a pair of bipartisan US senators and the director of consumer financial protection bureau (CFPB) have said they intend to more closely scrutinize the business practices of “house-flipping” companies, following an investigative report alleging that one such entity, HomeVestorsAs ProPublica reports, it “trains its approximately 1,150 franchisees to zero in on the frustration of homeowners.”
During a Senate hearing last week that served as the CFPB’s semi-annual report to Congress, Sen. Tina Smith (D-Minnesota) asked CFPB Director Rohit Chopra about the company and any possible actions the bureau might take. asked about
“Last month, ProPublica reported on a real estate flipping company targeting vulnerable homeowners, and using deception [and] Forced to close the sale,” Smith told Chopra during the hearing. “You [previously indicated] That the CFPB has a role in preventing issues like this from going nationwide.”
When asked what he’s seeing and what the bureau is doing to stay on top of such things, Chopra replied that there’s something new the CFPB is hearing related to these recent stories.
“I actually met with some Minnesota community leaders about the contract targeting certain immigrant groups across the country,” Chopra said. “And I think what we want to make sure is also where we may not have jurisdiction to go after the scandal, we want to point out Justice Department and state [attorney general],
Chopra is concerned, he said, that because of the housing shortage and affordability issues across the country, people are turning their attention to a large number of older homeowners sitting on a lot of equity who may be widowed, or have have limited English proficiency, and are targeting them for scams.
Chopra said, “You mentioned that ProPublica article that clearly contained some very disturbing allegations, I don’t want to comment on that in too much detail.”
Chopra said, however, that the CFPB is relying on data, including consumer complaints and discussions with consumers in various regions, to determine its potential action on various issues.
“One of the big mistakes federal regulators made in the lead-up to the financial crisis was ignoring stories from the ground,” Chopra said. “And that turned out to be a critical mistake.”
A day after the Senate hearing, Sens. Smith and Cynthia Lummis (R-Wyoming) sent a letter National Association of Attorney General Recommending that state attorneys general “take steps to protect homeowners from predatory home buying practices.”
In a joint statement, the senators said, “Senators Lummis and Smith were concerned by recently reported allegations that some franchisees of America’s HomeVsters, commonly recognized by their advertising catchline, ‘We Buy Ugly Houses,’ elderly And were targeting sick homeowners.” “The letter details dangerous and deceptive practices in which some franchisees allegedly target vulnerable homeowners and communities, use deception and coercion to close sales, and force their victims to be forced out of sales despite unfair conditions.” used complex legal maneuvers to prevent him from doing so.”
Within the original report, representatives for HomeVester told ProPublica that its reporting “represents[ed] a small fraction of the company’s total transactions, which have totaled more than 71,400 since 2016,” according to the report. A spokeswoman “denied that the company targeted the elderly and that homeowners who sold to HomeVester pointed to a 96% approval rating among critics, which was calculated internally from the company’s ‘over 500’ customer reviews.”
The company said it has “already taken action on some of the cases” highlighted by the report, and is “investigating others in light of the reporting.”
Shortly after the report’s publication, David Hicks, CEO of HomeVester, posted a response to the story.
The response states, “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 conducted over our nearly 30-year history.” provided during. “We have thousands of encouraging stories of franchisees going above and beyond to help sellers and their communities.”
HousingWire reached out to HomeVester for comment but did not receive a response prior to publication of this article.
