Arizona Foreclosure Rescue Operator Files For Chapter 11 Bankruptcy

The Arizona Daily Star reports:

• As more homeowners end up in foreclosure, one investor in distressed properties has ended up in financial trouble, too. Deed and Note Traders LLC, which has operated a foreclosure rescue service under the name HomeSavers, filed for Chapter 11 bankruptcy Sept. 7.

[...]

• [S]ome investors who provided financing to Deed and Note Traders said the bankruptcy filing might ... have to do with dubious business practices. Previously, under the HomeSavers program, the company offered to buy houses from people on the brink of foreclosure, and allowed sellers to continue to live in the properties through rent-to-own arrangements.

• Last year, Deed and Note Traders agreed to pay fees and restitution of $400,000 after being sued by the state Attorney General's Office for using deceptive tactics and luring customers into rental deals they couldn't afford [see Arizona AG Press Release]. In the settlement, Deed and Note Traders agreed to stop conducting its rent-to-own foreclosure rescue program and allow customers still living in their homes to repurchase the houses at a discount.

• One of the company's largest unsecured creditors ... said Deed and Note Traders has also been unfair to investors.

[...]

• Another distressed property buyer, HomeVestors, is getting plenty of calls in Tucson, said Fred Hubbard, a local franchisee of the Dallas, Texas-based firm. The company does not offer rent-to-own deals for its sellers because of the potential for legal complications, Hubbard said. "There's been a lot of abuse in lease-backs," he said.

For more, see HomeSavers' parent files for bankruptcy.

For other stories on Deed and Note Traders, see:

• Creditors question Deed and Note Traders president (10-11-07),
• Ethics finalist was sued 8 times (BBB nominee for award is on AZ 'watch list').

For more on equity stripping scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.).