D.R. Horton Sued for Allegedly Deceptive sales Tactics, Inflated Homeowner Costs
A group of Florida homeowners has filed a federal class action lawsuit against D.R. Horton, the nation’s largest homebuilder, and its lending arm, DHI Mortgage Co., alleging a scheme to mislead first-time buyers with artificially low monthly payment estimates. The lawsuit, filed in the Middle District of Florida, claims homeowners were blindsided by substantially higher payments once their mortgages were transferred and full property taxes were applied.
The legal action centers around what attorneys are calling a “Monthly Payment Suppression Scheme,” where D.R.Horton and DHI Mortgage allegedly promoted “affordable” monthly payments that deliberately excluded the full cost of property taxes. This practice, plaintiffs claim, left them paying hundreds of dollars more each month than initially represented.
Attorneys representing the plaintiffs – from the firms Varnell & Warwick, P.A., Clarkson Law Firm, P.C., and the National Consumer Law Center (NCLC) – are seeking both financial relief for affected homeowners and systemic changes to the company’s sales practices. thay are pursuing the case under the Racketeer Influenced and Corrupt Organizations Act (RICO), a powerful legal tool that could allow buyers to recover up to three times their losses.
“the lawsuit alleges that D.R. Horton and DHI Mortgage were running a scheme to mislead first-time homebuyers into thinking their total monthly housing costs would fit their budgets,” explained Jennifer Wagner,a senior attorney at the NCLC. “They preyed on people’s faith in the American Dream of homeownership to lure them into unaffordable, deceptive deals.”
Frankie Santiago, a Florida homeowner and plaintiff in the case, recounted being promised a monthly payment of $2,164 for a home in Lake County. However, less than a year later, after his loan was sold to a new servicer, his payment unexpectedly jumped to $3,136 per month due to the inclusion of full property taxes and past due amounts – an increase of nearly $1,000.
Industry experts suggest the issue often stems from the way property taxes are estimated during new construction sales. Jason Kindler,president of First Coast Mortgage Funding,noted that on new construction homes,counties typically assess taxes based on land value initially,rather than the improved property value.”If the land taxes are $600 a year, but the full taxes will be $4,000, that’s a big difference,” Kindler said. “If someone intentionally left that out to make payments look lower, that’s a major problem.”
the financial consequences for homeowners already struggling with affordability can be severe. “If you go in thinking you’re paying $2,000 a month and suddenly it’s $3,000, that person may not be able to afford that. For some, it could mean foreclosure,” Kindler cautioned.He added that he’s observed similar situations throughout his decade-plus career in new construction lending, attributing them to both inexperience and intentional misconduct.
Kindler recommends prospective buyers, notably those purchasing new construction, proactively inquire about how property taxes are calculated and ensure their loan disclosures reflect “improved” property values. “At my company, we use an estimated tax calculator for every Northeast Florida county,” he said. “It’s not perfect,but it gives people a much better idea of what their payments will really be once the home is assessed.”
Attorneys involved in the lawsuit emphasize their goal extends beyond individual compensation. “Our goal in bringing this class action lawsuit is to recover damages for the manny people around the country who’ve been cheated and to prevent future homeowners from being lured into this predatory scheme,” stated Kristen Simplicio,a partner at Clarkson Law Firm.
As of today, D.R. Horton has not issued a public response to the allegations.
Local homebuyers who believe they may have been affected by similar practices are encouraged to contact WJXT News4JAX at [email protected].
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