A Penn Hills couple whose credit was so badly damaged they couldn’t buy a new home in Florida after relocating for work.
A public school teacher who thought he was buying a home in Cranberry and never missed a mortgage payment.
A retired nurse so devastated by her husband’s sudden death she felt she needed to sell the Washington County home she’d shared with him.
All of them, the Pennsylvania Attorney General’s Office said in a lawsuit filed this week, fell victim to a rent-to-own scheme that ripped off both home sellers and buyers — and created a nightmare for both sides.
The complaint, filed in Allegheny County Common Pleas Court, names several defendants, including Charles Spencer of Cranberry and Sean Walters of Marshall, and alleges that they violated several state consumer protection laws governing landlords and tenants, loan interest and disclosures.
The lawsuit asserts that the transactions in question occurred from 2012 through at least 2020. The implications continue to unfold, the lawsuit claims, ranging from damaged credit ratings to foreclosures and thousands of dollars lost.
“The resulting defaults are wreaking havoc” on both the sellers and buyers, the lawsuit said.
The lawsuit does not specify how many alleged victims have been targeted in the scheme, but a spokesman for the attorney general said there are at least 10.
The attorney general’s office would not confirm or deny any ongoing criminal investigation into the scheme.
How it worked
According to the lawsuit, the defendants’ first step in the process was to offer to buy homes from owners looking to sell quickly.
Under the contracts, the attorney general said, Spencer and Walters were to take over and pay the mortgage; sometimes they made the payments, other times they did not, according to the lawsuit.
As part of the scheme, the lawsuit said, the defendants would have the sellers sign documentation that made the defendants the primary contact with the mortgage lender, so there would be no continuing notice to the sellers when payments were missed.
“Irrespective of the contractual mechanism used, defendants agreed and represented that they would pay off the mortgage on homeowner consumers’ homes, thus assuring them that the whole burden of home ownership would be taken off their hands when in fact it was not,” the complaint said.
The homeowners were not told that the debt or mortgage would remain in place indefinitely or impact their credit ratings, the attorney general said.
In reality, the lawsuit said, the defendants sometimes defaulted on the mortgage obligations and “created a nightmare” for the sellers and buyers, the attorney general wrote.
Then, when it came time for the defendants to sell the homes for which they’d obtained the mortgage rights, the attorney general said, they did not disclose that they did not actually have the title to the property to record a legal sale.
Instead, the lawsuit said, they implied that they did.
The defendants benefited financially, the lawsuit said. In cases when the defendants paid the mortgage, they would sell the homes for a higher price than was owed on the mortgage and pocket the difference, the attorney general alleged.
In other cases, the defendants cheated the people to whom they were selling homes, according to the lawsuit. During the covid pandemic, the complaint said, the defendants were collecting mortgage payments from the buyers while being granted a grace period by the banks holding the mortgages.
The attorney general said that provided the defendants “a gravy train,” but created “a long-term headache” for the homeowners as their mortgage debt increased.
From dream to nightmare
As part of the civil court case, the AG’s office obtained a preliminary injunction that requires the defendants to pay the impacted sellers’ mortgages; halts all evictions or other legal proceedings; and prohibits the defendants from further encumbering the affected properties.
“These defendants made the American dream of homeownership a living nightmare for unsuspecting home sellers and buyers. The defendants were deceptive and predatory, choosing homeowners who were under pressures to move quickly,” Attorney General Dave Sunday said in a news release.
In addition to Spencer and Walters, the lawsuit names several of their companies as defendants, including CSW Financial LLC; RS Capital LLC; W Group Holdings LLC; and Alpha Realty Investment LLC; Alpha Asset Management and Marlin Holdings LLC, which are all based in Millvale.
Messages left with the company, Spencer and Walters on Thursday afternoon were not returned.
Consumers who believe they may have been impacted by the scheme who have not yet been in contact with the attorney general’s office are asked to call 1-800-441-2555.