Winston & Strawn Attorneys Join Our Fight Against Predatory Lending
A multifaceted collaboration led to the successful settlement of a Federal Case against landlord/mortgage lender HMK. The settlement enables vulnerable people to escape the predatory loan conditions that jeopardized the security of their homes.
In 2018, Legal Aid of NorthWest Texas and Texas Legal Services Center filed a federal lawsuit alleging the landlord/mortgage lender HMK violated a number of consumer protection laws, including the Truth in Lending Act. The lawsuit also claimed that HMK induced the plaintiffs, who are West Dallas residents, into signing illegal contracts containing predatory terms without their knowledge or the required disclosures from HMK.
All parties settled in June when HMK dropped the controversial restrictions in mortgages it granted in 2017 — a huge victory for the 150 low-income families involved. The original terms included a "due-on-demand" clause that allowed the lender to call the loan at any time, for any reason or no reason at all. These terms stayed in effect for the entire life of the loan, which could have left the families on the streets, even if they had paid off 95% of the mortgage.
We want to thank Thomas Melsheimer, Matthew Orwig, Alex Wolens, and Ahtoosa Amini Dale from Winston & Strawn's Dallas office for their assistance in this case. Ahtoosa and Alex developed the trial documents, such as jury charges, that allowed us to convince the defendants to meet all our clients' demands and ultimately avoid trial. Without Winston & Strawn's involvement, these families may have never realized the security of true homeownership, which is particularly critical during this ongoing health crisis.
Interested in learning more about collaborating with Texas Legal Services Center and our pro bono program? Contact Development Director Amanda Hill.
Photo by Nathan Hunsinger / Staff Photographer with The Dallas Morning News
More About the Case
Settlement in Long Simmering Dallas HMK Housing Controversy
The parties announced a settlement Thursday in the HMK affordable housing controversy that has been simmering for years in Dallas. Landlord HMK first refused to repair old rent houses, then sold them to tenants with strings attached. Now, HMK has agreed to drop controversial restrictions in mortgages it granted in 2017 on substandard properties.
"We are here today to dismiss this case. We're doing this because HMK has done everything that we asked of them," said Buyers Attorney Wayne Krause Yang.
The restrictions allowed HMK to demand the property back from buyers and granted the company the right of first refusal on future resales.
Univision, Dallas - Fort Worth
After years of legal battles, 140 West Dallas families own the homes in which they live
With the help of a team of lawyers, residents of a small area of the city filed a federal lawsuit against a company that had imposed mortgage terms that they claimed were "abusive." Finally, both parties reached an agreement that will allow these people to stay or sell the homes.
Texas Legal Services Center
Case Alleging Lending Violations Moves Closer to Being Heard by Jury
A federal judge issued a ruling today ensuring that West Dallas homeowners will have a trial on whether a lender violated numerous consumer protection laws. In denying HMK Mortgage, LLC’s motion for summary judgment, Judge Brantley Starr removed the last barrier to a jury hearing the plaintiffs’ claims in a lawsuit filed nearly two years ago. The trial is set for late June.
The Dallas Morning News
Two former HMK tenants sue over West Dallas home purchases, as affordable housing saga moves to courtroom
The suit was brought by Julian Campos, a Mexican immigrant, and Roberto Barahona, a Salvadoran immigrant. Both are Spanish-speakers with limited English who signed agreements to purchase houses.
HMK “knowingly and intentionally took advantage of their lack of experience and capacity by foisting lengthy, wordy contracts in English minutes before they were to be signed,” according to the suit. The suit seeks to get contract language changed and to award damages to plaintiffs.
“I am worried and disappointed,” said Campos, a 66-year-old construction worker.
Campos and several attorneys from Legal Aid of NorthWest Texas and the Texas Legal Services Center detailed the suit at the modest, butter-yellow corner house that Campos has called home for more than a decade.
Former Tenants Sue Over HMK Contracts to Buy Homes
The deal to sell low cost homes to tenants of landlord HMK, Ltd. a year ago came under fire Wednesday in a federal lawsuit.
Lawyers representing two former tenants said the deal was illegal. They want a Federal Judge to order changes. “Our clients thought they had bought themselves a home and a life. But what they were sold was something very different,” said attorney Wayne Krause Yang with Texas Legal Services Center.
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