Recently, The Cleveland Plain Dealer reported on a lawsuit recently filed by Illinois Attorney General Lisa Madigan against Safeguard Properties (“Safeguard”), a company that secures and maintains foreclosed homes for lenders and loan servicers, alleging that Safeguard wrongfully prevented residents from entering their homes by breaking in, changing locks, shutting off utilities while foreclosure proceedings were still pending. The lawsuit was filed in the Cook County Circuit Court, and seeks to have Safeguard banned from doing business in the state.
As this blog has discussed before, since the start of the financial crisis in 2008, the number of foreclosures in Illinois has increased dramatically. Ill-equipped to handle the spike in foreclosures, lenders and loan servicers have struggled to maintain properties in foreclosure that have been abandoned. According to realtytrac.com, one in every five hundred twenty eight properties in Illinois is currently in foreclosure. Through the first half of 2013, Illinois posted the nation’s third highest foreclosure rate: 1.20% of housing units with a foreclosure filing.
As lenders and loan services continued to be criticized, and sometimes fined, for failing to maintain vacant properties, which lead to increases in crime and decreases in property values, they turn to companies like Safeguard, which are supposed to preserve properties by preventing weather damage, protecting against vandalism, and performing general maintenance.
After being notified by a lender of a property in foreclosure, Safeguard begins by driving by and/or performing exterior inspections to determine whether the property is vacant. According to the lawsuit, however, Safeguard is taking it a step further by doing things such as removing possessions, causing damage to properties, and running off residents that have fallen behind on mortgage obligations but are still legally entitled to occupancy of the property.
Illinois law provides that a property owner that has defaulted on his or her mortgage is permitted to reside in the home until the foreclosure process has been completed. Further, before a mortgage-holder can take possession of a property, it is required to state obtain a court order, even if the property is perceived to be abandoned. The lawsuit alleges that Safeguard has engaged in intimidation and fraud to force residents out of their homes and asserts that Safeguard has not properly trained or supervised its contractors.
In response to the lawsuit, Safeguard spokeswoman, Diane Fusco, claimed that the company prohibits contractors from entering occupied properties or interacting with residents and takes “corrective action if [it] find[s] that policies have been violated.”
Last year, five banks and forty-nine state attorney generals entered into a $25 billion settlement requiring the banks to improve oversight of third-party service provides such as Safeguard. It would appear, however, that, despite this settlement, companies such as Safeguard are still engaging in unscrupulous, and likely illegal, conduct. If you have questions regarding the rights and obligations you have as property owner or believe you have been the victim of the unfair practices of a lender or its contractors, contact the experienced real estate attorneys at The Slater Firm, Ltd. today.