Amy Johnson, now 93 and facing foreclosure, thought the loan she purchased from Lehman Brothers, the now disgraced and defunct investment bank, was a fixed mortgage loan for $140,000. She and her late husband hadn’t had a mortgage on the home since they’d paid it off sixty years ago. After her husband died, she was struggling to make ends meet. The loan turned out to be an adjustable rate mortgage for $750,000. And the money appears to have gone missing. Johnson has no memory of what happened to the three quarters of a million dollars.
Think about this. A mortgage broker closed a deal with a woman in her mid-to-late eighties. He/She probably earned a hefty (probably tens of thousands of dollars) commission by duping a financially strapped elderly widow into an adjustable rate mortgage loan $750,000 presumably with a twenty to thirty year term. This is the pinnacle of predatory lending. Here in South Florida, many seniors were likewise targeted, falling victim to the same practices. Many have already lost their homes or are currently facing foreclosure.
Investors like pension funds or municipalities were enticed by slick commission based Wall Street hucksters to invest millions in the fraudulently rated mortgage-backed security bonds that were backed by thousands of such predatory mortgages. This is where much of America’s retirement savings and public funds went. The bonds sloshed through four to eight financial institutions on the way to the pension fund investors. Each financial institution earned fees and commissions, taking their cut then and several continue to take their cut now, servicing mortgage loans and processing fraudulent foreclosures in the most fee-laden method that keeps the last bit of bond money flowing to the financial institutions until the well has completely dried up.
Back to Amy Johnson who says she’ll be okay though, “I will be happy on the street. I already went to practice to be homeless, but I did this for only three days because it got so cool at night. I couldn’t stand more.”
Read 93 Year Old Woman Faces Foreclosure at the Los Angeles CBS affiliate news story here.
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