Use Of Informal Sale Process, Onerous Terms, Broken Oral Promises Are Central To Texas Rent-To-Own, Contract For Deed Rackets Targeting Unsophisticated, Wanna-Be Homebuyers; Victims Often Face Boot Threats After Being Duped Into Investing Thou$and$ In Downpayments & Home Improvements In Dubious Deals

In Austin, Texas, the Austin American-Statesman reports:

• Several dozen Dove Springs residents gathered [] to call for a state agency to investigate a local real estate group they blame for deals under which neighbors lost their homes, or have been threatened with foreclosure or eviction.
  
  On Monday evening, Texas RioGrande Legal Aid(1) and Austin Interfaith, as well as a representatives from the offices of state senators Kirk Watson and Judith Zaffirini and Austin City Council Member Delia Garza, who represents Dove Springs, met residents in the neighborhood seeking more information.
  
  Attorneys are seeking to bring the residents’ allegations to investigators with the Texas Department of Savings and Mortgage Lending.
  
  “The scale is remarkable,” said Austin civil rights attorney Brian McGiverin. “This company offered what seemed like a good deal at the time.”
  
  Legal aid attorneys said they are investigating whether a rotating cast of four firms, all owned and controlled by the same people, targeted Latino and Spanish-speaking buyers in the Southeast Austin neighborhood, many of whom didn’t qualify for traditional loans, reaching them through fliers posted around the neighborhood.
  
  Molly Rogers, a staff attorney with Texas Rio Grande Legal Aid and manager of its foreclosure prevention team, said the firms in question are HomeTex Enterprises LLC, F&S Capital LLC, Tenzing Investments LLC and The Lending Group LLC.
  
  Residents on Monday night said that Jeff Evans, listed as the property director for HomeTex Enterprises on his LinkedIn page, lured them into unfavorable housing contracts.
  
  Evans could not be reached late Monday. An attorney who has represented associates of HomeTex did not respond to a request for comment Monday afternoon.
  
  Legal aid attorneys allege the group took advantage of an informal sales process — buyers were often unrepresented by a real estate agent, title company or attorney — and signed people up for financing packages that included large balloon payments. According to Rogers, some buyers did not realize a payment for the remaining balance on the home would come due within five or so years, while others believed the balloon payment would be far lower than it turned out to be. In some cases, according to attorneys, homeowners were promised a chance to refinance balloon payments but were then denied at the critical moment, resulting in default.
  
  Several residents at the meeting said they signed contracts without fully understanding them after receiving assurances from Evans.
  
  Rogers said that was common among the Dove Springs residents, many of whom she said thought were buying homes, but were “actually being treated more like renters.”
  
  Several of the residents gathered Monday night said they contacted Evans after seeing signs around the neighborhood advertising home ownership for small down payments or rent-to-own opportunities.
  
  Rogers said that in many cases, residents paid hefty down payments and then put in thousands of dollars in repairs and improvements on homes they were then forced to leave.
  
  Martha Leal, 56, said she paid more than $10,000 for a down payment as well as thousands for tile flooring and a new porch while she tried to improve her credit score as part of a rent-to-own contract.
  
  She said the contract called for her to get her credit into good enough shape to purchase the house within five years. But when she missed a February deadline, she says Evans threatened to remove her option to buy; she said the deadline has since been moved to December.
  
  “It’s not fair,” she said. “It’s very scary.”
  
  Attorneys are seeking to file a formal complaint with the Texas Department of Savings and Mortgage and are hoping that the City of Austin will step in to help residents, though it was unclear Monday night how that would happen.

For the story, see Dove Springs residents seek investigation of real estate group.

Texas lawmakers are apparently trying to do something to control the numbers of unsophisticated homeowners being screwed over by these types of rackets. See New Texas Law Aims To Minimize Contract For Deed Ripoffs; Provides That Recording w/ County Records Office Effectively Converts Contract Into Deed Of Trust That Requires Formal Foreclosure Process When In Default.

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(1) Texas RioGrande Legal Aid (TRLA) is a non-profit organization that provides free legal services to low-income residents in sixty-eight counties of Southwest Texas, and represents migrant and seasonal farm workers throughout the state of Texas and six southern states: Kentucky, Tennessee, Alabama, Mississippi, Louisiana and Arkansas. In addition, TRLA operates public defender programs in several Southwest Texas counties, representing the poor who are accused of felonies, misdemeanors and juvenile crimes.