Magazine article Mortgage Banking

Safeguard Files Motion to Dismiss Illinois AG Lawsuit

Magazine article Mortgage Banking

Safeguard Files Motion to Dismiss Illinois AG Lawsuit

Article excerpt

On Nov. 12, Valley View, Ohio-based Safeguard Properties filed a motion to dismiss a lawsuit brought in September by the Illinois attorney general (AG) that accuses the property preservation company of allegedly making incorrect vacancy determinations on homes and then entering properties, shutting off utilities and changing the locks.

The motion to dismiss the lawsuit maintains that the AG's lawsuit is based on only four alleged instances since 2008 out of the roughly 90,000 property inspections that Safeguard performs in Illinois monthly.

Field service companies follow federal guidelines and state and local laws in carrying out inspections of properties where owners are delinquent on their mortgages. They are required to secure those that are found vacant or abandoned to preserve the value of the property against vandalism or blight.

The Illinois AG office asserted in its lawsuit filed on Sept. 10 that Safeguard had violated the Illinois Consumer Fraud Act (ICFA). In a press release announcing the suit, Illinois Attorney General Lisa Madigan alleged that "Safeguard routinely deemed occupied properties in Illinois as vacant, instructing its contractors to winterize and secure homes that occupants still had a legal right to live in."

Madigan stated in the release, "This case shows the lengths that banks and their service providers will go to abuse and intimidate borrowers in foreclosure." The subhead on the AG's press releases states: "Attorney General Sues Safeguard Properties LLC for Breaking into Legally Occupied Homes, Changing Locks & Shutting Off Utilities."

In its motion to dismiss, Safeguard states, "The Attorney General's Office has used this complaint as a springboard for castigating Safeguard unfairly in the press, but the complaint does not state a valid ICFA claim."

Safeguard's motion explains that the state has asserted that the AG's office "is aware of over 200 complaints from Illinois consumers against Safeguard." Safeguard asserts that by itself does not support a finding of a "widespread practice." Safeguard's motion further argues, "The ICFA requires the state to plead facts showing actual violations of the ICFA, not generalized assertions."

The motion also states, "The state contends that Safeguard deceived mortgagors by placing a sticker on the door of properties found to be vacant. …

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