AARP Attorneys Represented Homeowners Settling Lending Lawsuit

AARP Foundation attorneys represented older Washington, D.C. homeowners in a lawsuit that alleged a particularly pernicious lending scheme. Settlement of the suit resulted in return of title to the homeowners' homes and/or cash compensation that in some cases exceeded $100,000 per homeowner.

Background

The lawsuit alleged that defendants Vincent Abell, Modern Management Company and their associates engaged in fraudulent practices through which homeowners facing foreclosure were persuaded to transfer title to their homes. The lawsuit alleged that defendants conspired to take advantage of the homeowners at a time when each was financially distressed and emotionally vulnerable by persuading them to sign over their deeds through misrepresentations and fraud on the eve of foreclosure, misleading them into thinking that they were borrowing money to save their homes. The lawsuit alleged that what actually happened was that the paperwork was a contract to pay at least the amount of the monthly mortgage payment as "rent" to the new owner under the terms of a "lease."

The plaintiffs were all older homeowners of limited education and little financial sophistication who were approached by people after their homes fell into foreclosure. The lawsuit alleged these strangers offered to help the homeowners "save" their homes and persuaded them, after increasingly aggressive approaches, to sign documents that did not refinance their old mortgages, but instead transferred title to their homes.

Take for example the situation of Idriis Bilaal, a 77-year-old veteran being treated for post-traumatic stress disorder dating to his service in Vietnam. Bilaal inherited his house from his mother in 1973, and in subsequent years saw his equity stripped by predatory lender after predatory lender. His last mortgage was serviced by Fairbanks Capital Corp., a company that has been sued by the Federal Trade Commission for unscrupulous practices.

After Fairbanks threatened him with foreclosure in December 2003, claiming arrearages of nearly $7,000, Bilaal alleged that he was approached by Calvin Baltimore and that, after repeated visits to his home promising to "make a loan to stop the foreclosure," Baltimore convinced Bilaal he could provide a "wrap around" mortgage that would refinance his mortgage loan, provide additional funds to Bilaal, and provide sufficient money to cover monthly mortgage payments. Meeting Baltimore at a local Burger King for the "closing," Bilaal alleged that even when he told Baltimore that he had forgotten his glasses, Baltimore assured him the paperwork was in order and persuaded him to sign documents.

After returning home, Bilaal realized the papers included several provisions that transferred tens of thousands of dollars of unexplained fees as well as "trust" accounts not adequately described or accounted for.  According to the lawsuit, Bilaal  called Baltimore who offered him a complicated and misleading explanation about the implications of the paperwork. Eager to avoid foreclosure, Bilaal accepted the explanations. It was not until later that he realized he had not absolved himself of any mortgage liability but instead agreed to maintain his mortgage debt to Fairbanks while transferring title to his property to Baltimore’s confederate Vincent Abell and agreeing to have Abell’s company, Modern Management, broker his mortgage payments. Moreover, Bilaal claimed that when he sought to ask Baltimore about the transaction, and find out where to send his payments, he was unable to find him. Bilaal alleged in the lawsuit that Modern Management told him Baltimore did not work there. Ultimately, Bilaal faced eviction by Modern Management and only narrowly avoided being thrown out on the streets.

The lawsuit Bilaal and other victims filed claimed violations of state and federal lending and consumer protection laws, as well as violation of tort and trust laws. The claims included: aggressive and misleading marketing, lack of federally required settlement statements and other paperwork, and missing notifications of borrowers' rights to rescind refinanced loans. The suit sought to stop defendants from conducting their business practices, to force them to return title to the homeowners' homes, to rescind the  contracts, and to recover punitive damages from defendants.

Without admitting liability, the defendants settled the case and agreed to return title to the homes and/or restoration of funds.

What’s at Stake

The ability to stay in the place where they have lived is extremely important to many older people. Moreover, a house is not only a home but often a family’s most significant financial asset, upon which they hinge their plans for financial stability as they grow older and income and earning potential become limited. Finally, home mortgages are usually a family’s largest debt and therefore particularly vulnerable to unexpected financial pressures (such as health care costs).  It is of critical importance that people’s rights to their homes be protected to the full extent of the law.

Case Status

Attorneys from AARP Foundation Litigation and AARP's Legal Counsel for the Elderly joined forces with attorneys from Hogan & Hartson LLP in representing Idriis Bilaal and other homeowners in Bilaal v. Abell, which was in D.C. Superior Court when it was settled in 2007.