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Woman Closed On Loan In Hospital Bed
Reported by: Joce Sterman, ABC2 News
You've seen the stories before, right here on our website,
abc2news.com and on the air. Our award-winning Mortgage
Meltdown series takes a look at housing loans that take
advantage of you, costing you more money – maybe
even your house. Now we’ve got another story. As
ABC2 News Investigator Joce Sterman explains, a local
woman's house is on the line thanks to a deal she signed
in a hospital bed.
It's a sales pitch made of promises: cut your monthly
payments in half, find interest rates as low as one-percent.
When Judith Holley heard those claims on the radio, she
thought she'd found salvation. She says, "When you
hear people on a Christian station, you automatically
assume they're very honest people." Judith was looking
for a way out of her money problems when she heard the
ad for a mortgage company she thought could help. The
68-year old says she was struggling, unable to work after
losing her leg. After refinancing to handle other bills
and help her kids over the years, payments on the Parkville
home she'd owned since 1980 had become too much to handle.
Judith needed a solution. However, she says what she
got only made her situation worse. It’s a realization
she made while taking a hard look at her bills months
after signing a new loan. She says, "The ending
balance was $175,000 and the beginning balance had been
$173,000. So, I thought, that's weird. Shouldn't that
be coming down instead of going up?"
But with a Pay Option Arm, it's not weird: it's standard
procedure. Judith was lured in with the promise of lower
payments and low interest, but she actually signed up
for a loan with negative amortization. That’s a
fancy term for what many experts call a quicksand loan,
where Judith’s balance will just keep growing.
In fact, she already owes the bank about $7,000 more
than when she took the loan last January. ABC2 Mortgage
Expert and Freedmont Mortgage CEO Carl Delmont says that’s
a problem. He says, “Because you now owe more than
the original loan payment, your credit score will plummet.
So you're stuck in a loan that's rising, that keeps going
up in payment and balance and you can't refinance because
your score just dropped 60-100 points."
Delmont has been trying to help Judith, and he knows
all about the Pay Option Arm. He says it's the kind of
loan many people end up taking because they don't understand
the terms. But the numbers are dropping. According to
First American Core Logic's loan performance data, in
2006, five-percent of Baltimoreans who refinanced took
negative am loans. That figure fell to just over two-percent
in 2007, when Judith signed up. She takes responsibility
for pushing to get the loan completed, but some believe
she has a reason for not understanding what she was getting
into. Why? Judith signed all of her paperwork during
a stay at Good Samaritan Hospital. She had congestive
heart failure and was on a cocktail of medications. But
that didn't stop a loan agent with Chatham Mortgage from
closing the deal right in her hospital room. It’s
an act Judith looks back on with anger. She says, "I
think he's a sleaze ball. But the thing is they went
of business last year.”
Chatham Mortgage's local branch in Timonium did go out
of business, but we were able to track down the man who
brokered Judith's loan. Ron Shadoff told us over the
phone that he spoke with Miss Holley for several weeks
about the loan before she signed and that she was anxious
get the money to meet personal expenses. As for the closing,
he says, “The title company sent an attorney along
to ensure Judith's competency and that closings in hospitals
are not uncommon."
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