Youve seen the ads promising well 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. Weve put a stop to their phony We Buy Homes promises so no more consumers will be caught up in this scheme.
As alleged in Coopers 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 didnt 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 homeowners 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.