A federal judge has given the go-ahead to a suit accusing a Texas firm of targeting minorities as it preyed on would-be homebuyers in Atlanta.
U.S. District Court Judge Richard Story denied Harbour Portfolio’s motions to dismiss the suit brought by 17 plaintiffs. The plaintiffs say they were misled by Harbour Portfolio and associated companies into thinking they were becoming owners when they signed agreements that effectively made them renters.
It was a scheme aimed at deceiving and exploiting people who only wanted to join the ranks of homeowners, said Sarah Bolling Mancini, an attorney with the Home Defense Program of the Atlanta Legal Aid Society.
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“This is a very important case brought by consumers who were attempting to pursue the American Dream,” she said. “Harbour’s contract for deed transactions required them to take on all of the obligations of home ownership with none of the rights.”
A message requesting comment from Dallas-based Harbour was not returned.
Harbour bought relatively low-cost homes in a number of cities in the aftermath of the housing crisis. The company offered what are known as “contracts for deed,” in which a resident takes possession of a house and pays Harbour monthly. The resident is typically responsible for repairs.
But the arrangement does not allow the resident to accumulate equity. So if the resident skips payments, he or she can be evicted, like any renter, the suit alleges. The lawsuit cites a University of Texas study that found about 45 percent of contract for deed purchasers defaulted during a 20-year period. Fewer than one in five ever received a deed for the property.
The plaintiffs also accuse Harbor of buying homes – and marketing the deals – in minority areas.
“The discriminatory targeting of these contracts prevented the plaintiffs from building equity, despite being told repeatedly that they were becoming homeowners,” Mancini said.
The judge did grant several of Harbour’s motions, tossing out one plaintiff’s claim that Harbour had violated federal truth-in-lending laws because the time limit for filing had elapsed. Other claims for “malicious eviction” were dismissed because only three of the plaintiffs have been evicted.
However, all 17 plaintiffs remain, since each of them still has some claims that the judge said could go forward.
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AJC Business reporter Michael E. Kanell keeps you updated on the latest news about jobs, housing and consumer issues in metro Atlanta and beyond. You'll find more on myAJC.com, including these stories:
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