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AG Cooper shuts down illegal real estate scheme

Release date: 6/17/2005

Integrity Investment Properties of Raleigh failed to buy, resell homes as promised

Raleigh: A real estate operation that used a complicated land trust scheme to deceive home sellers and buyers has been ordered to stop doing business, Attorney General Roy Cooper announced today.

“Integrity failed to live up to its name by misleading its customers at every turn,” said Cooper. “The company and its owner led homeowners to the brink of foreclosure rather than helping them sell their homes quickly as promised.”

Wake County Superior Court Judge Kenneth Titus today agreed with Cooper and the North Carolina Real Estate Commission’s request to temporarily stop Integrity Investment Properties, LLC of Wake County also known as Mi Casa, LLC and its manager Steven D. Gray from doing business while Cooper’s case against the company goes forward. Cooper this week filed suit against Integrity for unfair and deceptive trade practices and operating as a real estate broker without a license. He is asking the court to permanently stop Integrity’s illegal real estate business and order Integrity to cancel all contracts with consumers and pay them refunds.

According to the complaint, Gray incorporated Integrity in March of 2002 and began pitching the company’s real estate services online, in local newspapers and on Spanish-language radio stations in July of that year. Advertisements claimed that the company could help buyers purchase a home in twenty-four hours without credit, a mortgage application or even going to the bank. Integrity also sent letters to homeowners who were trying to sell their homes claiming to be a real estate investment company interested in buying homes in the Triangle area.

Cooper alleges that rather than buying and selling homes legally, Integrity ran an elaborate scheme through which it placed the title to homes in a trust and then leased the homes while leaving the actual owners responsible for the existing mortgage. Integrity leased the homes to people who wanted to purchase them, collecting large “down payments” and requiring tenants to secure financing to buy the home within three years or forfeit all payments they had made. Because Integrity priced the homes above their actual market value, it was highly unlikely that any tenant would be able to find the financing needed to actually purchase one of the homes, nor did the company apply the down payment to the purchase price.

Although Integrity promised to pay the mortgages on homes it “bought” from sellers, the company never assumed responsibility for the mortgages and sometimes failed to make payments, putting homeowners at risk of foreclosure. According to one typical homeowner’s story, Integrity promised to purchase her home and make payments on the mortgage until they found a buyer for her house. The company claimed that it would take only a few months to sell the home and that she would be able to go ahead with the purchase of a new home. However, she was unable to get a loan for a new home because despite Integrity’s claim to the contrary, she remained responsible for the mortgage on her old home. Integrity leased her home and collected rent from the tenant but sometimes failed to use the money to make timely payments on her mortgage, placing the homeowner in jeopardy of losing her home to foreclosure.

A total of 16 consumers complained to Cooper’s office about Integrity’s practices. Other consumers who wish to file a complaint about Integrity can contact the Attorney General’s Consumer Protection Division at 1-877-5-NO-SCAM.

A bill that would provide additional safeguards for homeowners who wish to sell their homes through real estate resale dealers is currently pending in the North Carolina General Assembly. The measure, House Bill 725 sponsored by Representative Deborah Ross, would require resale dealers to make disclosures to customers and obtain a bond that could be used to pay refunds if needed.

“A home is the most important purchase most people will ever make,” said Cooper. “If you’re in the market to buy or sell your home, watch out for companies whose claims sound too good to be true.”