Controversial real estate lenders use questionable deals to prey on homeowners in Chicago. The dream of homeownership is an exciting prospect, and something many work hard over their lives to achieve. Unscrupulous investors seeking to prey on those facing hardships can quickly jeopardize Illinoisans’ homes and financial security.
If you were taken advantage of by a predatory home lender, you may still have options. Discuss your case with a real estate lawyer from The Rogoff Law Group in Chicago and Peoria, Illinois, to learn more. Call 847-768-2194.
Tactics Used to Prey on Homeowners in Illinois
Predatory real estate deals involve deceptive or unfair practices that exploit a homeowner’s financial vulnerability. These deals often promise a quick solution to a homeowner’s financial woes, but ultimately leave them worse off.
A case involving a number of Chicago homeowners has drawn attention for the lender’s controversial practices. The Illinois Department of Financial and Professional Regulation has filed an 11-point disciplinary complaint against MV Realty for engaging in “dishonorable, unethical, or unprofessional conduct” aimed at deceiving, defrauding, or harming the public. The IDFPR complaint also alleges MV Realty was dishonest in signing up homeowners under its Homeowner Benefit Agreements.
Common tactics used by predatory real estate investors in Illinois include:
Misleading Market Practices
Chicago is generally a good place to invest in real estate. However, predatory investors may intentionally undervalue your home, claiming that market conditions have drastically reduced its worth. They may pressure you to sell your home quickly for far less than its true market value. Investors may also misrepresent the terms of the deal, downplaying fees and obscuring the true costs associated with the transaction. They may claim they can help you avoid foreclosure, even though their offer leaves you with little to no equity.
Unfair Terms in Contracts
Predatory contracts often contain hidden fees, quick-claim deeds that remove your ownership rights, or unrealistic deadlines.
Many of the homeowners who signed with MV Realty did not fully understand the terms of the contracts, or what they mean for their properties. In exchange for agreeing to use the company as their real estate broker if they decide to sell their homes, homeowners were given money up front by MV Realty. For at least one homeowner who signed with the company, however, he did not learn his contract contained terms such as the right to an early termination fee, and the agreement lasting 40 years and remaining in effect even after the death of the homeowner, until two years later when trying to secure a reverse mortgage.
Pressure Tactics and Limited Timeframes
Some investors may create a sense of urgency. They might pressure homeowners into signing a contract until they have time to seek legal advice. Alternatively, they may use scare tactics, such as arguing that you cannot sell your house when the market is slow or emphasizing other imminent threats to the value of your home or your ability to sell.
Exploiting Vulnerable Homeowners
Predatory investors often target homeowners facing foreclosure, divorce, job loss, or other financial hardships. These individuals may be desperate for a way out of their situation and more susceptible to high-pressure tactics.
MV Realty bought leads of homeowners who may be looking to get some cash out of their properties. The lender then targeted those with at least 40% equity in their homes.
Legal Protections in Illinois
Illinois takes consumer protection seriously and has established laws to safeguard homeowners from predatory lending practices.
- The Predatory Loan Prevention Act (PLPA): Enacted in 2021, this act sets a cap on Annual Percentage Rates (APR) for most consumer loans in Illinois, effectively preventing lenders from charging excessive interest rates that exploit vulnerable borrowers. While the PLPA primarily targets traditional loans, some real estate transactions might be structured as loans and could fall under its purview.
- The Illinois Deceptive Business Practices Act: This broader law prohibits deceptive or unfair acts and practices in any business transaction, including real estate deals. If a predatory investor misrepresents the value of your home, makes false promises about foreclosure relief, or uses high-pressure tactics to force you into a disadvantageous contract, they may be violating this act.
- The Illinois Home Equity Loan Consumer Protection Act (HELCPA): This act outlines specific requirements and disclosures for home equity loans and lines of credit. While it doesn’t directly address predatory real estate deals, some predatory investors might use tactics that mimic these loan structures. Understanding HELCPA can help you recognize red flags if an investor tries to disguise their offer as a legitimate home equity product.
While these protection measures may not explicitly target all predatory real estate practices, a real estate lawyer can assess your situation and determine if laws have been violated.
Options for Illinois Homeowners Caught in the Deal
Having filed for bankruptcy, MV Realty has put many homeowners in a worse position than before. Due to the filing, some faced eviction or foreclosure. Under its reorganization plan, however, the company established some possible paths to relief and ways out of the HBAs for homeowners. Those with HBAs will have 120 days to opt in to a program that allows them to seek to get out of the contract for cause. Further, MV Realty will not charge early termination fees in the event of death, foreclosure, or transfer to a family member.
If you’ve signed a predatory real estate contract, there may still be options available to you. An attorney can help you review the contract and determine if there are grounds to challenge it. In some cases, rescission of the contract may be possible, so don’t let concerns over how much a real estate lawyer costs hold you back from getting legal counsel.
Don’t become a victim of a predatory real estate deal. Educate yourself and seek legal advice from our team at The Rogoff Law Group if you are approached with an offer that seems too good to be true. Contact us today.
