When he first spoke with Mr. Morgan, LSLA Staff Attorney Velamir Rasic's sense of justice was deeply offended. "It was appalling, to say the least. He was being evicted because he apparently lived too long."

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A HAPPY ENDING

Our Nacogdoches office prevented CitiMortgage from taking a client's home in a foreclosure suit and, in the process, the firm obtained $500 in attorney's fees.

The client, Ms. Simpson, is a 58-year-old disabled widow who needs a constant supply of bottled oxygen just to survive. In 1999, her husband told her that he had been offered a great deal on a loan from a company called Allegiance Mortgage Group. He wanted to use the loan to fix their dilapidated house. That same day, Ms. Simpson and her husband went to a title insurance company and signed a number of documents with very little understanding of what they were signing.

It turned out that the Simpsons had agreed to a 30-year home equity loan with a high interest rate and secured by their homestead. Ms. Simpson and her husband faithfully made payments on the loan for years. Even after Ms. Simpsonís husband died in 2000, she continued to make regular payments until she suffered a massive heart attack in 2006.

After her heart attack, Ms. Simpson found it difficult to keep track of her bills, and her medical expenses exhausted the resources she had to make payments on her home equity loan.

Each time CitiMortgage contacted Ms. Simpson, she told corporate representatives about her situation. Nevertheless, the mortgage giant refused to work out a payment arrangement and continually threatened to foreclose on the home. After several years of intermittent payments by Ms. Simpson, CitiMortgage filed suit to declare that it could sell Ms. Simpson's home. In this suit, CitiMortgage alleged that Ms. Simpson now owed over $22,000 on the original loan for $15,000.

Ms. Simpson's home was appraised by the appraisal district at about $11,000 when the loan was made. In 2002, the City of Nacogdoches completely rebuilt Ms. Simpson's home using Community Development Block Grant funds. As a result of this improvement, Ms. Simpson's home was appraised at over $50,000 for property tax purposes when CitiMortgage filed its suit.

When Ms. Simpson contacted LSLA, we were able to quickly determine that the original loan did not fully comply with the requirements of the Texas Constitution for home equity loans for a homestead. After extensive investigation, we were also unable to find any evidence that the original lender, Allegiance Mortgage Group, alleging that the lien was invalid, CitiMortgage promptly sought to non-suit its case without prejudice. This would have left Ms. Simpson with a lien against her home and the possibility that CitiMortgage could simply restart the foreclosure process at anytime.

CitiMortgage was initially unwilling to discuss a settlement of the case that would give Ms. Simpson peace of mind. We, therefore, filed an application for attorney fees for the many hours of time that we had invested in the case. CitiMortgage then quickly agreed to release the lien against the property, waive all of Ms. Simpson's liability, waive any income tax liability for her for the cancelled debt, clean up her credit history, and pay Lone Star Legal Aid $500 in attorney's fees.

Not only will this settlement relieve the extreme stress aggravating Ms. Simpson's heart condition, but, perhaps most important, it will allow her to be cared for by family and friends in the comfort of her own home.


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