Over 1,000 "uninformed" and "unrepresented" homeowners in Monroe County, Pennsylvania are expected to join in a recently filed class action lawsuit filed against developer Gene Percudani, appraiser Dominick Stranieri and William Spaner of Chase Manhattan Mortgage Corporation, claiming real estate fraud.
After hosting meetings to interview more than 1,200 homeowners who claimed they were defrauded, attorneys filed a 38-page complaint with the United States District Court in Scranton. They stated that the defendants operate a fraudulent scheme that "culminates with a customer purchasing a house in excess of its true value. The scheme resulted in severe financial hardship or ruin, often resulting in foreclosure, bankruptcy, and irreparable damage to the customer's credit rating."
The lawsuit seeks punitive damages, alleging violations of the federal Racketeer Influenced and Corrupt Organization (RICO) Act, the Pennsylvania Unfair Trade Practices and Consumer Protection Law and Pennsylvania common law, according to Matt Birkbeck of the Pocono Record, who has been following this story since he did a special report in April.
Attorney Steven Weiss of Seeger Weiss LLP of New York City stated that the fraud was systematic and he expects more than 1,000 homeowners to be part of the lawsuit - homeowners he states were "uninformed" and "unrepresented." Two other law firms from Philadelphia are also representing plaintiffs --Merovitz & Cedar LLP and Banks, Banks & Weidman.
Home buyers were enticed to buy homes from the developer with television, radio and print ads that stated "Why-Rent" when you could a new home for $1,000 down and $685 monthly mortgage payments. They saved up for a down payment by sending monthly payments to the developer for a year, while the home was being built. The development company would "take care of everything, including the financing, appraisal, title insurance and an attorney to protect the buyer's interest at the closing."
Home buyers found out at closing that the amount they were promised for a monthly mortgage payment was not true - they were required to pay more. Rather than lose the money they had already put toward the home purchase, they closed on the loans.
The district attorney from Monroe County and the state attorney general formed a real estate task force to investigate the homeowners' complaints after the story broke in the Pocono Record. The newspaper and the reporter, Matt Birkbeck, have been sued by Raintree Homes and Chapel Creek financial services.
Related Stories:
Pat Rioux
