Attorney General Files Suit In Massive Real Estate Contract Scheme; Issues Consumer Alert

Attorney General Hector Balderas 
 
AG News:
 
ALBUQUERQUE  Thursday, Attorney General Hector Balderas announced that he filed a lawsuit against Jesus Cano for an alleged real estate contract and mortgage scheme involving potentially hundreds of victims and properties in Bernalillo, Sandoval and Valencia Counties.
 
The lawsuit alleges Mr. Cano and his associates perpetrated fraud and would prey on Spanish-speaking and Hispanic communities in central New Mexico taking anywhere from $1,000 to $46,000 from victims with the empty promise of owning a home. Many times the victims would find themselves in substandard homes that they would have to make repairs on themselves just to lose all their money without getting the title to the home.
 
“No one deserves to have their dreams for a better life for their family exploited and destroyed. I filed this complaint to help put an end to fraudulent, deceptive and unconscionable practices that prey on working families in New Mexico,” Balderas said. “Unfortunately, we often see these types of predatory practices target Spanish-only speaking consumers and Hispanic communities who are underserved by traditional banking and mortgage services. Our office will hold Mr. Cano, and those like him, accountable for taking advantage of these underserved communities, and for tricking families into turning over their life savings just to live in substandard homes they have no certainty of owning in the future.”
 
The Attorney General’s lawsuit seeks restitution for potentially hundreds of victims in New Mexico, fines, injunctive relief to stop Cano from offering real estate and mortgage services, and attorney’s fees for the State of New Mexico. 
 
Attorney General Balderas continued, “I am also issuing a Consumer Alert regarding real estate contracts because in addition to the Cano case, our office has received an increasing number of complaints related to their use for the purchase of a home. Families considering purchasing a home need to be aware that real estate contracts do not provide the same protections offered by a mortgage, and they should know that, among other things, a buyer who defaults on a seller-financed real estate contract could face imminent eviction and lose all of the payments made on the property.”
 
Difficulties qualifying for a traditional mortgage may send potential home buyers to seek out alternative ways to finance the purchase of a home. Real estate contracts have different risks than conventional mortgages, which means that some unscrupulous sellers can take advantage of buyers. Consumers should confirm that the seller has the legal right to sell the home under a real estate contract.
 
Since a real estate contract is typically between private parties and generally does not involve a title company or traditional “closing,” a consumer may not be able to easily verify that the seller actually owns the home being sold. A consumer can hire a title company or attorney to verify ownership. 
 
Consumers are advised to carefully study the terms being offered in the contract, including the annual percentage rate (APR) of the loan, fees, and other important terms such as what will happen in the event that the consumer is late in paying an installment. Consumers also may want to have a home inspection performed on the home prior to signing a real estate contract – once the consumer signs the contract, it is generally not the duty of the seller to repair or maintain the home. 
 
Unlike a traditional home loan, a real estate contract (also called a “land contract” or “contract for deed”) does not involve a loan from a bank to obtain a deed to a home in the name of the consumer. In a real estate contract, the seller retains the legal ownership of the home and thus does not have to file a foreclosure lawsuit in court to take the home and evict the buyer in the event of a default. In some cases consumers can lose the value of substantial improvements made to the home and any money they have paid on the contract.  
 
For more information regarding purchasing a home or if you believe you have been the victim of a scam, please call the Office of the Attorney General toll free at 1.844.255.9210.
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