‘A Homeowner’s Worst Nightmare’

CHICAGO (CN) - Safeguard Properties, one of the nation's largest loss-prevention services, illegally evicts people before foreclosures are complete, breaks into homes, changes locks and shuts off utilities while the owners are legally living there, the Illinois attorney general claims in court.

Attorney General Lisa Madigan sued Safeguard Properties in Cook County Court.

Safeguard contracts with banks and other mortgage lending institutions to protect foreclosed properties by boarding up doors, changing locks, and winterizing pipes. It also helps coordinate evictions, offering occupants "cash-for-keys," and monitors the house for squatters. The Ohio-based company is the nation's largest privately held businesses to offer these loss-prevention services.

In Illinois, "homeowners in default on their mortgage payments have the right to remain in their home until the foreclosure process has been completed and an order of possessions has been entered against the homeowner. Similarly, tenants in foreclosed buildings often have the right to remain in their homes for the duration of their lease, even after the foreclosure process has been completed," Madigan says in the lawsuit.

"Despite these protections, Safeguard has unlawfully dispossessed legal occupants of their homes by breaking into occupied houses, locking the occupants out of their homes, removing the occupants' personal property, and shutting off utilities in the home, often in the face of clear evidence that the property remains legally occupied." Safeguard also lies to homeowners and tenants, telling them they are no longer legally allowed to remain in their homes, Madigan claims.

"This case shows the lengths that banks and their service providers will go to abuse and intimidate borrowers in foreclosure," Madigan said in a statement. "This company was illegally breaking in to people's homes, removing all their possessions and locking them out. It is a homeowner's worst nightmare."

In one example cited by the lawsuit, a Safeguard subcontractor knocked down homeowner Barry Tatum's front door with a sledge hammer, although the porch light was on, then left the property without fixing the door.

In another case, a Safeguard subcontractor broke into homeowner Dilene Bishop's home when she was behind on her payments, but not in default. The subcontractor changed the locks, shut off the water, and winterized the property while Bishop was out, and left a notice on her door informing her that she was locked out, Madigan says.

"Neither CitiMortgage nor Safeguard had legal justification to dispossess Ms. Bishop or her home," the complaint states.

When Bishop called Safeguard and demanded keys to her home, the company "told Ms. Bishop that she was not entitled to reside at the property."

Madigan says her office has received more than 400 complaints about Safeguard.

Madigan seeks an injunction permanently barring Safeguard from providing its services in Illinois, and civil penalties of $50,000 for each violation of the Consumer Fraud Act, or $60,000 if the violation was committed against a senior citizen.

Safeguard spokeswoman Diane Fusco said in an email: "Safeguard Properties intends to vigorously defend against this lawsuit, as this is an industry-wide issue. The property preservation industry plays an important role in protecting and preserving vacant and abandoned properties on behalf of the mortgage industry. We follow industry best practices in performing services on behalf of our clients, and are proud of our record of quality. Our mortgage servicing clients routinely and thoroughly audit our policies and procedures, both for quality assurance, and to assure that we comply with all regulatory requirements that affect them."

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