Elderly California Retiree Files Suit Alleging Negligence, Fraud, Elder Financial Abuse In Attempt To Undo Predatory Loan & Fight Off Foreclosure

In Carmel Valley, California, The Monterey Herald reports:

• A Carmel Valley woman is facing the loss of her home of 50 years after she allegedly was led into a risky investment in the failed real estate investment firm Cedar Funding Inc. Margaret Bennett, 75, a retired government worker, is trying to stave off the foreclosure sale of her home in which she raised six children as a single mom. She filed a civil suit [...] that accuses a Monterey mortgage broker and the foreclosing bank of putting her into the predicament.

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• Her suit alleges that she was effectively duped into borrowing $600,000 on her home and putting $470,000 of that money into Cedar Funding — just 15 months before the real estate investment company sank into bankruptcy.(1) Cedar Funding owner David Nilsen was indicted on federal fraud charges last month [go here for Nilsen indictment].

For more, see Woman sues broker, bank over Cedar Funding investment (Retiree invested $470,000).

(1) According to the suit, Bennett went to mortgage broker Heidi Daunt in September 2006 to see about getting a $130,000 loan on her home, which was then valued at about $1 million, according to the story. She wanted to pay off a home-equity line of credit and to consolidate other debts. Her only source of income was about $2,000 a month from Social Security and her pension, she said. The suit alleges Daunt proposed that Bennett get a $600,000 loan instead from Washington Mutual, and put most of the money into Cedar Funding. According to the suit, Daunt told Bennett that her income would increase because Cedar Funding investors were making 10 percent on the company's real estate loans, the story states. The monthly payments on the $600,000 loan came to nearly double Bennett's monthly income, the suit alleges. The loan application to Washington Mutual stated Bennett's monthly income was $8,000, a figure used "without (her) knowledge or approval," the suit alleges.

The suit accuses the defendants of negligence, fraud, elder financial abuse and other wrongful actions. It contends they should have known the loan and investment strategy was unsuitable for Bennett, with her limited financial means and lack of financial savvy. The suit alleges she was taken advantage of by people motivated by greed.