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A federal judge in Dallas declined to rule on a temporary restraining order Thursday morning against a West Dallas landlord related to a housing fight that’s been ongoing since late 2016 that almost resulted in the displacement of 300 West Dallas families.
Attorneys for HMK Mortgage LLC agreed during a hearing to not pursue foreclosure or debt acceleration on three homeowners suing HMK until the conclusion of the lawsuit in which the homeowners allege the terms of their loans were predatory.
U.S. District Judge Sam Lindsay said the order wasn’t necessary because attorneys and their client, Khraish Khraish, the HMK landlord at the center of the legal dispute, agreed to the terms.
The only exception to the agreement not to foreclose would be if the three men suing failed to make their monthly mortgage payments.
“This agreement quite comprehensively and adequately protects plaintiffs from foreclosure or debt acceleration until the conclusion of the ongoing trial,” Lindsay said. “But I’m not going to prevent default from failure to pay their mortgages.”
Julian Campos and Roberto Barahona sued HMK Mortgage LLC last May, alleging that the terms offered by HMK were predatory and violated consumer protection laws. A third buyer, Martin Morales, joined the lawsuit Thursday after Lindsey approved the motion.
Natali Franco, interpreter, (from left) Julian Campos, Wayne Krause Yang, Mindy Henderson, Ann Maldonado Heaps, Stephanie Champion and Franklin Ortega during a press conference at the home of Julian Campos in Dallas on May 30, 2018. Legal Aid of Northwest Texas and Texas Legal Service are filing a federal lawsuit on behalf of West Dallas residents exposing reverse redlining.
Among their complaints: Terms of the loans were not made clear to them because of their lack of English proficiency and a “snatch back” clause that attorneys argue would allow HMK to call back the loan at any time.
Attorneys for HMK Mortgage LLC sent a letter in April to the men who sued, letting them know that the nature of the lawsuit was putting them at risk of foreclosure.
Wayne Krause Yang, managing attorney with the Texas Legal Services Center, the group representing Campos, Barahona and Morales, said they sought the temporary restraining order because that letter was a threat
“Basically, HMK kicked our clients out of their homes simply because they tried to exercise their rights in the American legal system,” Krause Yang said.
John Carney, an attorney for HMK, said the April letter was not a notice of debt acceleration or foreclosure on the homes but rather to inform the buyers that their attorneys were placing them in jeopardy of default due to the lawsuit filed in May 2018.
“We agreed to do what we weren’t going to do anyways,” Carney said after the Thursday morning hearing.
This legal battle is rooted in late 2016 when HMK Limited, the rental company co-owned by Khraish, took 300 homes off the market after the City of Dallas passed stricter code compliance guidelines. Khraish issued eviction notices to the families living in those properties.
But Khraish succumbed to public pressure in the months that followed and agreed to sell some homes to the tenants under terms that some public officials criticized. The homes were financed by HMK Mortgage LLC.
Carney said that about 140 homes have been sold to those families and that the deals only benefited the homebuyers due to low interest rates and either no down payments or a rent payment serving as such.
“He left a lot of money on the table to make a bunch of families first-time home owners,” Carney said.
HMK landlord Khraish Khraish (second from right) announced at a press conference that he’d changed his mind and would to sell homes to their West Dallas tenants for $65,000 in May 2017.
Campos, one of the three men suing, said he just wants the matter resolved. The 66-year-old has been living in his West Dallas home for about 15 years and wants to know what the fate of his home will be.
“We’re fighting so that we can win. We just want to keep our houses,” Campos said. “I may not be around much longer and I just want to make sure my family is OK and has the paperwork needed to keep making payments or not.”