They Took Our Home!

The Situation

Recently, we heard from a local woman who told us her mother left them her house when she passed away; however, she did not own it. Confused, we decided to meet and discuss the situation further. We met at an Italian restaurant in Cary. They have excellent outdoor seating, so we were able to maintain social distancing without anyone hearing our conversation.

The Assessment

Six months ago, the Client’s mother had died. In her will, she left the house and all of its contents to her only child. The mother had lived in the house for 63 years and had proof of ownership from the bank. The Client already had a house and was not interested in renting out his late mother’s house, so he decided to sell it.

During the title search by the real estate agent, it turned up that the mother had actually signed over the house to financial firm, in exchange for the house upon her death. Since the client was unaware this had happened, something certainly seemed suspicious. I love a good mystery, so we took the case.

We Went to Work

The Client was aware that his mother was taking out a Reverse Mortgage, also called a Home Equity Conversion Mortgage. The idea is that a homeowner over 62 years old could take out a mortgage and not have to make payments on it. Once the homeowner moves out or dies, the loan has to be satisfied, usually by the heirs either paying it off or selling the house and paying off the loan, or signing over the deed in lieu of foreclosure to the lending company. In this case, the client's mother was convinced by a member of her church to sign the deed over to the finance company in repayment of the loan, for a cash advance that was less than 40% of the equity of the house.

To make matters worse, the mother signed a power of attorney to the broker who had not only pocketed most of the money from the reverse mortgage, but continued to borrow against the house in the mother’s name and pocketed that money, too. Plus, the property taxes had not been paid in over two years. That meant that the contents of the house would be seized and auctioned off to satisfy the tax bill.

Yes, in North Carolina, they still do that. A sheriff can come to your house with a court order and an appraiser to take things from your house to sell at auction. Any money left after the satisfaction of the tax bill is returned.

After a lengthy investigation, it became apparent that not only was the Client’s mother taken advantage of, so were many OTHER members of her church. We learned one of the congregation had been running a scam to bilk the elderly out of their homes, money and anything else that she could get her hands on. ELEVEN elderly member’s of the church all came forward with the same story. None of them suspected they were victims of fraud and if it hadn’t been for the Client hiring MG&A to investigate, the senior citizens and their family members would have been none the wiser.

Highly unethical, but legal!

Unfortunately, everything they did was legal.

By signing the Power of Attorney, on the guise that it would make things easier on the victims so that they wouldn’t be bothered by the legal ‘mumbo-jumbo’, this woman was able to swindle these people out of hundreds of thousands of dollars and the houses that they had worked so hard to pay off and have something to enjoy their golden years was stolen.

What’s more, the heirs would be on the hook for the outstanding balances since the Power of Attorney also allowed the con-artist to take out documents transferring the debts to their heirs.

All of this could have been avoided if the Client, or anyone who has elderly family members, were more involved with their lives and the legal ramifications of their actions. The Client even admitted that he had no clue as to what his mother did, who she hung out with and how she was affording trips and shopping excursions. He figured that she was running up credit cards and after she passed, it would all just go away.

Unfortunately, this isn't Fantasy Land so it just doesn’t work that way.