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The $42 million pact is the first of its kind to resolve complaints that a mortgage servicer treated foreclosed homes differently based on the racial composition of the neighborhood.
June 6
Safeguard Properties on Tuesday filed a motion to dismiss a fraud complaint by Illinois Attorney General Lisa Madigan that seeks to bar the Cleveland property inspection company from doing business in Illinois because inspectors broke into occupied homes.
Last month, Illinois became the first state to legally claim that Safeguard had "unlawfully dispossessed legal occupants of their homes." Property maintenance has become a new area of liability for large banks that have hired Safeguard and others to secure homes in foreclosure and to maintain real estate-owned properties.
Illinois's lawsuit cited four borrowers whose homes were broken into by Safeguard or its subcontractors while the homes were still occupied. In one case, a 15-year-old girl called 911 thinking the home was being robbed, and two subcontractors were arrested. In another case, an Army reservist returned from military training to find several doors had been broken, locks changed, and utilities shut off.
Safeguard alleges that Illinois did not provide enough facts to claim either deceptive or unfair conduct other than alleging that more than 200 complaints had been filed by Illinois consumers concerned about the removal of personal property.
"Even if all (the complaints) were accepted as accurate, those complaints would still represent an extremely small percentage of Safeguard's work in Illinois," the company stated in its defense.
