San Mateo Pub. Guardian v. Transamerica Corp.

405495 (Cal. Super. Ct. San Mateo County Feb. 4, 2000) ; Clearinghouse Number: 53051

Description

Elderly Homeowners Challenge Reverse Mortgages as Unconscionable and Financially Abusive

Abstract

In this class action challenge to “reverse mortgages,” whereby plaintiff elderly homeowners trade their homes’ equity for cash, plaintiffs allege that the conduct of defendant lending institutions abuses elderly homeowners in violation of the state Consumer Legal Remedies Act, elder abuse statutes, and consumer protection laws. Plaintiffs claim that the reverse mortgages sold to them by defendants illegally concealed high costs and excessive charges to the borrowers and that defendants counted on elderly purchasers paying less attention to costs since fees are folded into the costs of the loan, and generally no repayment of the loan is expected until after the borrower dies. Plaintiffs allege that, six to ten years after a loan by one defendant is issued, most of the reverse mortgages transmute into an annuity which that defendant requires borrowers to purchase through defendant life insurance company. The cost of the annuity is charged up-front, and compound interest is charged on this cost even though the borrower may never see payments under the annuity. Plaintiffs charge that defendants levy unconscionably high charges and fees, including “contingent interest,” “maturity fees,” and “life annuities,” which, when coupled with compounded interest charges, result in class members owing multiple times the amount of money received during the first years of their loans.

Additional Information

Attorney Information
Plaintiff represented by Niall McCarthy, Cotchett, Pitre & Simon, San Francisco Airport Office Center, 840 Malcolm Rd., Suite 200, Burlingame, CA 94010; 650.697.6000
Docket Date
2000-02-04 00:00:00+00:00

Files

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