Joint federal-state lawsuit accuses company of foreclosure rescue scam
Prosecutors allege Bella Homes scammed 450 homeowners
The homeowners lost more than $3 million in two years, the lawsuit says
Bella Homes agrees to stop making real estate foreclosure transactions
The company operates from private residences in Arizona and Georgia, the suit says
(CNN) -- Bella Homes LLC, a real estate investment company, and its principals are being sued by the federal government and the state of Colorado for allegedly preying on homeowners in foreclosure.
Bella Homes LLC, is a limited liability company organized in Delaware. According to the lawsuit, the company operates from the principals' private residences in Arizona and Georgia, and maintains "virtual offices" in Atlanta and Scottsdale, Arizona.
The complaint, filed in U.S. District Court in Denver by Colorado Attorney General John Suthers and U.S. Attorney John Walsh and announced in a joint press release, alleges Bella Homes scammed more than 450 unsuspecting homeowners across the nation, including five in Colorado. The company took in more than $3 million in "rent" between March 2010 and this February, according to a press release from the Colorado attorney general's office.
The Department of Justice alleges Bella Homes convinced homeowners to transfer their home titles to the company and enter into a type of lease agreement, where the homeowners would then rent or lease their homes back for a fee.
During the lease period, Bella Homes claimed if would work to stop foreclosure and would purchase the homeowners' mortgages, according to the release.
In exchange, Bella Homes allegedly promised homeowners they could avoid eviction, foreclosure and ruining their credit.
The company also told homeowners they would have an exclusive option to "repurchase their homes in three years for 90 percent of its fair market value and receive credit for 60 percent of the rent paid to Bella Homes," according to the release. Homeowners would also "enjoy a mortgage payment following their repurchase that is 40 percent to 60 percent lower than previous payments."
The complaint alleges Bella Homes did not pay off or assume the existing mortgage, nor did it make make mortgage, tax or insurance payments on the property. Prosecutors contend the promises made by Bella Homes were false and the company actually does very little to actually help homeowners.
Calls and e-mails to Bella Homes LLC and its Georgia attorney were not returned over several days.
"Bella Homes gave false hope to desperate homeowners, taking advantage of their desire to do anything to save their homes," said U.S. Attorney John Walsh. "Bella Homes's actions not only hurt those vulnerable homeowners, but the housing market generally. The company will now face the consequences of its misconduct."
U.S. District Judge Marcia Krieger granted a temporary restraining order against Bella Homes on February 15 that prohibited the company from entering into additional deals, and froze Bella Homes' assets.
On Sunday, Bella Homes website, bellahomesllc.net, was no longer available. Only the message "This Account Has Been Suspended" appeared on the site.
Bella Homes does not contest the facts, according to court documents, and it consented to stop making real estate transactions. In addition, the company voluntarily arranged to set aside $500,000 for restitution, pending a resolution in the case.
Bella Homes also agreed to cooperate with prosecutors to minimize the negative impact on homeowners and provide a list of homeowners in the Bella Homes program, according to court documents.
In the release, Suthers said Colorado law prohibits a loan modification company to charge a homeowner an upfront fee. The company can charge for services rendered, but only once the services are completed. He further warned homeowners that any time someone stops making payments on their mortgage, foreclosure could result.
Bella Homes and its principals have not filed a response to the allegations in federal court yet, but the parties are expected to be in court March 6 for a scheduling conference.