[NYTr] Bob Herbert: A Swarm of Swindlers

[All the News That Doesn't Fit]

The New York Times - Nov 20, 2007
http://www.nytimes.com/2007/11/20/opinion/20herbert.html

A Swarm of Swindlers

By BOB HERBERT
Chicago

Like vultures, the mortgage lenders began circling the single-family
house with the tiny front lawn on Merrill Avenue.

They knew that the woman who owned the house was old and sick and that
her two aging daughters were struggling with illness and poverty as
well. That was all to the good as far as the lenders were concerned.
The predator’s mission is to home in on the vulnerable.

“The people that wanted to put through the loan called me about a
hundred times,” said Rosa Dailey, who is 65 and going blind and needs
an oxygen tank at times to help her breathe. “I kept telling them no,
because I didn’t think we could afford it. But they kept saying how it
was to our advantage. So I finally said: ‘All right, let’s see what we
can do.’ ”

That was the beginning of a tragic spiral, with one unaffordable loan
following another. As Ms. Dailey put it: “I feel like they led me down
a dark alley.”

Ms. Dailey told me her story in the freezing living room of the house
on Merrill Avenue, which no longer has a working furnace and is growing
shabbier by the day. It’s all she has left. Her mother and her older
sister are dead now. Her only income is about $1,300 a month from
Social Security — less than the monthly note on the house, which is in
foreclosure proceedings.

One aspect of the so-called mortgage crisis that hasn’t been adequately
explored is the extent to which predatory lenders have committed fraud
against vulnerable homeowners. They have pushed overpriced loans and
outlandish fees on hapless victims who didn’t understand — and could
not possibly have met — the terms of the contracts they signed.

In some cases, corporate con artists have deliberately targeted and
seized the equity of financially strapped and unsophisticated owners.
In some cases, homes have been stolen outright.

This is an issue crying out for a thorough federal investigation.

Ms. Dailey and her sister, Betty Jones, agreed to refinance the
mortgage on their ailing mother’s home in 2000. Neither understood how
deeply into debt they were slipping. They struggled to make the
payments and hang on to the house after their mother died, although
neither was working and their only income was from Social Security.
Then Ms. Jones was hospitalized with a heart condition.

As illogical as it may sound, the two women were pressed to refinance
yet again in 2005. There was no way they could legitimately qualify for
such a loan, and the lenders had to know it. But they persisted.

On Aug. 8, 2005, a representative of the Argent Mortgage Company took
Ms. Dailey from the Merrill Avenue house to her sister’s bedside at
Kindred Hospital. There the women signed papers for a loan that they
were told would bring their monthly payments down to a manageable level.

Betty Jones was dying. Ms. Dailey’s eyesight was too poor to read the
papers shoved in front of her. Both women were frightened and confused.

“I was told that was the only way I could save the house,” Ms. Dailey
said.

Thousands of dollars in additional fees were heaped upon them. And the
required monthly payment was more than they could possibly have
afforded.

Betty Jones died the following December. Rosa Dailey was left with the
sick realization that she had been had, that in her confusion and
desperation she had agreed to terms that were impossible.

“I’m terrified,” Ms. Dailey told me as she wrapped a sweater tightly
around her to ward off the cold. “I can’t sleep anymore. They’re trying
to take the house away from me, and I wanted to stay here until I died.
That was what I was really trying to do.”

A lawyer, William Spielberger, has taken up Ms. Dailey’s case. He said
she and her sister were clear victims of fraud, that the companies
pushing loans on them had deliberately inflated their meager incomes on
the loan applications, had inflated the value of their property, had
imposed unconscionable terms and fees and were fully aware that the two
women did not know what they were getting into.

He has filed a federal lawsuit on Ms. Dailey’s behalf against a number
of companies, including Citi Residential Lending, a subsidiary of
Citigroup that acquired Argent Mortgage this past summer.

A spokeswoman for Citi Residential said she could not comment on the
case because of the pending litigation.

I asked Rosa Dailey yesterday how she’d be spending her Thanksgiving.
She said her money for the month had run out, so she wouldn’t be doing
anything special.

“I’ll be right here,” she said. “I’ve got some corn flakes and canned
vegetables. That’ll be my Thanksgiving.”

Copyright 2007 The New York Times Company