Tuesday, September 13, 2016

High-Interest Home Improvement Financing, Local Mortgage Broker/Contractor, Real Estate Contracts Designed To Fail At Center Of Alleged Ripoff That Left Some San Antonio Homeowners With Shoddy Repairs, Deeply In Debt & In Fear Of Possible Foreclosure

In San Antonio, Texas, the San Antonio Express-News reports:
  • Dreams of a better home led more than 50 San Antonio homeowners to take high-interest loans from local mortgage broker Fred Hobbs to hire his contracting company to fix their foundations, replace their wiring or add a new bathroom, among other improvements.

    But in many cases, Hobbs’ companies left them deeply in debt and with their homes in worse shape than before, with cracked walls, leaky roofs, tilting floors, and faucets and electrical outlets that don’t work, according to two lawsuits and interviews with another eight homeowners.

    Two borrowers lost their homes after struggling to repay the loans, and others have been threatened with foreclosure. Many say they have paid thousands out of their own pockets to fix the work after Hobbs’ company, Texas Home Restoration, refused to help.

    “Every time I find something new, I get so angry and tell my husband, ‘What are we going to do?’” said Mary Luis, 69, who took a $21,000 loan from the company in 2011 to build a handicap bathroom for her elderly mother.

    Shortly after the bathroom was finished, frogs and lizards started coming into the shower through a crack in the wall, Luis said. The grout crumbled and the roof started leaking, ruining one of the walls and the carpet in an adjacent room. She and her husband say they have spent more than $5,000 to repair the work on their South Side home.
    ***
    Other homeowners share similar stories. West Side couple Graciela and Richard Muñoz said their home began tilting a year after they took out an $18,900 loan from the company to fix their foundation and replace their wiring. Another West Sider, Alma Santos, said she had to spend another $28,000 to level her home after she paid almost $29,000 to Texas Home Restoration, which failed in its attempt.

    Leonard Sanchez said he borrowed $39,000 for the company to repaint his house and make other repairs, but the contractors used spray paint that quickly began peeling and patched his roof with old wood that ended up cracking.

    Elaine Castro and her husband, who took out a $32,420 loan for a wholesale restoration of their home, say they’ve resorted to using their shower to wash their hands and brush their teeth after Hobbs’ contractors bungled their plumbing. They can’t afford to fix it.

    Perhaps the most striking story comes from Gloria Revillas, who said Texas Home Restoration left the foundation of her West Side home in such bad shape that the floor became crooked, forcing her and her husband to spend more to fix it. The episode caused her 76-year-old husband so much stress that she believes it contributed to his two recent heart attacks, she said.
    ***
    The two homes that Hobbs’ companies foreclosed on have ended up in the hands of Jack Markman, a Houston property owner who has been accused in numerous lawsuits over the past 15 years of trapping low-income customers in property contracts that are designed to fail.

    Markman entered the San Antonio market last fall by partnering with Hobbs to buy homes; he told the Express-News he plans to buy and flip between 100 and 200 homes in inner-city San Antonio.

    He has bought another two of Texas Home Restoration’s contracts from Hobbs, meaning that if those properties go into foreclosure, he will have a chance to snatch them up.
    ***
    Texas Home Restoration has been sued twice. [...] Both lawsuits claim that Texas Home Restoration didn’t take out the proper permits for the renovation work. A search of the city’s permit database shows that many renovation projects funded by Hobbs’ company never received permits.

    Hobbs said in an interview that his company and its contractors always obtained the proper permits when the scope of the work required it.

    Some homeowners who have taken loans from Hobbs accuse his companies of sloppy record-keeping. [Alma] Santos, the West Side homeowner who borrowed money to level her home, said the company hasn’t let her see how much of the loan she has paid off.

    Becky Valdez, who took a loan to level her South Side home, said the company unexpectedly raised her monthly payments from the low $400s to the high $700s. Hobbs’ companies have failed to provide amortization schedules and payment notes when requested, she said. She and her husband had to dip into a 401(k) retirement account to make payments after the company threatened foreclosure.

    The couple has decided to sell their home “because we just don’t want to deal with them anymore,” Valdez said. “We just don’t.”
For more, see Texas Home Restoration offered high-cost loans, shoddy repairs, lizards, homeowners say (Restoration company accused of fleecing homeowners).

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