An embattled real estate company accused of predatory lending
has shuttered its doors, becoming an additional signal of a
slumping housing market.
GILROY
An embattled real estate company accused of predatory lending has shuttered its doors, becoming an additional signal of a slumping housing market.
On Monday, the Morgan Hill offices of Rancho Grande Real Estate looked like the properties they used to sell. The rooms were dark and bare of furniture, with only the stubs of phone cords projecting from the ground and walls. At ACR Investments – a San Jose-based company owned by the same owners as Ranch Grande – work numbers were disconnected and cell phones were not answered. In addition, the company terminated its contract with its public relations firm, which knew nothing about the closure, former spokesman Juan Lezama said.
“It’s absolutely the market,” said Patty Filice, broker associate with Intero Real Estate Services. “When things were hot, people ramped up.”
Business hired staff to meet the demand of high home sales, she said. When home sales declined, businesses were forced to slim down their operations. In Santa Clara County, only 1,200 homes were sold in November, a 40 percent decrease from the same month last year, according to DataQuick – a company that provides land and real estate numbers.
Rancho Grande is not the only business in South County to be hit by the slump. Century 21 Premier, which had employed 90 real estate agents, hurriedly closed its doors in mid-September due to dwindling profits and a large stock of unsold homes. Alliance Title, a nationwide company that handles the financial end of closing home sales, shuttered its offices in Morgan Hill and Gilroy earlier this month, Filice said.
Besides a slumping housing market, the owners of Rancho Grande are in trouble with the California Department of Real Estate and faced losing their license, department spokesman Tom Pool said.
Staff at ACR Investments sold a $720,000 Hollister home with $5,200 monthly payments to two couples who made a combined $6,500 per month picking strawberries, Deputy Real Estate Commissioner Charles Koenig wrote in an accusation of wrongdoing. The company should have known that the families could not make these payments and that the home would go into foreclosure – both of which happened – Koenig continued.
A similar story surfaced in Gilroy, where couple Maria Alarcon Garcia and Julio Romero saw their $820,000 home go into foreclosure. Though the couple spoke only Spanish, they bought the house by signing forms in English and using the translation of Rancho Grande’s owner, Maria Avila, the couple said.
While the couple signed forms, Avila promised the couple monthly payments of $3,200 – a tough but acceptable proposition as it constituted more than 90 percent of their income – the couple said. However, the couple saw payments of about $5,300, fell behind and watched as their credit and dreams were shredded.
The couple has not filed a complaint or a lawsuit against the company, however.
As for the existing department complaint, Rancho Grande’s closure will not affect it, Pool said.
“Any accusation that we file, it’s serious,” he said. “The fact that these folks have closed down doesn’t have any bearing on the accusation that has been filed.”
The attorneys in the case are still exchanging evidence before setting a preliminary hearing date, Pool said. Though it could take months before the complaint is settled, some people might already have found closure.
Given the nature of the complaints, “One might think that it’s a good thing that they’re not operating any more,” he said.
