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SEATTLE, Washington /
The Seattle Times / Business & Technology / October 26, 2009
Barbara Simonson, 90, had to sell her million-dollar home after a series of WaMu loans stripped much of its equity.
By David Health, Seattle Times staff reporter
For more than half a century, Barbara Simonson lived on a bluff overlooking Puget Sound in Seattle's Blue Ridge neighborhood.
Her late husband, a noted architect, designed the house. She liked to sit in the living room and watch the boats going by. She had hoped to live there the rest of her life.
Simonson, 90, didn't get her wish.
Barbara Simonson now lives in a tiny apartment off Aurora Avenue in Seattle.
Washington Mutual "should be ashamed of themselves for doing what they did to me," she says.
Erika Shultz/The Seattle Times
She was forced to sell after six Washington Mutual mortgage loans in six years stripped much of the equity from her nearly million-dollar home. She got them all from the same loan officer at WaMu's home-loan center at Northgate, loans that were far too complex for a stroke survivor to understand.
In fact, not until going over her loan documents with a reporter did she realize that interest rates were adjustable. "I have to tell you, math was not one of my better subjects in school," she said.
Barbara Simonson lost her Blue Ridge house, designed by her husband, after repeatedly refinancing with WaMu. Erika Schultz/The Seattle Times
For years, Simonson had kept all of her money at Washington Mutual. She trusted the bank. Her monthly Social Security check, now roughly $1,270, was deposited there directly.
Things began going wrong for Simonson when she borrowed more than $500,000 against her house to lend to her son. A contractor now in Iraq, he made payments for a while, then stopped.
Worried about draining her savings to meet the payments, she visited WaMu's Northgate loan center and talked to a loan officer, Patricia Collins, about getting a loan with a lower interest rate and smaller payments.
The loan officer drew up papers for a $551,000 loan in 2001. The loan application listed Simonson's monthly income at $10,300. Simonson says she has no idea where that figure came from. Collins didn't return calls seeking comment about the wildly inflated income.
When it came time for Simonson to sign the papers for the adjustable-rate loan, she said, "I was told what to do and I did it."
The next year, when her payments went up, she complained to WaMu and refinanced into a larger loan.
In October 2003, the bank qualified her for a $680,000 option ARM. If she had been asking for a 30-year fixed-rate loan, Simonson wouldn't have come close to qualifying for it, even using the inflated monthly income figure.
With the option ARM, Simonson started out making minimum payments that didn't cover interest or principal, piling up more debt. The bank had "qualified" her for the loan on her ability to pay the minimum amount. In other words, Simonson was put into a loan that she could not repay once the loan reset in five years, when the minimum payment was replaced by payments on full interest and principal.
The loan cost more than $11,000 in fees, which were rolled into her mortgage.
Her minimum payment was $2,266, nearly twice her retirement check.
The loan officer used the bigger new mortgage to pay off Simonson's old mortgage and put the remainder in an account that made automatic monthly payments on the loan.
Simonson, who did not understand the loan, was upset when her monthly payment went up in December 2004 by $200, and called the bank to complain.
Collins refinanced her into a larger option ARM, but one that dropped the monthly payment back to where it had been. The new loan cost Simonson $3,350 in fees and put her in the same predicament as before: A year later, her payments shot up, and the process was repeated, this time costing Simonson $3,743 in fees.
By summer 2007, with her savings depleted and the loan resetting into much higher amounts due, Simonson couldn't make payments.
In September 2007, WaMu sent Simonson a notice that it was foreclosing on her home. She hired a lawyer, Melissa Huelsman, who filed a lawsuit against WaMu. Huelsman tried unsuccessfully to work it out so Simonson could stay in her home. But the bank's lawyers, according to Huelsman, said WaMu had done nothing wrong and that refinancing the loans each year actually benefited Simonson because she was able to stay in her home. The parties eventually settled.
The WaMu lawyer, now at JP Morgan Chase, said the bank will not comment.
"They should be ashamed of themselves for doing what they did to me," Simonson said.
"What Mrs. Simonson experienced was unconscionable," said Helen Howell, the former director of the state's Department of Financial Institutions. "She was victimized by the raw pursuit of profit without regard for the impact on her as a customer."
David Seaver, who prosecutes bank fraud for the King County Prosecuting Attorney's Office, said his office can go after lenders accused of stripping away home equity under false pretenses. But such cases can be difficult to prove, and in Simonson's case, the statute of limitations may have expired.
