Metro Detroiters sue EasyKnock Inc. over deceptive sale, leaseback of their homes

Randee Noggle has one wish — for her family to be able to stay in their home.

On Thursday, a federal judge ordered that to be the case — for now — for the Noggle family, of Taylor, and several other metro Detroiters who filed a civil lawsuit against a New York company, alleging it lured them into deceptive sale and leaseback transactions of their homes.

The seven plaintiffs allege they "rent" their homes from the company with monthly payments they can't afford. They've fallen behind on their rent and face risk of eviction, according to filings this week in U.S. District Court in Detroit.

Noggle and her husband, Adam; Catherine and Leonard Rodgers, of Hazel Park; Kendrick Rouser, of Pontiac, and Gunther and Lauren Hamann, of Redford Township, filed the 106-page lawsuit Tuesday against EasyKnock Inc.; EK Real Estate Fund 1 LLC and Jarred Kessler, the CEO and founder of EasyKnock.

A spokesperson for EasyKnock wrote in an email to the Free Press on Thursday that she "checked with our legal counsel and this is unknown to us — we have not been served. Generally speaking, however, we do not comment on active litigation, and certainly would not comment on a case for which we have not even been served."

The plaintiffs owned their homes outright, per court filings, but faced financial distress that caused them to borrow cash in a loan secured by home equity. They found EasyKnock online and a "Sell & Stay" option that their attorneys allege is "an inflexible debt trap that stripped Plaintiffs of the equity in their homes, exposed them to high-interest rates disguised as fees and 'rent,' and unlawfully circumvented federal requirements to evaluate a consumer's capacity to repay a loan before securing a transaction with their home's equity."

"This is just ridiculous. I mean what we pay a month (in rent) is what I get in disability," said Randee Noggle, 33, who, with her husband, 46, a restaurant cook, has a 6-year-old son with special needs.

"I just wanna be able to stay in my home because that was the whole reason behind this was to stay in my home. And even with agreeing with EasyKnock, it was to regain my home back by these payments, not for payments to keep going up and up and then each year the prices to buy back goes higher."

Robin Wagner and Kevin Carlson, the plaintiffs' attorneys, said in a statement to the Free Press: "This is a corporation that predatorily targets homeowners experiencing financial difficulties to swindle them out of their homes and impose exorbitant fees and rents. The plaintiffs are not alone in their pursuit of justice, and we hope other Michigan homeowners who were targeted by EasyKnock's deceptive practices feel empowered to come forward."

The court filings allege EasyKnock has purchased warranty deeds for at least 80 homes in Michigan.

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On Wednesday, an emergency motion for a temporary restraining order and preliminary injunction was filed in federal court. Wagner said it was filed after the Noggles received a letter Monday about past-due rent, and Randee Noggle was told later the company would start the eviction process in five days if the couple did not pay.

U.S. District Judge Sean Cox on Thursday wrote in an order that the law and facts presented by the plaintiffs supported a temporary order "to prevent irrevocable harm while this matter is adjudicated."

He ordered the defendants or anyone acting on their behalf are prohibited from initiating eviction actions against the plaintiffs, including but not limited to demands for possession and notices to quit; declaring any of the plaintiffs from being in default on their lease agreements with the defendants, and selling the plaintiffs' homes.

The order expires July 11. A status conference is set for July 9 to discuss a motion for preliminary injunction, according to court records.

Wagner describes what is happening as a "slow flip."

EasyKnock was founded in 2016 as a "first-of-its-kind real estate technology company," according to its website. It states its residential sale-leaseback solutions "help more people convert their home equity into cash, giving them a flexible, quick solution for their financial needs while staying in the homes they love."

These programs, per the website, "were designed to provide liquidity, flexibility, and control to over 16% of Americans whose credit score makes them unable to access their home equity through conventional loans."

For the "Sell & Stay" program, according to the website, people sell their home to EasyKnock, converting home equity into cash that can be used to pay off debt and other bills. People can stay as a renter for up to five years and repurchase their home for an agreed-upon buyout cost or direct EasyKnock to sell it.

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But the plaintiffs' allege that the "Sell & Stay" plan is deceptive and under which the defendants "acquired title to Plaintiffs' home in exchange for an amount of cash that was far less than the purchase prices and an illusory 'option agreement' to repurchase within five years."

Noggle said she used an inheritance to buy her home and didn't owe anything on it. Since COVID-19, the Noggles fell behind on bills and property taxes and she had student loan debt. She said they tried to see if they could get a home equity loan, but got denied. She said she took to Google to find home equity loans for people with bad credit and found EasyKnock.

Getting a portion of money out of the home and making payments toward it to gain it back sounded good, she said, but it broke her heart to sign over the title.

"This house is the first thing I've ever owned in my life," she said. "And we didn't have a choice."

But things went sideways. While Noggle said they received money from the program to help pay their bills, the money also went to making the rent payment, which she said now is nearly $1,600 a month.

The couple again got behind in rent payments and bills. Noggle said their very last car payment is past due, and they have to pay for speech therapy for their son because it is not covered by insurance.

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In May, Michigan Attorney General Dana Nessel announced in a news release that her department sent a notice of intended action to EasyKnock ordering it to cease and desist from engaging in unlawful business practices. It stated the "Sell & Stay" transactions target financially-distressed homeowners with low credit and high home equity in an effort to strip them of their home equity and homes.

The office also stated it received information that the company made misrepresentations or misleading statements to pressure homeowners into transactions, caused confusion about escrow fund disbursements and failed to make necessary home repairs in a timely manner, according to the release.

The notice of intended action stated the Michigan AG became aware of the company when the Massachusetts attorney general announced EasyKnock agreed to permanently cease operation of is sale-leaseback business as part of a settlement agreement. It also stated the department was aware of an investigation by the Connecticut attorney general into the company as well as "many private lawsuits filed against EasyKnock."

Danny Wimmer, Michigan AG spokesperson, wrote in an email Thursday that after the issuance of the notice of intended action, the office was contacted by attorneys for EasyKnock.

"While we did not receive a letter response, we have been involved in discussions with those attorneys. It would be inappropriate for us to comment further regarding those discussions," he wrote.

Wimmer wrote that since EasyKnock has a number of homes in Michigan with tenants who entered into agreements with that entity, it is still operating in Michigan.

"At this time, we are continuing to investigate through informal means, which include interviews with Michigan consumers who have entered into transactions with EasyKnock," he stated.

In December, the Massachusetts Attorney General's Office announced in a news release a settlement, via an assurance of discontinuance, with EasyKnock to resolve an investigation by that office into the company's sale-leaseback products. The investigation alleged EasyKnock engaged in unfair and deceptive acts and practices in the process of marketing sale-leaseback products and transacting with Massachusetts consumers and violated that state's landlord-tenant law.

According to the Massachusetts AG's release, EasyKnock agreed not to solicit or enter into the sale-leaseback transaction at issue in the assurance of discontinuance on any residential property in that state in perpetuity; to make a payment of $200,000 to the state; to adjust tenants' monthly rent amounts; to return certain withheld funds to tenants; to revise its leases to come into compliance with state law, and to make a good faith effort to avoid evicting tenants.

Contact Christina Hall: chall@freepress.com. Follow her on X, formerly Twitter: @challreporter.

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This article originally appeared on Detroit Free Press: Residents sue EasyKnock Inc. over deceptive sale, leaseback of homes