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 the companies duped first-time buyers with misleading sales tactics that left homeowners paying hundreds more each month than expected.
Filed in the U.S. District Court for the Middle District of Florida, the lawsuit claims D.R. Horton and DHI Mortgage worked together to promote “affordable” monthly payments that didn’t include full property tax costs, a practice attorneys are calling a “Monthly Payment Suppression Scheme.”
Once the homes were sold and the mortgages transferred, homeowners say they were blindsided when their payments suddenly spiked.
Attorneys with Varnell & Warwick, P.A., Clarkson Law Firm, P.C., and the National Consumer Law Center (NCLC) are representing the plaintiffs.
They’re seeking financial relief and changes to the company’s sales practices under the Racketeer Influenced and Corrupt Organizations Act (RICO) — which could allow affected 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,” said Jennifer Wagner, senior attorney at the NCLC. “They preyed on people’s faith in the American Dream of homeownership to lure them into unaffordable, deceptive deals.”
One Florida buyer, Frankie Santiago, said he was promised a $2,164 monthly payment for a home in Lake County, but less than a year later, after his loan was sold, his new mortgage servicer recalculated escrow to include the full property taxes and past due amounts. His payment jumped nearly $1,000 to $3,136 per month.
Local mortgage expert Jason Kindler, president of First Coast Mortgage Funding, said the issue likely stems from how property taxes are estimated during new construction sales, but if done intentionally, it’s serious.
“What I believe was happening is they were being disclosed unimproved taxes,” Kindler explained. “On a new construction home, the county hasn’t assessed the full property value yet, just the land. So if the land taxes are $600 a year, but the full taxes will be $4,000, that’s a big difference. If someone intentionally left that out to make payments look lower, that’s a major problem.”
For buyers already struggling with housing affordability, the financial fallout can be devastating.
“It’s huge,” Kindler said. “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, who’s worked in new construction lending for more than a decade, said he’s seen similar situations before, sometimes due to inexperience, and sometimes due to bad actors.
“I wouldn’t be surprised if something like this sparks more conversations,” he said. “There are cases where loan officers might say whatever it takes to get the person in the home. Then a year later, the builder’s out of the picture, the loan’s been sold, and the homeowner’s left holding the bag.”
Kindler recommends that buyers, especially those purchasing new construction, ask detailed questions about how property taxes are calculated and ensure their loan disclosures reflect “improved” property values, not just land assessments.
“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 say the lawsuit aims not only to recover losses but to stop what they call a pattern of predatory behavior in homebuilding and lending.
“Our goal in bringing this class action lawsuit is to recover damages for the many people around the country who’ve been cheated and to prevent future homeowners from being lured into this predatory scheme,” said Kristen Simplicio, a partner at Clarkson Law Firm.
D.R. Horton has not yet responded to the allegations.
If you have experienced this as a local homebuyer, we want to hear from you! Email tsalameh@wjxt.com and tell us about it.