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.”
Many consumers indicated that City Mortgage was often late in forwarding payments to the corresponding mortgage companies, resulting in delinquency notices and late fees, the office reported. In its last few months of operation, City Mortgage failed to make payments altogether, and simply shut down and kept the consumers’ money, the office alleges, and 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, the office also has charged.
The office advises that consumers can make arrangements to pay extra amounts each month that can be applied toward paying down the principal of the loan, and that no middlemen are necessary and consumers do not have to pay enrollment fees like those charged by City Mortgage. Consumers who believe they have been victimized by City Mortgage or similar operations should contact the Office of the Attorney General at (800) 252-8011. Assistance is available in both English and Spanish.
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