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North Carolina Shutters “We Buy Homes” Scheme

By Mark Huffman
ConsumerAffairs.com

July 13, 2007

Foreclosure • Buying a Home in Foreclosure: What You Need to Know • Mortgage Crisis? Act Now to Avoid Foreclosure • Foreclosure Not Inevitable, Fast Action Needed • Avoiding Foreclosure Takes More Than Hope --- News • One-Third Of Recent Home Buyers "Underwater" • Worst Foreclosure Activity Limited To Four States • Fighting Foreclosure: One Family's Story • Mortgage Group To Step Up Homeowner Aid • Florida Governor Signs Foreclosure Rescue Law • California Busts 'Land Grant' Foreclosure Scam Artists • Foreclosure Filings Up a Record 65% in April • White House Threatens To Veto Anti-Foreclosure Bill • Fed Chief Seeks Greater Effort To Stem Foreclosures • Realtors Frustrated by Banks' Lack of Interest In Short Sales • Bank Of America Tries To Stem Rising Foreclosures • Foreclosure Efforts Lacking, States Find • California Foreclosures Surge 327% • March Foreclosures Up 57% • Homeowners Raiding Retirement Accounts to Avoid Foreclosure • 'House Stealing' Scam Combines Identity Theft, Mortgage Fraud • Foreclosure Filings Up 57 Percent In February • Senate Will Try To Override Veto Of Foreclosure Bill • Foreclosures Up In Most Urban Metros Last Year • ACORN, Countrywide Tweak Subprime Relief Plan • Foreclosure Prevention Efforts Falling Flat • States Fight Foreclosure Rescue Scams • Mayors Warn Homes Could Lose $1.2 Trillion In Value • Foreclosures Spike in More Metro Areas • Searching For Foreclosure Bargains Can Be Costly • September Foreclosures Double Year-Ago Levels • August Foreclosures Up 115% Over Last Year • Foreclosures Continue at Record Levels • Feds Urge Lenders To Help Stave Off Foreclosures • Foreclosures Surge 93 Percent In One Year • New Jersey Man Cited For Exploiting Foreclosure Victims • North Carolina Shutters “We Buy Homes” Scheme • Predatory Lending Bill Back in Congress • Groups Seek To Roll Back Foreclosures • Seniors Bear Brunt Of Predatory Lending • U.S. Foreclosure Rate Surges 47 Percent • Regulators Urge Mortgage Lenders to be Flexible with Homeowners • California Foreclosure Notices at 10-Year High • Bankruptcy Laws Contributing to Foreclosure Epidemic • Realtors: Home Prices May Dip This Year • Civil Rights Groups Want Foreclosure Moratorium

You’ve seen the ads promising “we’ll buy your house – for cash!” In North Carolina, state officials say one such company making that promise to homeowners was nothing more than a scam.

A North Carolina court has ordered Charlotte Home Solutions to stop its operation that purported to buy homes and then resell them to buyers with poor credit.

Attorney General Roy Cooper said the company 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.”

As alleged in Cooper’s complaint, three local businessmen began doing business as Charlotte Home Solutions in September 2002. The 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 one of the partners, William Keaton, who was allegedly 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.

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