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Safeguard attempts to overcome Illinois legal controversy

Fights AG's claim of wrongful eviction practices

November 13, 2013
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By now firms involved in eviction services know Safeguard Properties is embroiled in a bitter legal battle with the Illinois Attorney General. Earlier this year, the AG accused Safeguard of wrongfully evicting homeowners by "breaking into their homes, changing locks to bar residents" and shutting off utilities.

The claims are shocking on their face, putting Safeguard in the position of defending itself in a public fashion.

"This case shows the lengths that banks and their service providers will go to abuse and intimidate borrowers in foreclosure," Madigan said in a statement back in September when the action began. “This company was illegally breaking in to people’s homes, removing all their possessions and locking them out. It is a homeowner’s worst nightmare."

But now, Safeguard is pushing back, filing a motion to dismiss the case, which on its face seems less routine in nature and more evident of an agency that feels it’s being unfairly treated in the court of public opinion.

Generally, a motion to dismiss a complaint is standard – and often boring. That's not the case with Safeguard. They seem to be taking the allegations hard and are ready to go on the defense.

While attempting to shoot down the AG's allegations, the firm suggests it's caught in a strange dichotomy. On one hand, Chicagoland is rough on financial firms that fail to keep up with distressed properties that are vacant. They even tried to get rougher last year before having to carve back on new, proposed rules. On the other hand, Safeguard claims the Illinois AG is pinging the firm over four isolated instances against the backdrop of 90,000 home inspections each month.

The AG essentially accused Safeguard of violating provisions of the Illinois Consumer Fraud Act in an attempt to bar the company from operating in the state. 

But Safeguard claims in its motion to dismiss that the state "acknowledges two of the four properties were vacant (albeit not abandoned) at the time Safeguard vendors performed initial securing services."  And those two homeowners included a deployed service member and a homeowner living elsewhere with an ill family member.

Safeguard says in a third incident, a vendor who found a home occupied, backed off and repaired door damage from his entry.

Safeguard says the state failed to allege sufficient facts to supports its theory that the property inspection firm violated any of the provisions of the Illinois Consumer Fraud Act.

The company also claims the state does not possess the facts to justify the massive injunctive – or the operations ban – that it currently seeks against Safeguard in Illinois.

Safeguard says Illinois also failed to support its claim that the business deployed deceptive conduct when a vendor left an unspecified message on a home. Safeguard claims the message clearly stated that the home was found abandoned and will be reported as such unless someone calls the number provided to report the vacancy as an error.

The firm contends this so-called deceptive message was clear and intended to inform the borrower.

Safeguard also is asking the court to strike the state’s demand for $50,000 in penalties for each violation. The company believes the state failed to plead any deceptive conduct or share facts ‘showing an intent to defraud,' making the demand for excessive penalties unwarranted in Safeguard’s opinion.

In addition, the firm is accused of inducing borrowers to rely on its vacancies notices. However, Safeguard claims the messages it posted advised homeowners to call Safeguard if they found the property marked as 'abandoned' in error. The company does not see them as an inducement.

But Safeguard’s overall policy argument is this: Chicago wants vacant properties cleared up – and Safeguard's practices are in accord with this public policy, the firm contends.

The company even cites a Chicago Municipal Ordinance that requires a lender to determine if a mortgaged property in default is vacant and to protect the property from decay and other issues within 30 days time.

Overall, Safeguard contends it is serving the public interest and is performing with only these four cases being scrutinized. The company also contends the four cases are isolated incidents and suggests the consumer act is not intended to provide "relief for one-off errors."

Either way, the legal battle over these vacancy postings is heating up, with pointed assertions coming from both sides.

Click here to read the AG's initial statement (a link to the complaint is provided at the bottom).

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