A group of homebuyers has filed a class action lawsuit against homebuilder D.R. Horton Inc. and its mortgage lending subsidiary, DHI Mortgage Co., alleging the companies engaged in deceptive home-selling and mortgage practices that left buyers with unexpectedly high monthly payments.
The homebuyers in the lawsuit allege that D.R. Horton targeted prospective homeowners by promising low, affordable monthly payments but failed to fully disclose all the costs, including most of the escrowed property taxes. As a result, homeowners claim their actual payments were hundreds of dollars higher than quoted, a discrepancy they discovered only after closing on their homes and after DHI Mortgage sold their loans to third-party mortgage servicers.
The plaintiffs are seeking to recover their financial losses and to stop the builder and lender from continuing the alleged deceptive marketing practices.
What Is Being Alleged?
If the court finds in the homeowners’ favor, they may be entitled to three times their out-of-pocket losses under the Racketeer Influenced and Corrupt Organizations Act (RICO).
The lawsuit, filed in the U.S. District Court for the Middle District of Florida, is being led by Varnell & Warwick, P.A., Clarkson Law Firm, P.C., and the National Consumer Law Center (NCLC).
“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, in a prepared statement. “They preyed on people’s faith in the American Dream of homeownership to lure them into unaffordable, deceptive deals.”
“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,” added Varnell & Warwick attorney Jeffrey Newsome.
D.R. Horton Inc. and DHI Mortgage Co. did not respond to MortgagePoint’s request for comment as of press time.
