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Terry Goddard Announces Settlement Over Deceptive Home Rescue Program

(Phoenix, Ariz. – Dec. 21, 2006) Attorney General Terry Goddard today announced asettlement with Deed and Note Traders, Inc. (DNT), a Tucson-based “foreclosure assistance”company. The settlement resolves allegations that its HomeSavers program was deceptive inoffering consumers who faced foreclosure a simple way to save their homes.

The settlement requires the company to change its business practices and pay restitution tocustomers who took part in the HomeSavers program.

The complaint alleged that DNT targeted consumers in foreclosure and paid them a nominalamount of money (in one case, $25) for their homes, then permitted the consumers to leaseback their homes and re-purchase them in about 24 months. The State alleged that theHomeSavers program was deceptive and misleading because DNT did not save consumers’homes, and in most cases, the consumers were evicted.

The complaint also alleged that DNT’s Rent-to-Own program was deceptive: DNT targetedconsumers with credit problems by offering a “NO QUALIFYING” way for consumers topurchase homes. The State alleged that consumers rarely were able to purchase the homesthey were renting because the company set up too many financial hurdles for consumers toovercome.

This settlement does not constitute an admission of liability by Deed and Note Traders.

According to the settlement:

  • DNT must allow consumers who still live in their homes an opportunity to re-purchase themat a discounted price.
  • DNT must provide to eligible consumers who are no longer living in their homes restitutionequal to the equity lost to DNT. Refunds will range from $1,709 to $43,566.
  • DNT is prohibited from engaging in any type of “foreclosure assistance.”
  • DNT must finance the purchase of consumers’ homes for those consumers who continue tolease from DNT. The company must provide financing for a minimum of 15 years toconsumers for the purchase price of their homes on terms consumers have the ability topay.
  • DNT must abide by the conditions outlined in the settlement to provide Rent-to-Owntransactions. For example, DNT must possess the consumer’s completed credit applicationand other documentation that establishes creditworthiness and ability to pay the rent. TheState had alleged that DNT did not check consumers’ creditworthiness in the past because DNT never intended that they would be able to buy the properties they were renting.
  • DNT will pay the Attorney General’s Office $200,000 for the cost of the investigation.

A copy of the settlement is attached. Pima County Superior Court Judge John Kelly approvedthe settlement. Assistant Attorney General Noreen Matts handled this case for the AttorneyGeneral’s Office.