Fair housing lawsuit targets Indy rent-to-own operator

City officials on May 25, 2017, demolish a home, a duplex in the Brookside neighborhood that was damaged by a fire and had become a source of crime as well as a safety issue. (Marcus Collins/WISH Photo)

INDIANAPOLIS (WISH) — A city housing center and four residents on Tuesday filed a class-action lawsuit against a local rent-to-own housing operation.

The lawsuit says the companies have purchased close to 1,000 empty, dilapidated houses in Marion County to perpetrate a predatory and unlawful rent-to-own scheme. Their efforts saddle customers with houses in terrible condition, sales prices inflated by up to 500 percent, exorbitant interest rates and high late fees, the Fair Housing Center of Central Indiana said in a news release.

Jim Hotka operates Rainbow Realty Group Inc. and Empire Holding Corp., which are named in the lawsuit. He said the lawsuit against his realty firm at 6104 E. 21st St. is frustrating.

“We’re a good company. … We spend millions of dollars a year helping fix properties here in Indianapolis.”

“I know for a fact we haven’t violated any federal housing laws. I know we haven’t,” he said in a phone call with 24-Hour News 8.

The lawsuit, filed in the federal court in Indianapolis, comes after years of the city trying to address what it has called a growing abandoned home problem. Earlier this month, Mayor Joe Hogsett helped use a large piece of construction equipment to demolish a house and focus attention on his neighborhood investment strategy to bring more than 2,000 homes in Indianapolis back to healthy life.

The residents filing the lawsuit are Nelly Espinoza, Mory Kamano, Marvin Martinex and Norma Tejeda, all of Indianapolis. The lawsuit says Hotka and his companies count on customers not knowing the true condition or value of their houses before they sign a contract. Plus, his companies’ efforts are targeted at Marion County’s high-minority neighborhoods and minority residents, the housing group’s release said.

Amy Nelson, the housing center’s executive director, said in the release that her group has “interviewed dozens of people who put hundreds to thousands of dollars into their homes in the hope of getting their houses to a condition that was livable, depleting their finances, until eventually they were overwhelmed.

“They are then evicted, without any protection or recognition of the equity they had put into their homes.” Nelson said.

Hotka said his companies have been in business for years — since 1974, according to media reports. They buy properties from lenders who are not maintaining them, manage hundreds of properties across central Indiana, spend millions of dollars fixing up homes in Indianapolis and have hundreds of happy customers.

“It depends what spin you want to put on it,” he said. “You could say we’re taking advantage of people, or you could say we’re out here helping people.”

“I know for a fact we haven’t violated any federal housing laws. I know we haven’t.”

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