Predatory Lending Scams Targeting Seniors

Amid the heavy rains of last week, 66-year-old Mary Louissaint came home on Tuesday evening to find an eviction notice on the door of her home. The note — a single white sheet of paper with a handful of words — stated that she, her daughter and grandson must immediately vacate the home that Louissaint purchased with her late husband for $45,000 and has lived in for the past 29 years.
“I have no place to go,” Louissaint said.
Near tears, the distressed senior headed over to Jamaica Housing Improvement, Inc. (JHI), a small community organization that works with about 150 people yearly. But exactly what, if anything, the center can do for her remains up in the air.
For Peggy Morris, the executive director of JHI, the story is all too familiar.
“It’s a Catch-22. Either you live in your house and subject yourself to unhealthy conditions, or you lose your house because you can’t pay the mortgage,” Morris said. “[Predatory lenders] are taking the soul out of this community.”
After agreeing to transfer over the property deed for her house to Premiere Mortgage Company, Louissaint said that her payments rose from $1200 a month to $1900, and when she missed her last rent payment because she had to pay $2000 to fix a broken pipe, the company threatened to throw her out.
Louissaint is one of many senior citizens victimized by what Sarah Ludwig, founder and executive director of Neighborhood Economic Development Advocacy Project (NEDAP) calls “deed theft.”
Faced with looming mortgage payments and diminished incomes, elderly people are targeted for deed theft, where companies will purchase the deed, promise to rent to the owner, and in turn, evict the elderly person.
“A lot of people have lost their homes,” Ludwig said.
Deed theft is one of two new scams becoming more pervasive in cities where immigrant and minority populations reside, Ludwig said.
Along with deed theft, “the new face of predatory lending” in Southeast Queens is a scam where companies will sell “flipped” properties, according to Ludwig.
Using a whole team of people — from appraisers to lawyers — a company will sell a first-time homebuyer a property worth much less than estimated, often needing much repair, and causing the buyers to soon go into default.
“Some of these homes have gone through a series of property flips,” Ludwig said.
Still, the most common form of predatory lending is subprime loans. Customers are lured into refinancing with the promise of an immediate payout, and often are unaware that their monthly payments will rise substantially.
When Sybil and Gilbert Worthy re-financed, they received a payout of $25,000, which they said went to cover necessary repairs on the roof and steps.
“Water was coming down on her,” Gilbert, 77, said, pointing to his two-year-old granddaughter, Thalia.
Several months later, only about $1000 remains. With a total monthly income of $2000, and a mortgage bill of $1800, they don’t know how they will pay for everyday expenses once their savings run out.
Jamaica resident Betty Green refinanced twice – in August and November of 2004 — and saw her monthly payments jump from $1200 to $1600 to $1900. Combining her salary as a nurse’s aid along with $600 in disability payments from the government for her 32-year-old disabled son, Green finds herself left with $300 a month.
The list goes on and on. Morris said that she has even come across home mortgages extended to a young person with their first job or a college student.
Under the current law, refinancing a home becomes illegal when banks do not certify that the borrower can afford the payments, but Morris said that many Queens residents are too embarrassed to admit being duped.
With a new $1.35 million program, PACE, launched two weeks ago, the city is hoping that stories of predatory lending will become fewer and farther between.
“We are working hard to help New Yorkers keep the dream of owning and affording their own home,” Mayor Michael Bloomberg said at the press conference announcing PACE.
“If you are already in foreclosure … if you need help … please call us, call 311,” Ludwig added.
Last Tuesday evening, the Worthys, Green, and Louissaint all placed calls to 311 to investigate their individual circumstances. As of press time, all were awaiting more information from the city to see if anything could be done.
csantucci@queenscourier.com