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The horror story of the elderly husband and wife began in 1990. At that time, the retired couple had a monthly payment of only $235 on the remaining $10,800 of their mortgage. Unbeknownst to them, their security would be shattered on an August afternoon by the nice young man named Jimmy who offered to install windows at their home. At first they balked, saying they lived on a fixed income and couldn't possibly afford such work; however, they accepted when Jimmy told them they could pay over time — 15 years at $43.00 per month.
A couple days after their first meeting, Jimmy again visited the home, this time offering to renovate their kitchen and bathroom. Jimmy assured them the additional work would only add a few dollars a month to the cost of the original window job. The elderly couple was excited about the prospect of fixing up the house for such a reasonable fee and agreed to the deal. No one had mentioned anything about home mortgages.

Shortly thereafter, Jimmy arrived to take the couple to an office to sign some papers. The husband inquired as to whether he might take along a lawyer. Jimmy assured him that everything about to happen was formality. Jimmy was nice; the retirees trusted Jimmy. When the retired couple left the office, they had no idea they had just signed a first mortgage on their home for $75,038.79 with an APR of almost 18%. They paid $6,500 in points and $3,538 for a credit life insurance policy. That $235 mortgage payment jumped to $1,156.22 per month, practically twice the couple's fixed income. Soon the elderly man was searching the neighborhood for odd jobs. The couple also took in boarders.

Even that proved not to be enough. The couple called their lender and expressed their worries about being able to pay the note. The lender offered to REFINANCE the original mortgage 6 months after the first set of papers were signed. The tally? $87, 971.99, almost 16% interest, $7,500 closing costs, and $5,472 for credit life insurance. Over the next five years, somehow the couple managed to pay over $68,000 on the new loan. Finally, however, in 1996, the husband and wife were served with foreclosure papers.

Although this particular incident occurred in New York, the lender maintains locations nationwide, including in Texas. There have been similar stories all over the country involving a variety of lending companies. So much focus has been placed on these business practices that the United States Senate Special Committee on Aging has held special hearings on them.

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