The state of Illinois is suing Safeguard Properties, the nation's largest firm that maintains foreclosed homes for lenders, alleging that it illegally broke into occupied homes of people in foreclosure or behind on their mortgages and locked them out or removed their belongings.

The lawsuit charges that representatives of Safeguard, which includes subcontracted firms, wrongly told homeowners and renters that they could not live in their homes during the foreclosure process. The case was filed this week by Illinois Attorney General Lisa Madigan in Cook County (Ill.) Circuit Court.

Under Illinois law, homeowners who have missed mortgage payments and are in foreclosure can  stay in their homes until the court-supervised foreclosure process is finished and a judge has entered an order of possession against them.

Madigan's office said more than 200 Illinois residents complained that Safeguard removed their personal property from their homes. According to the suit, in one case the belongings removed by a Safeguard contractor included a tenant's asthma pumps.

Tenants living in rental buildings in foreclosure, under Illinois law, also can stay until the lease expires, even if the foreclosure process has been completed and the building has been repossessed.

"Despite these legal protections, Safeguard has ignored and severely curtailed the rights of occupants of at-risk properties, properties in foreclosure and (bank-owned) properties by illegally breaking into homes, removing occupants' personal property, locking out occupants, turning off utilities for legally occupied property, refusing to allow re-entry into these properties, and making coercive and deceptive representations to legal occupants," the lawsuit charges.

The lawsuit accuses Safeguard of not adequately training the firms it subcontracts with to determine if a property is vacant. Safeguard officials were not available for comment.

Subscribe Now

Authoritative analysis and perspective for every segment of the payments industry

14-Day Free Trial

Authoritative analysis and perspective for every segment of the industry