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Texas AG Shuts Down Realtor reselling property with Shriners mortgage lien





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Mortgage Fraud Blog
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Texas Court Shuts Down Real Estate Scam

Wednesday, May 23, 2007

An enforcement action brought by the Texas Attorney General has shut down an Austin real estate scam that targeted Hispanic home buyers.

Pursuant to a permanent injunction, Roberto Flores and Galindo Trust are prohibited from selling homes to consumers without disclosing that the property is encumbered by pre-existing liens. The court also ordered the defendants to pay more than $1.4 million in civil penalties for violating the Texas Deceptive Trade Practices Act. Flores must provide restitution to consumers who were harmed by the defendants’ unlawful scheme.

“Home ownership lies at the heart of the American dream,” Attorney General Abbott said. “Texans will not tolerate those who exploit the dream of home ownership for their own unlawful gain. We must aggressively protect those who aspire to own a home.”

Flores sold homes to consumers without disclosing that the properties were encumbered by pre-existing liens. Shriners Hospital, the original owner of the properties, sold and financed the homes to Flores, who made mortgage payments through Galindo Trust. Flores re-sold the properties, but subsequently stopped making payments to Shriners Hospital, putting the homes at risk of foreclosure. When some consumers who financed their homes through Galindo Trust tried to sell their property, they were unable to do so because of Shriners’ pre-existing liens.

Shriners Hospital, which was unaware of the fraudulent arrangement, is working with the Office of the Attorney General and Volunteer Legal Services of Travis County to help consumers get proper titles to their properties.

Flores also misrepresented to consumers that property taxes and homeowners’ insurance payments were being made on their behalf. In fact, Flores stopped paying insurers and taxes, causing insurance policies to lapse and consumers to become delinquent on their property taxes.

Attorney General Abbott offered consumers the following tips when buying a home:

• Be wary of high-pressure sales tactics and sellers who press for an immediate decision to buy a home or sign documents.

• Review all documents carefully before signing; take them to a trusted, independent person, such as a lawyer, to help review the terms if they are unclear.

• Involve a title search company in the transaction to determine who the owner of the property is and whether there are liens or outstanding debts for which the buyer could be held liable.

• Never make cash payments. Use checks or money orders. Avoid making large cash deposits upfront before closing.

• If monthly payments to the seller or financing institution include homeowners’ insurance and property taxes, check periodically with the county tax assessor and with the insurance company to ensure that accounts are current.

Consumers who believe they have been deceived in the purchase of real estate should report it to the Office of the Attorney General


Further Reading:

The Royal Order of Jesters - The Shriners Secret Society Secret Society - 'Mirth is King'

The Shriners - The 'Krafty' Klowns