Lawsuit: Providence homeowners victimized by ‘foreclosure rescue’ scheme

PROVIDENCE, R.I. (WPRI) — R.I. Attorney General Peter Neronha has filed a lawsuit against a real estate broker accused of orchestrating a so-called "foreclosure rescue" scheme.

Kyle Seyboth, owner of Seyboth Team Real Estate, allegedly tricked a Providence family into selling their home for significantly less than market value, according to a complaint obtained by 12 News.

The elderly homeowners, who Neronha said have lived at the same address for nearly 30 years, are Haitian immigrants with extremely limited English proficiency.

Neronha claimed Seyboth and his associates preyed upon the family after the homeowners defaulted on their mortgage in May 2023. The remaining payoff for their home, which has a market-value of $450,000, totaled more than $62,000, the complaint said.

He said one of Seyboth's associates approached one of the homeowners nearly a month after they were notified of their impending foreclosure, asking how much she would be willing to sell it for.

"[The homeowner] responded that she would sell it for $400,000, if she were to sell it, and then asked [the associate] if she did reverse mortgages," the complaint reads. "[The associate] answered 'yes' and gave [the homeowner] her business card, saying that someone would follow up."

The homeowner then gave the business card to her daughter, according to the complaint, and admitted that she did not fully understand what she and the associate had discussed.

Neronha said another associate texted the homeowner's daughter a few days later, proposing a plan in which he and Preferred Property Solutions, one of Seyboth's real estate firms, would add their names to the title, pay off the existing balance, develop a new mortgage repayment plan and then transfer sole ownership back to them.

The associate then explained that Seyboth was willing to offer $100,000 to make the proposal a reality, according the complaint.

Neronha said no interpretation services were provided to the family throughout the completion of the deal, despite the daughter's insistence that her parents did not understand English. The homeowners, thinking they were refinancing their home, wound up signing documents without realizing that they were transferring the deed to Preferred Property Solutions.

"The homeowners did not intend to sell their $450,000 house for $100,000, and there is no reason why they would or should have," Neronha wrote in the complaint.

Believing they had refinanced their mortgage, the homeowners continued making payments to Red Balloon Capital, another one of Seyboth's real estate firms, for the next year, according to the complaint. Meanwhile, Neronha said Seyboth listed their home for sale online for $450,000.

Neronha said Seyboth and his associates "deceived and took advantage of a Rhode Island family in danger of losing their home, preying on their financial desperation and limited knowledge of the English language."

"The alleged behavior exposes the depths to which some people will sink in order to turn a buck, robbing the [homeowners] of the place they called home for decades," Neronha said. "More broadly, it's news to no one that we have a severe housing crisis on our hands, and this alleged behavior only exacerbates our housing problems, forcing families already in financial distress onto the streets."

Neronha believes Seyboth and his associates have violated the Deceptive Trade Practices Act, and is now seeking civil penalties and injunctive relief on the homeowners' behalf, including voiding the sale altogether.

"As tragic as this case is, I am hopeful that [the homeowners] will see their home returned to them, and grateful that we have the Deceptive Trade Practices Act as a tool to hold accountable these types of bad actors," he said. "I hope this story reaches other Rhode Islanders who have experienced unlawful real estate transactions, as we stand ready and willing to investigate and prosecute those who make a living off of swindling others out of their homes."

Seyboth took the listing down and promised not to kick the family out of their home as a result of Neronha's complaint.

"We deny the allegations in the complaint and remain confident that the facts of the matter will show that the Seyboth Team Real Estate has acted lawfully," a spokesperson told 12 News. "We will put forth a vigorous defense and will not comment further on pending litigation."

Anyone who believes they may have fallen victim to a "foreclosure rescue" scheme or other unlawful real estate transactions is urged to contact Neronha's office by calling (401) 274-4400 or filing an online complaint .

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