OT: Investigation reveals exploitation of vulnerable

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Sunday, December 2, 2007 - Page updated at 12:00 AM*

Investigation reveals exploitation of vulnerable

Mike Fancher

http://seattletimes.nwsource.com/html/insidethetimes/2004047415_fanch

er02.html

Seattle Times editor-at-large

Today's story, " The Fleecing of Frances , " should move you to

wonder about the exploitation of people when they are most

vulnerable. How can a 96-year-old woman lose not just her home, but

everything — $2 million and nearly all of her possessions?

Reporter Kelleher got a tip about after The Seattle

Times published a story about a mentally ill man who had been bilked

by a car salesman. The caller said that was nothing compared to what

happened to . At the heart of today's story are allegations

that one man took advantage of an old woman losing herself to

Alzheimer's. But, as the story says, that man had a lot of help.

" The companies that fed off her decline are part of a financial-

services industry that targets people, looking for potential

borrowers with high debt and assets that can be tapped to pay off

that debt, " today's story asserts.

Tomorrow in The Times, Kelleher and Mayo report the details

behind that assertion. If you are moved by what happened to Frances

, you shouldn't miss this broader story of how the system has

targeted many more older borrowers.

As she worked on the story, Kelleher was troubled by what she

calls a " dissonant picture. " was one of millions of subprime

borrowers, but she didn't fit the stereotype of young, first-time

home buyers with bad credit. Was she an anomaly?

Then Kelleher noticed that many of the people testifying before

Congress about subprime mortgages didn't fit that picture, either.

They were older, more established, but they were losing their homes

because of high-cost, high-interest mortgages. They weren't first-

time buyers seeking the American dream; they had refinanced their

way out of it.

What was going on here? Kelleher wondered. Unfortunately, there was

no ready way to find out. The federal government tracks mortgage

data by categories such as race but doesn't track by age.

Enter Mayo, whose specialty is databases and computer-

assisted reporting. A decision was made to focus on Ameriquest, one

of the lenders in 's story and a major player in the subprime

market. " The starting point was the King County Recorder's Office, "

Mayo said.

" We queried their online database and downloaded all deeds of trust

involving Ameriquest over a five-year period (2002-2006). This

produced more than 4,000 loans. At this point all we knew was:

borrower name, filing date, recording number and legal description

of the property, including (in most cases) the parcel number.

" We linked the parcel number to the county property database, which

allowed us to find addresses for the borrowers. Finally, with name

and address, we then searched voter registration and driver's

license databases to find birth dates to calculate ages. "

The investigation got even more complicated after that, but I want

to emphasis a critical element. Cheryl , the editor who

oversaw the data analysis, puts it succinctly: " There is no way this

story could be told without the dates of birth. "

Efforts are under way in the courts and Legislature to exempt birth

dates from public disclosure. Proponents of exemption argue they are

trying to prevent identity theft, but they haven't made their case.

Information from public records hasn't been identified as a source

of identity theft.

To the contrary, the harm done by predatory-lending practices is

real. Tomorrow's story includes this quote from Huelsman, a

Seattle attorney who represents homeowners in predatory-lending

suits:

" You can't take away a house with a gun, but you can take it away

with a piece of paper. We as a society should treat that as a

serious crime. "

In a society that is aging, the elderly become an easy target. In

Frances 's case, one lending agency disregarded its own rules

with seemingly no fear of consequences.

When lending is based on the assets the borrower has, the lender has

little to lose, no matter how risky the loan or how onerous its

terms. The lender has no reason to look out for the borrower and may

have a financial stake in guiding the borrower to loans with higher

fees, higher interest rates and prepayment penalties.

" Debt begets more debt, and more costly debt. It becomes a debt

death spiral, " Kelleher said. If lenders target borrowers at their

most vulnerable, there is " an irrational imbalance of power " in the

relationship, she added.

" There are so many good and decent people in the lending industry,

but this is happening all over America, " Kelleher said. " It's mind

boggling. "

Inside The Times appears in the Sunday Seattle Times. If you have a

comment on news coverage, write to R. Fancher, P.O. Box 70,

Seattle, WA 98111, call 206-464-3310 or send e-mail to

mfancher@.... More columns at

www.seattletimes.com/columnists