August 18, 2008
UFCU Helps Defrauded Homeowners Keep Their Homes
Austin, TEXAS — August 18, 2008 — Austin’s largest credit union finalized home purchases on Friday, August 15, 2008, for 11 Hispanic families victimized in recent years in a local home purchase fraud.
The University Federal Credit Union (UFCU) mortgage loans will allow the homeowners to retain residences they bought earlier this decade in what turned out to be a scam according to Texas Attorney General Greg Abbott. Closing of the new loans will be conducted at 10:30 a.m. on Friday, August 15, in the offices of the Austin Bar Association at 813 Congress Avenue, Suite 700.
Attorney General Abbott said the fraudulent home sales were conducted by Robert L. Flores of Cedar Park and a company he operated, Galindo Trust. Abbott successfully sued Flores and Galindo Trust and permanent injunctions with civil penalties totaling $1.4 million were ordered against the defendants in May of last year.
Abbott said the scam targeted Hispanic home buyers who do not speak English, some of whom lacked Social Security identification or other documents normally required of purchasers.
UFCU mortgage lending officer Yvonne Lopez-Noack subsequently began helping the families to gain financing of their homes through conventional means with a legitimate title. She says the credit union stepped in after another UFCU employee, Monica Muñoz, became aware of the situation in the fall of 2006 and suggested that the credit union investigate how it could help.
A call to Attorney General Abbott’s office led to meetings with Volunteer Legal Services of Travis County and conferences with the defrauded homeowners.
In the home-selling scheme, Flores’ company sold homes that he bought as a group from a healthcare organization, which financed his purchase. Flores then re-sold the homes but did not tell the buyers of the pre-existing liens he owed. The homes were financed using a Contract for Deed, a device that allows the seller to collect a down payment and monthly payments but not deliver ownership to the buyer until the contract is paid in full. Using this type of financing, the home buyer remains in limbo until the home is paid in full. Flores also collected for taxes and insurance but failed to make the payments.
UFCU’s Noack first stepped into the case in August of 2006 and talked with the worried homeowners in Spanish about their situation. However, all parties had to wait to act further until a court finalized legal action in 2007.
UFCU will now provide fixed rate mortgages and a property deed to the homeowners and will escrow funds for taxes and insurance for timely payment. Closing costs for the new mortgages can be added to the loans to avoid any cash expense to the borrowers, and Cindy Forrester of the UFCU Insurance Agency will review homeowners’ insurance policies to make certain the homes are insured and protected.
The homeowners will pay only the balance actually remaining owed to the original lender on their individual homes following foreclosures that were part of the Attorney General’s legal action against Flores and Galindo Trust.
“The new mortgages will secure the homes in the occupants’ names with a Deed of Trust and provide a fixed monthly mortgage payment,” said Noack.
Why would UFCU get involved and finance mortgages for people who may not have access to conventional financing?
“Part of a credit union’s mission is to help people of modest means,” said Noack. “These people made a down payment and paid their monthly installments in good faith, and they deserve to enjoy the benefits of homeownership. We’re thrilled to be able to assist them as a public service.”
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