August 1, 2019
SUPERINTENDENT OF FINANCIAL SERVICES LINDA A. LACEWELL AND NEW YORK ATTORNEY GENERAL LETITIA JAMES SUE VISION PROPERTY MANAGEMENT AND CEO ALEX SZKARADEK FOR UNLICENSED MORTGAGE LENDING, PREDATORY LENDING, AND DEFRAUDING NEW YORK CONSUMERS
Complaint Alleges Vision and Its Affiliates Lured Economically Distressed New Yorkers by Using the Dream of Homeownership to Target Them with Predatory Subprime Home Loans
Suit Seeks Restitution and Damages for 150 New York Consumers in Upstate and Central New York
NEW YORK - Superintendent of Financial Services Linda A. Lacewell and New York Attorney General Letitia James today commenced a civil action in the Southern District of New York against Vision Property Management, a South Carolina company, and its CEO Alex Szkaradek. The lawsuit alleges that Vision and its affiliated companies operate an illegal, unlicensed mortgage-lending business profiting from predatory subprime home loans at the expense of some of the most vulnerable New Yorkers, primarily in upstate and central New York, since at least 2011. The illegal loans are styled as finance-lease hybrid agreements. Today’s suit alleges that Vision’s practices are deceptive, unfair and abusive under federal law, as well as deceptive, illegal and fraudulent under New York law.
“As alleged in the complaint, Vision swindled vulnerable New Yorkers who wanted nothing more than the American dream of homeownership but instead got distressed properties with unsafe, squalid conditions and high-interest, predatory loans,” said Superintendent Linda A. Lacewell. “We took this action to protect New York consumers by putting an end to these illegal, predatory and unconscionable business practices and holding Vision and its CEO accountable under New York State law and applicable federal laws. I am proud of the exemplary work of the DFS colleagues who investigated Vision’s activities for over two years, analyzed thousands of documents, and who worked to protect New Yorkers and bring this company to justice.”
“For nearly a decade, Vision put profits above people — fraudulently targeting, preying upon, and exploiting aspiring homeowners, including people with disabilities, the elderly, and those living on fixed income,” said Attorney General Letitia James. “These deceptive and abusive practices have trapped New Yorkers in mold-infested, dilapidated homes, and wrongfully placed the onus on consumers to pay the price. This behavior is unacceptable, which is why my office is aggressively prosecuting Vision and will do the same against any company or individual that tries to defraud New Yorkers.”
In addition to restitution and/or damages for New York consumers injured by Vision’s practices, the suit seeks to permanently forbid Vision, its affiliates and Mr. Szkaradek from engaging in any of the following misconduct in New York:
- Deceptive, unlawful, unfair and abusive practices such as disguising seller-financed loans as leases with option to purchase (LOP) agreements;
- Any form of unlicensed mortgage lending or mortgage origination activity;
- Any form of residential property rental or leasing; and
- Collecting any payment from a New York consumer under a seller-financed mortgage, including lease with option to purchase agreements, among other relief.
Vision buys severely distressed properties and markets them at a substantial markup with high-cost, interest rates — in the range of 10% to 25% — to consumers without making any repairs or renovations, passing those costs to the consumer. According to the complaint, the company targets vulnerable consumers who are eager to share in the “American dream” of homeownership but who, according to its website, cannot “qualify for conventional property purchases…due to various employment, health, divorce or other financial reasons.”
In its marketing, Vision characterizes itself as consumer-friendly alternative to irresponsible financial institutions, claiming that its “unique” business model is their path to homeownership. In reality, according to the complaint, Vision’s “unique” business model makes profits with little risk by skirting consumer protections and financial regulations and trapping vulnerable consumers, including the disabled, elderly and others living on fixed income, with high-cost mortgages and uninhabitable homes. Vision’s “unique” business model is a form of predatory subprime seller financing.
The complaint alleges that Vision does not fully disclose to consumers the many unsafe conditions that it knows exist at the properties and the repairs that will need to be made. Some of Vision’s business records, including inspection reports, describe the following property conditions:
- “[H]ouse in really poor condition, some windows broke[n] or missing, walls basement filled with so much debris and holes in almost every wall and black mold chimney leaking water … dog feces in one bedroom.”
- “All floors, trim, windows, roof worn and in poor shape. Some missing copper fixtures, wires. Bathroom gutted. Rear ceiling damaged…Overall poor condition.”
- “The black mold problem is out of control at this home and may fail HUD requirements and o[u]r standards. This home would cost more in repairs, mold remediation, remodeling, and asbestos removal than current value of home. I cannot advise putting up this home to be leased out to consumers.”
The high cost of the loans combined with the cost of repairs set consumers up to fail; and Vision routinely evicted consumers who had invested substantial sums of money in repairs without offering them the foreclosure protections to which they were entitled.
Vision made about 150 loans that qualify as subprime home loans under New York law, most of which also qualify as high-cost loans under New York law, but the company never complied with requirements of New York Banking Law. Vision’s data indicates that over 40% of the seller-financing agreements it signed with New York consumers ended in an eviction or surrender of the property.
The complaint jointly filed by the Superintendent of Financial Services and the Attorney General for the State of New York contains 13 causes of action under the Dodd Frank Act, the Truth in Lending Act, New York Banking Law, New York Financial Services Law, New York Executive Law and New York General Business Law.
The case is being handled by Peter Dean, Executive Deputy Superintendent, Real Estate Finance Division, and Cynthia M. Reed, Supervising Attorney, Consumer Protection and Financial Enforcement Division, DFS.
In the New York State Attorney General’s office, the matter is being handled by: Assistant Attorney General Noah Popp of the Consumer Frauds and Protection Bureau, under the supervision of Jane M. Azia, Chief of the Consumer Frauds and Protection Bureau, and Chief Deputy Attorney General for Social Justice Meghan Faux. The Bureau of Consumer Frauds and Protection is overseen by Chief Deputy Attorney General for Economic Justice Christopher D’Angelo.
A full copy of the complaint, including property photos, can be found on the DFS website.