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Atlanta Legal Aid stops foreclosures
by Brian Egeston
be@brianwrites.com
Barbara Harris, 70, and her husband Gerald, 68, have lived in their current Stone Mountain home for almost 20 years. When Wells Fargo refinanced their home in 2004, the Harrises were given an adjustable rate mortgage that capped off at 13.625 percent. When the rate increased and the Harrises were no longer able to afford their mortgage, Wells Fargo started foreclosure proceedings. The Harris home was scheduled to be auctioned off on the DeKalb County Courthouse steps on June 2. After the Atlanta Legal Aid Society (ALAS) got involved, Wells Fargo suspended the foreclosure. The incident is becoming a common occurrence among elderly and low-income residents.
Recently members of ALAS held a press conference to address issues surrounding elderly homeowners that the organization was representing. Three of the homeowners, including the Harrises, are DeKalb County citizens. All five ALAS clients in this particular case had mortgages that Wells Fargo either serviced or held as a trustee.
“We are particularly concerned about Wells Fargo Bank,” said ALAS staff attorney Bill Brennan. “Wells Fargo was a major player in the subprime securitization system. These were homeowners who were not financially sophisticated and ended up in totally unaffordable mortgage loans.” Wells Fargo bank, until last week, refused to accept settlement offers.
According to Brennan, Wells Fargo was the eighth largest originator of subprime loans and purchased Wachovia, which was the seventh largest servicer of subprime loans. Brennan also said Wells Fargo is the subject of a lawsuit by the city of Baltimore, alleging racial discrimination and is currently under investigation for racial discrimination by the Illinois attorney general.
“The callousness of Wells Fargo is something I’ve not seen before,” said State Senator Vincent Fort. “Wells Fargo is willing to take a mentally disabled woman to trial instead of settling,” said Fort. “They’re doing with a paper and pen what we would put people in jail for doing with a gun. These women are not their priority. Their priority is profit. We sent them two letters and in each instance, they essentially told us to go to hell.”
Joann Hall, 66, of Decatur is an ALAS client also scheduled for a June 2 foreclosure. In 2006, Option One Mortgage refinanced Hall’s home and sold the mortgage to Wells Fargo. ALAS said Hall’s teaser rate was 3 percent, but when the rate reset, the mortgage consumed 100 percent of Hall’s income.
Daniel and Mamie Jackson, both in their 80s, of Stone Mountain refinanced their home through Premium Capital Funding and sold it to Wells Fargo. The loan application, according to ALAS, showed that the first mortgage reset would consume 50 percent of the Jacksons’ income. ALAS contends that Option One violated the Truth in Lending Act by failing to give required disclosures.
When contacted by The Champion Newspaper, Debora Blume, a spokesperson for Wells Fargo, issued the following statement in the Harris case: “Our records show we are already working directly with the customer to resolve the matter. Because we must respect customer confidentiality, Wells Fargo cannot disclose information regarding the borrower or their loan.” Blume said Wells Fargo is unable to stop foreclosures for which the company is serving as a trustee.
As of press time, all five foreclosures had been stopped, according to Sarah Bolling, an ALAS staff attorney. “All of the [clients] are set, which is typical,” said Bolling. “We normally manage to get foreclosures stopped, and if we can’t we’re always ready with a backup plan. We can’t let the foreclosures go through. That would ruin our advocacy effort. We’re continuing to discuss settlement options with Wells Fargo.”
According to the National Law Center, factors leading to the increase in predatory mortgage lending include the deregulation of the consumer credit industry in the 1980s. This made way for the weakening of state regulatory and consumer protection statutes. A change of the tax code in 1986 established a preference for second mortgage interest over interest on other consumer loans, which also led to increased marketing efforts by lenders about the tax benefits of home equity loans.
Formerly unsecured debt such as medical bills and credit cards are now folded into high-rate loans secured by homes even if the homeowner does not receive a tax benefit.
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