Lawsuit Seeks Relief for Bait-and-Switch Practices That Hid the True Costs of Homes from First-Time Buyers
ORLANDO – Today, a group of homebuyers filed a class action lawsuit against D.R. Horton Inc., the nation’s largest homebuilding company, and its mortgage lending subsidiary, DHI Mortgage Co., to recover money they lost in deceptive home-selling and mortgage schemes that led to unexpectedly high monthly mortgage payments.
The homebuyers in the lawsuit, filed in U.S. District Court for the Middle District of Florida, are represented by Varnell & Warwick, P.A., Clarkson Law Firm, P.C., and the National Consumer Law Center (NCLC).
The lawsuit seeks to stop the defendants from luring homebuyers into buying more expensive homes with larger mortgages and get back all money the homeowners lost. Under the Racketeer Influenced and Corrupt Organizations Act (RICO), homeowners may be entitled to three times their out-of-pocket losses.
According to the lawsuit, D.R. Horton targeted prospective homeowners by promising low, affordable monthly payments. However, the company low-balled the true monthly costs because it excluded the majority of required property taxes.
“The lawsuit alleges that D.R. Horton and DHI Mortgage were running a ‘Monthly Payment Suppression Scheme’ to mislead first-time homebuyers into thinking their total monthly housing costs would fit their budgets,” said Jennifer Wagner, senior attorney at the National Consumer Law Center. “They preyed on people’s faith in the American Dream of homeownership to lure them into unaffordable, deceptive deals.”
Many buyers didn’t learn their payments would be hundreds of dollars higher each month until after they had closed on their homes and DHI Mortgage had sold the loans to a new mortgage servicer.
“The lawsuit claims that the home builder and its mortgage company were working together from their initial sales pitch to deceive buyers into closing on homes and mortgages by presenting artificially low monthly payments, leading to payment shock,” said Jeffrey Newsome, attorney at Varnell & Warwick.
In one instance, plaintiff Frankie Santiago was promised a monthly payment of $2,164.68 for a home in Lake County, Florida. Based on this, he chose a D.R. Horton home with a DHI Mortgage loan because the monthly payment was lower than comparable homes with similar sales prices. But less than a year after closing, Santiago’s new servicer conducted an escrow analysis that included all of the property taxes as well as the amounts he now had to cover for back taxes due to the scheme, and his monthly payment skyrocketed by nearly $1,000 to $3,136.33.
“Our goal in bringing this class action lawsuit is to recover damages for the many people around the country who’ve been cheated and to prevent future homeowners from being lured into this predatory scheme,” said Kristen Simplicio, partner at Clarkson Law Firm.
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Clarkson, a public interest law firm founded in 2014, is made up of experienced trial lawyers, paralegals, clerks, and litigation professionals. We believe the law is an integral part of society’s checks and balances, empowering everyday citizens to create change. Justice means more to us than just recovering monetary damages. Our clients are an essential part of establishing precedents and policies that help protect countless others.
Varnell & Warwick, P.A. is a nationally recognized consumer protection law firm with a strong record of success in complex litigation, including class actions and high-stakes federal cases. Our experienced lawyers are dedicated to safeguarding consumers’ rights while delivering strategic, results-driven advocacy and exceptional results.
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