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Homeland insecurity 

The wild ride of refinancing may cost one woman her home

Amid Beverly Fletcher's bouts of depression and psychosis, her home on Spence Avenue was her source of solace -- until the phone rang two years ago with a call from Parsons Mortgage Group.

Fletcher had moved to her house in 1971, leaving Atlanta's westside for Decatur. With her three young children in tow, she hoped to escape the grief of previous years. She had never made it past 10th grade. She had been sent to Central State mental hospital three times as a teenager. At age 25, her husband of two years was shot to death, leaving her to care for her children alone.

The young widow bought the brand new three-bedroom house in Decatur's East Lake for about $16,700, a price that included the cost of escape. "It was the one I was looking for," she says of her home.

To support the children and maintain the tidy brick and yellow bungalow, Fletcher held a job for 11 years, working in the hospital kitchen at Georgia Mental Health. She paid her first mortgage, and several subsequent ones, diligently, according to her attorney. It was the most recent loan that would hurt her.

Now, at age 57, her children grown and her home blissfully quiet, Fletcher is fighting foreclosure, her payments having climbed so high it may be impossible for her to stay.

The path that led to Fletcher's financial distress differs, depending on who's describing it. Mortgage broker Tom Parsons, head of Parsons Mortgage Group in Woodstock, says that when his firm called Fletcher she was already in trouble financially. Mortgage lender New Freedom, who financed the new loan, is suing Fletcher for falling too far behind in her payments, claiming that she breached her contract. "Ms. Fletcher has been stubbornly litigious, and has caused New Freedom unnecessary trouble and expense," according to the lawsuit, filed this month in DeKalb County Superior Court.

Others allege Fletcher is a victim of fraud. And they say she's one of perhaps thousands of homeowners nationwide -- most of them poor blacks living in gentrifying neighborhoods -- whose equity in their homes made them a target for unscrupulous profiteers.

The particular abuse Fletcher may have suffered has become more and more common in recent years, cropping up across the country. In mortgage lingo, the abuse is called "lending without ability to pay," and it's one of several practices that have been collectively coined as predatory lending.

The scheme works like this: A mortgage broker solicits borrowers and tells them his firm wants to help refinance their homes. The broker, who survives on the fees he can accumulate for each loan signed, is out to generate as many loans as possible. So to make sure a borrower is approved, the broker sometimes jacks up the borrower's income -- knowing that the borrower would never get the loan otherwise.

That's what Bill Brennan, a predatory lending expert and attorney at the Atlanta Legal Aid Society, says might have happened in Fletcher's case, which he's investigating.

When a Parsons representative called Fletcher's home in winter of 2000, she thought they were trying to help her, she recalls.

"They were telling me they could lower my payments from what they were," Fletcher says. "I'm wondering why they were double when I was done."

Even without taking medication to stabilize her mental disability -- medication that "interferes with her judgment, concentration and fine motor skills" -- Fletcher has trouble reading and comprehending, according to a letter from her doctor, D.S. Siddappa at the DeKalb Community Service, to Brennan.

"In our judgment, she is unable to make financial decisions of this magnitude without assistance," according to the letter, which describes Fletcher as suffering major depression.

Fletcher says the language of her new loan confused her -- and that she couldn't have read what she was signing even if she wanted to. "There are some things I can spell -- addresses, my kids' names, small words."

She says no one told her the payments would wind up higher than her actual income.

Before the Parsons call, Fletcher had been flipped through a number of high-cost, abusive loans, according to Brennan. By the time Parsons got to her, her mortgage had been hiked to $85,000. Her monthly payments were $670.

Then it got worse. After Parsons reconfigured her loan, tacking on fees and $19,000 in cash that Fletcher claims she didn't ask for, the new balance topped $118,000.

And the payments, at $1,270, nearly doubled what she had been paying before -- and exceeded her income by over $100.

Fletcher says she had trusted Parsons and had given the firm copies of her prior mortgage, as well as checks that proved her income, so that Parsons could help her. At closing, she initialed all the necessary pages of the mortgage contract -- including the ones that listed an incorrect income and impossible payments.

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