“Last month, ProPublica reported about a real estate flipping company that is targeting vulnerable homeowners, and using deception [and] coercion to close sales,” Smith told Chopra during the hearing. “You [previously indicated] that the CFPB does have a role to play in preventing such issues from going nationwide.”
When asked about what he is seeing and what the Bureau is doing to stay on top of such things, Chopra responded that there is something new that the CFPB has been hearing related to these recent stories.
“I actually met with some Minnesota community leaders about contract-for-deed targeting certain immigrant groups across the country,” Chopra said. “And I think what we want to make sure is even where we might not have jurisdiction to go after a scam, we want to tell the Justice Department and the state [attorney general].”
Chopra worries, he said, that because of the housing shortage and affordability issues playing out across the country, people are turning their attention in greater numbers to older homeowners sitting on a lot of equity who may be widowed, or who have limited English proficiency, and targeting them for scams.
“You mentioned that ProPublica article that obviously had some very troubling allegations, I don’t want to comment on that in too much detail,” Chopra said.
Chopra did say, however, that CFPB is relying on data including through consumer complaints and discussions with consumers in different regions to determine its potential action on different issues.
“One of the big mistakes in the lead-up to the Financial Crisis is federal regulators ignored stories from the ground,” Chopra said. “And that proved to be a pivotal mistake.”
The day after the Senate hearing, Sens. Smith and Cynthia Lummis (R-Wyoming) sent a letter to the National Association of Attorneys General recommending that state attorneys general “take steps to protect homeowners from predatory home-buying practices.”
“Senators Lummis and Smith were concerned by recently reported allegations that some franchises of HomeVestors of America, commonly recognized by their advertising catchline, ‘We Buy Ugly Houses,’ were targeting elderly and ill homeowners,” the senators said in a joint statement. “The letter details alarming and misleading practices wherein some franchisees allegedly targeted vulnerable homeowners and communities, using deception and coercion to close sales, and employing complex legal maneuvers to prevent their victims from backing out of sales despite unfair conditions.”
Within the original report, HomeVestors representatives told ProPublica that its reporting “represent[ed] a tiny fraction of the company’s overall transactions, which have totaled more than 71,400 since 2016,” according to the report. A spokesperson “denied the company had targeted the elderly and pointed to a 96% approval rating among homeowners who sell to HomeVestors, which was calculated internally from what the company says was ‘over 500’ customer reviews.”
The company added that it had “already taken action in some of the cases” highlighted by the report, and is “investigating others in light of the reporting.”
Shortly after the report’s publication, HomeVestors CEO David Hicks posted a response to the story.
“While we regret any transaction in which we fall short of our high standards, we must view these instances within the larger context of the nearly 150,000 seller experiences we have provided during our nearly 30-year history,” the response said in part. “We have thousands of encouraging stories of franchises going beyond expectations to help sellers and their communities.”
HousingWire reached out to HomeVestors for comment but did not hear back before this article was published.