Vision Property Management, LLC, a South Carolina based real estate company, its CEO Alex Szkaradek, and a number of affiliated companies have agreed today, subject to court approval, that more than $3.75 million will be paid in consumer restitution for engaging in and operating an illegal, deceptive, and unlicensed mortgage-lending business that targeted, among others, the disabled, the elderly, single parents, and others living on fixed incomes.
Specifically, the settlement includes cash payments of $600,000 that will be distributed to numerous New York consumers who were victims of Vision’s conduct and have, for the most part, moved out of their previous homes. Additionally, more than $3.15 million in unpaid principal for 58 homes will be forgiven by Vision as restitution. The ownership of these 58 homes will be transferred, free and clear of any future payments, to Vision’s current New York consumers. Additionally, the defendants must wind down their remaining business in New York over the following year, and along with any businesses they take a controlling interest in, are permanently enjoined from engaging in any future residential real estate business in New York.
The settlement is set to resolve an August 2019 federal lawsuit, filed in the Southern District of New York, alleging that, since at least 2011, Vision and its affiliates profited from predatory, subprime home loans at the expense of some of the most vulnerable New Yorkers, primarily in Upstate and Central New York. In the complaint, Attorney General James and Superintendent Lacewell accused the company of buying severely distressed properties and marketing them at a substantial markup with high-cost, interest rates, in the range of 10% to 25%. Vision rarely disclosed these high interest rates and typically made no repairs or renovations to the dilapidated homes they were selling, illegally passing those costs on to consumers. Further, Vision was not properly licensed to engage in seller finance lending in New York, which it was required to be beginning in late 2011, and thus was operating illegally when entering into these transactions.
The lawsuit further charged that Vision targeted vulnerable consumers who , by the company’s own admission, were eager to share in the American dream of homeownership, but could not qualify for conventional financing due to various employment, health, marital, or other financial reasons. While Vision claimed its “unique” business model was a path to homeownership, in reality, the company made significant profits with little risk by skirting consumer protections and financial regulations and trapping consumers with high cost mortgages and often uninhabitable homes.
Despite placing the burden of repairing and maintaining the homes on consumers, Vision did not fully disclose the many dangerous, unhealthy, and unsafe conditions in its homes, and in many instances concealed the extent of these conditions by leaving the electricity and other utilities turned off while consumers took walk throughs of the homes. These conditions included pest infestations; faulty electrical wiring; water damage; missing heaters, pipes, water tanks, and septic systems; mold; asbestos; foundation damage; and severely damaged and rotted out, floors, windows, walls, and roofs. The high cost of Vision’s loans combined with the significant cost of repairing these violations set consumers up to fail. Moreover, Vision routinely evicted consumers who had invested substantial sums of money in repairs without offering them the foreclosure protections to which they were entitled.
The settlement being announced today is still subject to final court approval.
New York Attorney General Letitia James and New York Superintendent of Financial Services Linda Lacewell made the announcement.
“Vision’s illegal and deceptive practices that were targeted against New York’s most vulnerable residents will finally be put to an end,” said Attorney General James. “Owning a home is what millions of New Yorkers dream of, but Vision turned that dream into a nightmare. Not only are we shutting down this company’s illegal New York racket, but we are securing restitution for the many victims and are ensuring 58 families have their mortgage debts wiped away. A fair and transparent housing market is essential for the health, welfare, and economic stability of New York and its residents, which is why my office will never stop fighting to hold companies responsible for their deceptive actions. I want to thank Superintendent Lacewell and her team at DFS for their partnership and diligent work throughout this case.”
“Vision property management stole from hundreds of New Yorkers who sought the American dream of homeownership,” added Superintendent Lacewell. “This settlement holds Vision accountable for their illegal actions and provides a measure of restitution to New Yorkers who were victimized by Vision’s predatory practices. This is a clear message that New York has zero tolerance for those who rely on deception and fraud to turn a profit, and I commend Attorney General James and the staff of both DFS and the Attorney General’s office for their hard work on this important matter.”
In August 2019, Attorney General James and Superintendent Lacewell reached a settlement with New York-based hedge fund Atalaya Capital Management LP, for its role in funding and assisting Vision and its affiliates in their illegal business. Under that settlement, Atalaya paid New York $250,000 in civil penalties, agreed to abide by injunctive terms intended to prevent future wrongdoing, and paid more than $2.5 million in restitution to consumers, which is now being distributed to more than 100 New York homeowners in the form of monetary payments and payment cancellation.
This matter was handled by Assistant Attorney General Noah Popp of the Consumer Frauds and Protection Bureau, under the supervision of Bureau Chief Jane M. Azia and Chief Deputy Attorney General for Social Justice Meghan Faux. The Bureau of Consumer Frauds and Protection is overseen by Chief Deputy Attorney General for Economic Justice Christopher D’Angelo and First Deputy Attorney General Jennifer Levy.
Additional attorneys handling this matter for the Department of Financial Services included Deputy Superintendent Peter C. Dean and Supervising Attorney in the Consumer Protection and Financial Enforcement Division Cynthia M. Reed.