North Carolina Attorney General Roy Cooper announced the end to a scheme by a Charlotte, North Carolina company that promised to buy homes from people who needed to sell quickly but instead left them vulnerable to foreclosure.
“This scam hurt both homeowners and people who hoped to become homeowners,” said Cooper. “We’ve put a stop to their phony ‘We Buy Homes’ promises so no more consumers will be caught up in this scheme.”
A consent judgment approved by a Wake County Superior Court Judge, shut down a scheme by Charlotte Home Solutions and its manager William Keaton that purported to buy homes and then resell them to buyers with poor credit. Keaton is barred from operating this “We Buy Homes” scam and must pay the state $100,000 if he fails to comply with today’s judgment. Cooper previously won a consent judgment against Keaton’s partner Steven Huff in May, 2007. Huff is barred from operating a similar scheme and must pay the state $50,000 if he does not live up to the terms of the judgment.
As alleged in the complaint, Keaton along with Huff and David McBride began doing business as Charlotte Home Solutions in September 2002. Keaton and his partners advertised their business through signs, mass mailings to targeted neighborhoods and a website that promised to buy consumers’ homes. However, rather than purchasing houses outright, Charlotte Home Solutions convinced homeowners to sign title to their homes to a trust controlled by the partners. Because Charlotte Home Solutions didn’t assume the mortgage on the property, the original homeowner unknowingly remained responsible for mortgage payments on the house.
Cooper contends that Charlotte Home Solutions then advertised these homes for sale to consumers with bad credit, offering them an option contract to rent a home until they could qualify for financing. Purchasers had to pay a substantial deposit that was non-refundable in addition to monthly rent payments. However, many of these tenants
were never able to get a loan to buy a home. Despite the fact that Charlotte Home Solutions collected rent money, they failed to make mortgage, tax and homeowner’s association payments on the homes, leading in some cases to foreclosure proceedings against the original owners. When the homes were foreclosed on, the tenants were also forced to leave and lost their deposit and their option to purchase a home.
The North Carolina Real Estate Commission also joined in the complaint and consent judgment against Keaton, who was practicing real estate without being properly licensed.
Legislation backed by Cooper that is currently pending in the North Carolina General Assembly would put controls on similar “We Buy Homes” operations to help protect homeowners and homebuyers from falling prey to these types of schemes.