Texas Attorney General Greg Abbott has filed a lawsuit and is seeking a restraining order and asset freeze alleging that City Mortgage Services defrauded more than 150 Hispanic homeowners in Texas.

The company and its principals, Gustavo Duarte and Alfredo Mendez, allegedly 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.

"Brazen schemes like these will not be tolerated in Texas," said 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. City Mortgage charged families between $700 and $1,000 for the service.

Many consumers indicated that City Mortgage was often late in forwarding payments to the mortgage companies, resulting in delinquency notices and late fees. In its last few months of operation, City Mortgage failed to make payments altogether, and simply shut down and kept the consumers' money, the state charged.

Many consumers did not learn about City Mortgage's failure to pay until they received notices from their mortgage companies, informing them that they had accrued considerable debts.

Consumers can reduce their mortgage debt by dealing directly with their mortgage companies. Typically, consumers can make arrangements to pay extra amounts each month that can be applied toward paying down the principal of the loan. No middlemen are necessary, and consumers do not have to pay enrollment fees like those charged by City Mortgage.

City Mortgage has no affiliation with the CitiBank or CitiMortgage units of CitiGroup.