Lawsuit alleges broker misled homeowners into selling properties far below market value
The Rhode Island Attorney General has filed a lawsuit against real estate broker Kyle Seyboth and several associates, accusing them of running a deceptive “foreclosure rescue” scheme that exploited vulnerable homeowners.
The complaint, filed in the Providence County Superior Court, alleges that the defendants deceived vulnerable homeowners into selling their properties below market value under the guise of mortgage refinancing.
The report suggests Seyboth and his associates targeted homeowners with limited English proficiency, including the Delva family, Haitian immigrants who had lived in their Providence home for nearly 30 years.
Facing foreclosure due to a $61,000 mortgage default, the Delvas were approached in mid-2023 by representatives of Seyboth’s companies. The family was reportedly led to believe they were refinancing their mortgage when, in reality, they had unknowingly transferred the title of their $450,000 home to the defendants’ company, Preferred Property Solutions.
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The lawsuit claims the defendants misrepresented their intentions, failed to provide requested translation services, and continued collecting payments from the Delvas under the pretense of a legitimate mortgage arrangement. The property was subsequently listed for sale by Seyboth’s company, Red Balloon Capital, for $450,000.
The case was filed under Rhode Island’s Unfair and Deceptive Trade Practices Act (DTPA), which was strengthened in 2021 to provide broader consumer protections. The Attorney General’s office seeks civil penalties, injunctive relief, and a court order voiding the fraudulent property transfer to restore ownership to the Delva family.
In response to the lawsuit, the defendants agreed to remove the property from the market and leave the Delvas family undisturbed until the court holds a hearing on the Attorney General’s motion for a preliminary injunction.
“As alleged, the defendants 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,” said Attorney General Peter Neronha. “The alleged behavior exposes the depths to which some people will sink in order to turn a buck, robbing the Delvas of the place they called home for decades. And 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 on to the streets.”
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