Colo. AG, feds suing over alleged foreclosure rescue scam
DENVER (Legal Newsline) - Colorado Attorney General John Suthers and U.S. Attorney John Walsh announced a joint lawsuit on Thursday against a Georgia-based company and its principles for allegedly running a nationwide foreclosure-rescue scam.
Bella Homes allegedly preyed on homeowners that were facing foreclosure by accepting more than $3 million in fees referred to as rent, while they did little to help the homeowners avoid foreclosure, Suthers says. The alleged scam ran between March 2010 and February 2012.
Bella Homes allegedly asked homeowners to provide the company with the titles to their homes to enter into a lease agreement with Bella Homes that would allow the company to rent the houses. During this time, Bella Homes allegedly claimed that it would attempt to stop the foreclosure and purchase homeowners' mortgages.
The company allegedly said that it would help consumers avoid foreclosure, be protected under federal law from eviction during the terms of the lease agreement and be able to repurchase the home in three years for 90 percent of the fair market value while receiving credit for 60 percent of the rent paid to Bella Homes.
In addition, Bella Homes allegedly said that it would purchase or settle the mortgages of the homeowners, that the homeowners would have a mortgage payment following the repurchase that would be 40 to 60 percent lower than prior payments and that the consumers would not have foreclosures listed on their credit reports. The promises the company made were allegedly false and Bella Homes provided no meaningful assistance to homeowners to avoid foreclosure and remain in their homes.
"Foreclosure-rescue scams prey on distressed homeowners' desire to save their homes and to find any means to help fix their dire financial situations," Suthers said. "As is the case with most loan-modification and foreclosure-rescue operations, consumers who dealt with Bella Homes lost not only the thousands of dollars they paid for 'help,' but also their homes."
Suthers' office and Walsh's office received a temporary restraining order against the company on Feb. 15, barring the company and its principals from engaging in the foreclosure-rescue business and freezing the company's bank accounts. The defendants agreed to a preliminary injunction that ceased the company's further operations on Wednesday and transferred approximately $500,000 to the government to use for homeowner restitution, pending the case's final resolution.
Bella Homes allegedly accepted money from more than 450 consumers, including five in Colorado. The company's alleged actions affected consumers residing in more than two dozen states. Most of the more than $3 million the company derived from consumers was allegedly diverted to the principals of the company for personal use.