Thursday, October 29, 2009

Legal Action Filed Against Housing Scam That Targeted Hispanic Homebuyers

Jose Fernando "Fern" Hernandez, a real estate broker, his wife, Odessa S. Hernandez and his company, Fern Hernandez Realty, Inc., have been charged by Texas Attorney General Greg Abbott with defrauding Hispanic home buyers. According to court documents filed in Travis County, the defendants falsely promised their customers home ownership when, in fact, the customers' homes were actually owned by the defendants.

Hernandez, who advertised his real estate brokerage services on Spanish-language television and radio, promoted new home sales in Travis and Williamson counties,Texas. When potential home buyers contacted Fern Hernandez Realty, Hernandez or his sales representatives took inquiring customers to look at new homes. If the clients found a home they wanted, or a model home similar to what they wanted built, Hernandez would explain the home purchase process.

When Spanish-speaking clients did not qualify for traditional financing, Hernandez would offer them financing through a group of "investors." He promised them if they made monthly payments to this group for a year, the house would be transferred to the home buyer. Investigators discovered there were no outside "investors." Hernandez would close on the houses, with either he or his wife acting as the official buyer and taking title to what the home buyers thought was their property.

State investigators also found that Hernandez failed to provide his customers documentation verifying their purchase of the home. In one case, a couple gave the Hernandezes a $23,000 down payment on a home. The customers, however, did not actually own the residence and instead were given a lease/option arrangement for the house they thought they purchased.

In another case, a Spanish-speaking customer provided a certified check for $4,375 as down payment on a house; however, the customers never took title to the property. Rather, the home was purchased in Odessa Hernandez' name.

Nearly a year later, Hernandez provided the Spanish-speaking client with a contract written in English. The home buyer took the contract to a friend who could read English and only then did the home buyer learn that the document did not memorialize his purchase of the home. Instead, it gave the home buyer a lease with an option to purchase the residence.

When he was confronted about it, Hernandez explained that the $4,375 check was the payment for the option, not a down payment. Hernandez told the home buyer that if he wanted the house in his name, he would need to obtain financing from someone else. Later, the customer learned he would have to pay an additional $7,500 to transfer the title to his name. At this point, the customer refused to pay anymore and moved from the house.

According to state investigators, at least six properties in the defendants' names were leased to individuals who thought they owned the home in which they resided.

The Office of the Attorney General is seeking restitution for affected home buyers and a civil penalty of up to $20,000 for each of the defendants' violations of the Deceptive Trade Practices Act.

Consumers who believe they have been deceived in the purchase of real estate should contact the Office of the Attorney General at (800) 252-8011 or file a complaint online at http://www.texasattorneygeneral.gov.

mortgage fraud