We’ve written these words too many times to count, but they obviously merit repeating once more: “Never co-sign a loan unless you are prepared and willing to pay back the entire thing — plus interest and penalties — if the other person defaults.” It’s a lesson a New Jersey woman has spent the last four years learning, and who now faces foreclosure because her dead brother was taken by scammers.
Eleven years ago, the woman and her brother inherited their father’s home and eventually had the deed amended to list them as co-owners. Since the house, which had been bought outright in 1978 for $70,000 cash was now worth around $450,000, the woman’s brother talked her into co-signing on a $120,000 home equity line of credit in 2006.
Since we’re writing about this, you can probably guess it didn’t go well.
“He came to me and confessed that he had gotten taken in by countless online scammers: the Nigerian scam, the Spanish lotto, the Euro lotto and the Canadian lotto, to name but a few,” the woman tells the Newark Star-Ledger.
So not only had her brother, in spite of warnings from PNC Bank, spent the money on scams, the balance on the loan had suddenly shot up to $217,000 because the bank had cleared a fraudulent check for $97,000, which the brother promptly spent before it was declared a fake.
The fact that PNC cleared a check for $97,000 the same day it was deposited still strikes the woman as odd.
“There’s something wrong with a check that huge being cleared and posted on the same day as it was deposited. I ran my own business for 15 years and even $250 or $300 checks weren’t cleared for a couple, maybe three days,” she says.
So she got a lawyer, and in 2007, the bank told her that because she was not involved in that particular transaction, she was not on the hook for that addition to the amount of the loan.
After her brother passed away in 2008, the woman contacted PNC to see what could be done about forgiving the loan.
“Although (the rep from the corporate office) claimed he looked up the loan and found I had not signed anywhere on it, he then threatened to have my house taken away if I didn’t immediately make a $5,000 payment,” she tells the Star-Ledger.
From the original story:
She started receiving bills that asked for specific payment amounts, but none of the statements showed the total amount due. The requested payments were the same as when the loan balance was $217,000, even though the $97,000 addition was supposed to be gone.
This dragged on until earlier this year, when the woman represented herself in Superior Court and found the loan had actually been reduced back to the original $120,000. The judge also granted a forbearance so she could apply for a modification to reduce the hefty payment.
But PNC denied the modification, saying she didn’t qualify because she was not a co-signer on the first mortgage on the home. Problem is, as mentioned above, there never was a first mortgage because her father bought the house in cash 33 years earlier.
“When I finally got an attorney to force PNC to admit that there was no first mortgage on this house, they then denied the loan modification, claiming that this was a home equity loan not a mortgage and therefore could not be modified,” she says.
But HELOC’s can be modified, so she attempted again, but to no avail.
Even after the Star-Ledger got involved, the woman wasn’t able to get a straight answer from PNC.
“All (the rep) kept saying was the reason I was unable to get a loan modification is that I never signed the loan so I’m not authorized to get a loan modification,” she says. “(The rep) said the only person that signed for this loan was my late brother… and that is bull.”
The Star-Ledger thinks the confusion is being caused by the specific terminology used by lenders:
There’s the mortgage, in which the signers pledge ownership in the property, which is then used as collateral for the note. The note details the terms of the loan. The mortgage says if the note is not paid, the lender could foreclose on the property.
We know [she] signed the mortgage… but we don’t know if she signed the note. Neither does she, and PNC hasn’t furnished her with a copy. Still, PNC says because [she] didn’t sign the note, she doesn’t qualify for a modification.
“It’s bogus,” an attorney with the National Consumer Law Center says. “It’s a common reason for the bank to give a denial…. She’s allowed to assume the note under the federal Garn-St. Germain Depository Institutions Act because she’s inheriting the property from a family member.”
Another lawyer says the bank seems to not be giving the modification because it just doesn’t want to: “They are jerking her around… The bank can do whatever they want. They can modify it or they can give her a new loan.”