Tuesday, January 25, 2005

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Attorney General Abbott Hails $3.5 Million Judgment Against Business For Scamming Hispanic Homeowners

AUSTIN – Texas Attorney General Greg Abbott today applauded a $3.5 million judgment against a Texas-based business for bilking hundreds of Hispanic homeowners out of tens of thousands of dollars before its owners fled the United States. State District Judge Adolph Canales also issued a permanent injunction against City Mortgage Services, Inc. (no affiliation to CitiBank, CitiMortgage or Plano-based City Mortgage Group ) and its principals, Gustavo Duarte and Alfredo Mendez, preventing the company from defrauding any more consumers with its “debt-reduction service.”

“This judgment shows Texas is serious about cracking down on brazen schemes that target the Hispanic community,” said Attorney General Abbott. “Home ownership is one of our most cherished dreams, and I will not tolerate City Mortgage or any other fraudulent operation exploiting those aspirations for dishonest gain.”



City Mortgage FliersCity Mortgage
"Guarantee Certificate"


The judge found City Mortgage violated the Texas Deceptive Trade Practices Act and the Texas Home Solicitation Act, and ordered the defendants to pay $3.3 million in civil penalties and $210,000 in restitution for the consumers.

City Mortgage, which had offices in Austin, Dallas, Fort Worth and Houston, dispatched teams of door-to-door salespeople throughout Hispanic neighborhoods, touting the company’s “debt-reduction service.” City Mortgage promised consumers it would save them thousands of dollars by withdrawing money from their accounts and then forwarding to their mortgage company a larger monthly amount than their regular mortgage payment, thus reducing the number of years it took to pay off the loan. The company, which charged families between $700 and $1,000 to sign up for the service, failed to forward hundreds of payments and instead pocketed the money. City Mortgage shut down abruptly in 2004, leaving consumers owing their mortgage companies substantial amounts of money in missed payments and late fees. The owners fled the country and are being sought.

The judge’s order also found City Mortgage failed to inform consumers its service was something the homeowners could do themselves by dealing directly with their mortgage companies. Consumers who believe they have been victimized by City Mortgage or similar operations should contact the Office of the Attorney General at 1-800-252-8011. Assistance is available in English and Spanish.

Permanent injunction and final order against City Mortgage

Lawsuit against City Mortgage