In the past few years it’s become common to hear about faceless, unfeeling companies practicing “predatory lending policies.” But what about when the predator is a trusted family friend?
Betrayal of trust
Louise Henderson*, an 84-year-old African-American great-grandmother living in an up-and-coming neighborhood of Washington, D.C., was proud of the house she and her late-husband had bought back in 1969. Unfortunately, though, Louise had fallen behind on some of her tax payments.
That’s when Helen Phillips*, a childhood friend of Louise’s daughter, came to her rescue—or so Louise thought. Helen had seen on the Internet that Louise had some tax liens on her property, so she offered her a solution: to avoid foreclosure, Louise could sign over a 75% interest in her home to Helen, who would pay off the few thousand dollars of back taxes Louise owed in return.
Louise didn’t really understand what she was agreeing to, but she trusted Helen and signed the necessary documents. Helen paid $2,200 in back taxes, and got a house worth $324,000.
That wasn’t enough for Helen. A few years later, Helen noticed two new liens on the house—Louise had again fallen behind on some bills. Helen told her they needed to take out a loan on the house to pay off the liens, and Louise agreed. The liens cost under $14,000. Helen took out a mortgage and paid them off. But then Helen helped herself to another $300,000.
That $300,000 came from the equity in the house—the equity Louise and her late husband had built up, dollar by dollar, month by month, since 1969—and Helen didn’t tell Louise about any of it. Not about the $55,000 that paid off a mortgage on another property Helen owned, or the $11,000 that paid off her timeshare. Not about the $10,000 that paid off Helen’s credit card. Not about the $224,000 check Helen walked away with.
Helen did tell Louise that if there were any money left over from the loan, Helen would buy Louise a new stove or refrigerator. Helen never bought Louise a new stove or refrigerator.
It still wasn’t enough for Helen. A few years later, Helen wanted Louise out of the house so Helen could rent it or sell it. Making up a story about taxes, she tricked Louise into signing over the remaining 25% of her ownership.
The next business day, Helen sued Louise to evict her from her house.
Seeking redress
That’s when one of our attorneys got involved. Louise sought help from AARP’s free legal defense fund, and was referred to him on a pro bono basis.
First, the legal team filed a number of claims against Helen to prevent Louise’s eviction and to restore possession of her home. Then began the work preparing her case for a jury trial.
The new mortgage against the home complicated things. The lending bank had provided the money not knowing that Helen’s ownership was potentially fraudulent. The simple fact was the bank was owed money, and the house was collateral—no matter who was living in it.
So, in addition to returning title of the home to Louise and keeping her from being evicted by her former family friend, the obligation to the lender needed to be satisfied.
The morning of trial, Helen’s attorney came in with startling news: “I’m sorry, but my client, without my knowledge, just filed for bankruptcy.” Helen’s sudden bankruptcy filing meant our case had to be postponed.
It also made this already complicated case even more convoluted: where would the money be found for Helen to pay off the fraudulent mortgage?
The human touch: understanding and empathy
Lawsuits are not just about the law. In many situations, there’s a point where you have to expand beyond purely legal arguments to include emotional approaches.
Those approaches are created from the depth of knowledge and understanding that comes from learning not just the details of a person’s case, but the details of that person’s life. Understanding our clients and their needs on a personal level allows us to represent them from all perspectives, legal or otherwise. We make it a priority to spend as much time with them as possible.
Fortunately for our attorney, who was licensed in Washington, D.C., Louise was extraordinarily generous with her time. What’s more, because she didn’t have reliable transportation, he would pick her up from her house for meetings with her or for court. Those were opportunities for her to invite him in and show him around—she was clearly very proud of her home.
He talked to Louise about her life and how the neighborhood had changed. Hearing these stories in her home felt very personal, very intimate. It’s easy for lawyers in this modern technological age to simply sit in their office and communicate through e-mail, but knowing our clients is absolutely critical to the way we practice law.
It was critical in this case. Technically, the bank was owed money and probably could have foreclosed on the home, forcing Louise to the street. Several options were considered, but the best strategy for resolution with the bank involved a simple emotional appeal: don’t foreclose on an 84-year-old great-grandmother who was tricked out of her home. It’s just not right.
Louise’s stories about her life painted a much richer picture of who she was than the details of her case would provide. It allowed for a much deeper emotional argument. Ultimately, the bank and Helen settled, and Louise stayed in her home.
Taking it personally
Finding justice in this type of case is rewarding on multiple levels. As attorneys and professionals, we naturally want to provide the best service for our clients. But as we develop relationships, we also empathize with them and simply desire to help them through a difficult time.
It’s gratifying to know that after her trust had been so terribly betrayed by Helen, Louise trusted and built a relationship with our attorney—and received the justice she deserved.
*Names in this article have been changed to protect our client’s privacy. Our attorney worked on this case before joining Cooper & Elliott.
The outcome of any client’s case will depend on the particular legal and factual circumstances of the case.
