Caledonia Argus

Hatch issues warning to home owners

Posted: 9/9/03

by T.W. Budig
ECM capitol reporter

Attorney General Mike Hatch urged homeowners to keep a tight grip on the deed to their homes.

Hatchís warning came the day the Attorney Generalís Office filed a civil action against a St. Paul company allegedly engaging in ìequity stripping.î

ìWe know there are other companies engaging in this practice ó itís despicable, itís fraud, it ought to be stoppedî said Hatch, speaking Friday, Sept. 5, at a Capitol press conference.

ìThis type of practice, preying on the vulnerable, has to stop,î he said.

Equity strippers often show up at the front door when a homeowner is in financial distress, facing foreclosure, Hatch explained.

In return for the deed to the home, the equity stripper may promise to lease the home back to the homeowner, perhaps with the option of buying back the home.

But several Twin Cities residents at the press conference claimed that things went terribly wrong after agreeing to such an arrangement.

According to one South Minneapolis homeowner laid off from her job at Northwest Airlines and whose sole income was a $700 a month child support check, representatives of Grant Holding ó the company named in the civil action ó contacted her shortly before her $160,000 home was subject to sheriffís sale in September, 2002.

Although she told the representative she did not see how see could pay the $1,050 a month rent, she was given documents to sign without explanation, she alleges.

She was told to repurchase her $161,000 home ó a home with about $61,000 in equity ó would cost $25,000.

She did not believe she could ever afford that amount but was eager to remain in her home with her two children, one disabled.

Ultimately, the dealings ended with her eviction in July.

The civil action Hatch filed in Ramsey County District Court is seeking information from Grant Holding, Hatch arguing it he has a right to it under the Minnesota Consumer Fraud Act.

Other than in one instance, the company has not released information, said Hatch.

According to the Attorney General Office, Grant Holding has initiated some 95 evictions or related actions in Ramsey and Hennepin county hearing courts since April 2000.

Jordan Ash, executive director of Minnesota ACORN, praised Hatch for taking interest in the problem of equity stripping.

Strippers promise to help keep people in their homes.

ìThe goal all along is exactly the opposite,î he said.

Paul Fahning, an attorney representing Edina Realty realtor Hendrie Grant and Grant Holding, said he could not comment on Hatchís allegations without knowing exactly what the attorney general said.

A call to Hendrie Grant was not returned.

Hatch said the Attorney Generalís Office is examining a half dozen equity stripping cases.

ìAnybody out there engaged in this thing think theyíve dodged the bullet, they havenít,î said Hatch.

The Attorney Generalís Office offers tips to homeowners facing foreclosure:

ïCall a reputable mortgage foreclosure counselor ó there are nonprofits and government agencies that can help.

ïDonít wait. The sooner the problem is addressed, the better.

ïBe careful. Have a lawyer or someone you trust review paperwork. Have everything in writing. Donít accept verbal promises.

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