Illinois Attorney General Lisa Madigan and Safeguard Properties reached a $1 million settlement over allegations the company illegally locked Illinois residents out of their homes before a foreclosure was finalized.
Safeguard is hired by mortgage lenders to determine whether homeowners in default or facing foreclosure are living in their homes. If a property is deemed vacant, Safeguard is responsible for securing and maintaining the property to ensure it does not lose value after it is foreclosed.
In a 2013 lawsuit, Madigan alleged that Safeguard wrongly deemed homes vacant, instructing its contractors to shut off utilities, change the properties’ locks and illegally remove residents’ personal belongings even though they actively remained in their homes.
Nearly all of the money will be paid to Illinois residents who filed complaints over Safeguard’s practices.
Additionally, Safeguard must also follow 40 operating standards in conducting inspections and other services relating to Illinois properties set by Madigan’s office to ensure homeowners’ rights are protected.
Safeguard Properties released the following statement on the matter:
“The property preservation industry plays an important role in protecting and preserving vacant and abandoned properties on behalf of the mortgage industry. Safeguard has a proud history of partnering with our clients, municipalities and communities so that these properties do not negatively impact surrounding property values, raise safety concerns or contribute to blight in communities.
From the beginning, we have respectfully disagreed with the allegations made by the Illinois Attorney General and the settlement does not include any findings of liability or wrongdoing by Safeguard or any of its contractors. We are happy that we had the opportunity to educate the Attorney General’s office as to investor requirements and the risks inherent in determining vacancy within the preservation industry. The Consent Decree memorializes those procedures that were materially already in place at Safeguard prior to the filing of the lawsuit and will allow us to ensure a laser focus on quality frameworks to minimize risks in the field.
Safeguard has a proven history of supporting the communities in which we serve. The settlement agreement is an extension of the community and consumer focus that has always been a benchmark of our service delivery model. We feel that the monetary settlement will continue to support those communities and consumers in the state of Illinois as we have always done since our founding 25 years ago.
We are pleased to have come to an amicable resolution and look forward to putting this matter behind us.”
According to the Attorney General's press release, "Safeguard agreed to overhaul its business practices to ensure that the company only secures a property that is vacant based on objective standards," including:
- Inspectors must support their inspections with photographs and an affidavit;
- Safeguard must post notice to the occupant that it has determined the property to be vacant before it enters the property;
- Safeguard is prohibited from misrepresenting the rights of occupants that are allowed to remain in their home even though they might be behind on their mortgage and in foreclosure;
- The company must increase its oversight and quality control of its subcontractors;
- Safeguard must maintain a 24-hour hotline for fielding consumer complaints; and
- The company is prohibited from removing non-perishable and non-hazardous personal property prior to foreclosure unless it has a court order, and if Safeguard makes a mistake, it must restore a consumer’s possession of the home, restore utility service, and return or reimburse any personal property that has been removed.