Homebuyers sue D.R. Horton, DHI Mortgage for alleged deceptive lending
A
group
of
homebuyers
has
filed
a
class
action
lawsuit
against
D.R.
Horton,
the
nation’s
largest
homebuilding
company,
and
its
mortgage
lending
subsidiary,
DHI
Mortgage
Co.,
alleging
that
the
companies
engaged
in
deceptive
home-selling
and
mortgage
practices
that
left
buyers
with
unexpectedly
high
monthly
payments.
The
lawsuit
—
filed
Oct.
1
in
the
U.S.
District
Court
for
the
Middle
District
of
Florida
—
is
being
led
by
Varnell
&
Warwick,
P.A.,
Clarkson
Law
Firm,
P.C.,
and
the
National
Consumer
Law
Center
(NCLC).
Plaintiffs
aim
to
stop
what
they
describe
as
a
predatory
scheme
that
encouraged
homebuyers
to
purchase
more
expensive
homes
with
larger
mortgages.
Litigation
also
seeks
to
recover
all
financial
losses
for
affected
homeowners.
Under
the
Racketeer
Influenced
and
Corrupt
Organizations
(RICO)
Act,
homeowners
could
be
entitled
to
triple
their
out-of-pocket
losses,
the
National
Consumer
Law
Center
said.
Plaintiffs
say
the
firms
“significantly
understated
the
true
costs
of
homeownership”
According
to
the
complaint,
D.R.
Horton
and
DHI
Mortgage
allegedly
misled
prospective
homebuyers
by
advertising
low
monthly
payments
that
excluded
the
majority
of
required
property
taxes
—
significantly
understating
the
true
costs
of
homeownership.
“The
lawsuit
alleges
that
D.R.
Horton
and
DHI
Mortgage
were
running
a
‘Monthly
Payment
Suppression
Scheme’
to
mislead
first-time
homebuyers
into
thinking
their
total
monthly
housing
costs
would
fit
their
budgets,”
said
Jennifer
Wagner,
senior
attorney
at
the
National
Consumer
Law
Center.
“They
preyed
on
people’s
faith
in
the
American
Dream
of
homeownership
to
lure
them
into
unaffordable,
deceptive
deals.”
Many
homeowners
allegedly
did
not
discover
the
true
cost
of
their
mortgages
until
after
closing,
when
DHI
Mortgage
sold
their
loans
to
new
servicers
who
recalculated
escrow
accounts
to
include
the
full
property
tax
amounts.
“The
lawsuit
claims
that
the
homebuilder
and
its
mortgage
company
were
working
together
from
their
initial
sales
pitch
to
deceive
buyers
into
closing
on
homes
and
mortgages
by
presenting
artificially
low
monthly
payments,
leading
to
payment
shock,”
said
Jeffrey
Newsome,
attorney
at
Varnell
&
Warwick.
One
plaintiff,
Frankie
Santiago,
was
told
his
monthly
payment
for
a
D.R.
Horton
home
in
Lake
County,
Fla.,
would
be
$2,164.68.
Based
on
that
figure,
he
selected
the
home
and
mortgage
offered
by
DHI
Mortgage,
believing
it
was
the
most
affordable
option,
the
complaint
said.
But
less
than
a
year
after
closing,
his
new
mortgage
servicer
conducted
an
escrow
analysis
that
included
full
property
taxes
and
back
payments
—
raising
his
monthly
payment
by
nearly
$1,000
to
$3,136.33.
“Our
goal
in
bringing
this
class
action
lawsuit
is
to
recover
damages
for
the
many
people
around
the
country
who’ve
been
cheated
and
to
prevent
future
homeowners
from
being
lured
into
this
predatory
scheme,”
said
Kristen
Simplicio,
partner
at
Clarkson
Law
Firm.
