Edith and her husband lived in their family home for many years. Her husband looked after the home while he was alive but now that he was gone the responsibility fell to her. Her lack of experience and trusting nature made her an easy target for the “home improvement” company that came knocking on her door one day.
The man told her that she needed repairs done to her home. He indicated that his company had considerable experience in making the repairs needed and that he even could arrange financing for her. She agreed to enter into a contract with the man using the equity in her home as collateral for the financing.
Unfortunately, Edith found herself ensnared in a common predatory lending scam. As is all too often the case, a mortgage company working in conjunction with a predatory home improvement company searches the mortgage records to find elderly people who have paid off or are near to paying off their mortgages so that they have a significant amount of equity in their home. The homeimprovement company then contacts the elderly client, approaches them at their home and convinces them to get unnecessary and/or greatly overpriced home improvements.
Once a contract is entered with the builder and financingpapers signed, these papers are assigned to the mortgage company that is working with the builder. The mortgage company then contacts the elderly homeowner and convinces her to enter into a series of refinancing agreements, which each time increase the amount of debt. This causes the homeowner to incur repeated and inflated closing costs which are unjustified given the short period of time between the refinancings. The homeowner then ends up with a large amount of debt on her home which is now financed at a high interest rate.
Faced with high payments at unreasonable interest rates the elderly homeowner risks losing her home and all the equity which has built up during the course of her life. The lender forecloses on the mortgage when the homeowner falls behind in payments causing her to lose her longtime home as well as all of the equity which has built up through the years.
When Edith found herself facing foreclosure as a result of this scam she contacted Legal Services Corporation of Delaware. The LSCD attorney examined Edith’s paperwork and reviewed the State and Federal consumer protection laws which apply to this type of door-to-door sales. The attorney informed Edith that she had defenses to the foreclosure and she possibly could save her home.
The attorney filed suit in court on Edith’s behalf to rescind the contract because of violations of consumer protection statutes. The court action forced the lender to enter into a new mortgage with Edith. The new mortgage reduced her debt by half and recast it a reasonable interest rate. The lender also refunded the fees which had been charged to her for the successive refinancings.
Consequently, Edith is no longer faced with the loss of her home. The home is in good repair and she is making reasonable monthly payments which conform to her limited income.