Today, Simonson looks out a window from a tiny apartment in a commercial neighborhood off Aurora Avenue. She says she hates the noise of the big trucks going by. [
rc]
Copyright © 2009 The Seattle Times Company
Barbara Simonson now lives in a tiny apartment off Aurora Avenue in Seattle.
Washington Mutual "should be ashamed of themselves for doing what they did to me," she says.
Erika Shultz/The Seattle Times
She was forced to sell after six Washington Mutual mortgage loans in six years stripped much of the equity from her nearly million-dollar home. She got them all from the same loan officer at WaMu's home-loan center at Northgate, loans that were far too complex for a stroke survivor to understand.
In fact, not until going over her loan documents with a reporter did she realize that interest rates were adjustable. "I have to tell you, math was not one of my better subjects in school," she said.
Barbara Simonson lost her Blue Ridge house, designed by her husband, after repeatedly refinancing with WaMu. Erika Schultz/The Seattle Times
For years, Simonson had kept all of her money at Washington Mutual. She trusted the bank. Her monthly Social Security check, now roughly $1,270, was deposited there directly.
Things began going wrong for Simonson when she borrowed more than $500,000 against her house to lend to her son. A contractor now in Iraq, he made payments for a while, then stopped.
Worried about draining her savings to meet the payments, she visited WaMu's Northgate loan center and talked to a loan officer, Patricia Collins, about getting a loan with a lower interest rate and smaller payments.
The loan officer drew up papers for a $551,000 loan in 2001. The loan application listed Simonson's monthly income at $10,300. Simonson says she has no idea where that figure came from. Collins didn't return calls seeking comment about the wildly inflated income.
When it came time for Simonson to sign the papers for the adjustable-rate loan, she said, "I was told what to do and I did it."
The next year, when her payments went up, she complained to WaMu and refinanced into a larger loan.
In October 2003, the bank qualified her for a $680,000 option ARM. If she had been asking for a 30-year fixed-rate loan, Simonson wouldn't have come close to qualifying for it, even using the inflated monthly income figure.
With the option ARM, Simonson started out making minimum payments that didn't cover interest or principal, piling up more debt. The bank had "qualified" her for the loan on her ability to pay the minimum amount. In other words, Simonson was put into a loan that she could not repay once the loan reset in five years, when the minimum payment was replaced by payments on full interest and principal.
The loan cost more than $11,000 in fees, which were rolled into her mortgage.
Her minimum payment was $2,266, nearly twice her retirement check.
The loan officer used the bigger new mortgage to pay off Simonson's old mortgage and put the remainder in an account that made automatic monthly payments on the loan.
Simonson, who did not understand the loan, was upset when her monthly payment went up in December 2004 by $200, and called the bank to complain.
Collins refinanced her into a larger option ARM, but one that dropped the monthly payment back to where it had been. The new loan cost Simonson $3,350 in fees and put her in the same predicament as before: A year later, her payments shot up, and the process was repeated, this time costing Simonson $3,743 in fees.
By summer 2007, with her savings depleted and the loan resetting into much higher amounts due, Simonson couldn't make payments.
In September 2007, WaMu sent Simonson a notice that it was foreclosing on her home. She hired a lawyer, Melissa Huelsman, who filed a lawsuit against WaMu. Huelsman tried unsuccessfully to work it out so Simonson could stay in her home. But the bank's lawyers, according to Huelsman, said WaMu had done nothing wrong and that refinancing the loans each year actually benefited Simonson because she was able to stay in her home. The parties eventually settled.
The WaMu lawyer, now at JP Morgan Chase, said the bank will not comment.
"They should be ashamed of themselves for doing what they did to me," Simonson said.
"What Mrs. Simonson experienced was unconscionable," said Helen Howell, the former director of the state's Department of Financial Institutions. "She was victimized by the raw pursuit of profit without regard for the impact on her as a customer."
David Seaver, who prosecutes bank fraud for the King County Prosecuting Attorney's Office, said his office can go after lenders accused of stripping away home equity under false pretenses. But such cases can be difficult to prove, and in Simonson's case, the statute of limitations may have expired.
Today, Simonson looks out a window from a tiny apartment in a commercial neighborhood off Aurora Avenue. She says she hates the noise of the big trucks going by. [rc]
Copyright © 2009 The Seattle Times Company
