door-to-door salespersons throughout Hispanic neighborhoods, touting the company's "debt-reduction service." Sales pitches and promotional materials promised consumers City Mortgage would save them thousands of dollars by withdrawing and forwarding to their mortgage company a larger monthly amount than their regular mortgage payment, thus reducing the number of years it took to pay off the loan, the office announced. City Mortgage charged families between $700 and $1,000 for the service.

The lawsuit alleges, "The home solicitation presentation of defendants included a promise to lower the consumers' mortgage payments and shorten the term of their mortgage loan by making bi-weekly payments instead of monthly and making increased payment amounts. In many cases, the defendants represented to consumers that the mortgage repayment plan defendants were proposing was a city of Dallas plan and/or approved/sanctioned by the city of Dallas."



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