Predatory Lending Complaint Can Be Amended

SAN FRANCISCO (CN) - A federal judge ruled that an elderly woman can amend a complaint against a company she accuses of taking advantage of the elderly and disabled via predatory home loans.

Bess Kennedy sued PLM Lender Services, Monterey Bay Resources and 16 people, as guardian ad litem for Latanya Marie Session, an elderly African-American woman who is physically and mentally impaired due to a brain injury she suffered in 2005.

"According to the complaint, Ms. Session and her brother, Winston Session, were actively misled into signing a series of loan documents they did not, or could not, understand," U.S. District Judge William Alsup wrote. "Mr. Session was mentally disabled throughout all of the events alleged."

The brother and sister inherited their house from their parents in 1988. PLM claims the siblings signed their first loan documents in 2004.

"Despite their combined social security income of $2,000 per month, defendant Ty Ebright, a loan representative, recommended Ms. Session and her brother take out a $200,000 home loan," Alsup wrote. "The terms of that agreement required Ms. Session to pay $1,833.33 per month. Ms. Session does not recall her brother signing the documents. The signature appearing to be Mr. Session's on the loan document does not resemble his signature, and he was without capacity to sign the documents."

Session suffered an anoxic brain injury in July 2005 that left her with decreased motor and cognitive functions. She was hospitalized for more than 3 years. She returned home in November 2008, but never fully recovered.

Ebright talked her into a second loan for $10,000 shortly after her injury, while she was still hospitalized, Alsup wrote. She couldn't sign her own name and had difficulty remembering things.

"Mr. Ebright subsequently visited her in the hospital and gave her an ultimatum: 'Pay down the existing loan by entering into a new loan or face foreclosure,'" Alsup wrote. "Due to her and her brother's mental incapacity, Ms. Session and her brother appointed Matthew Lopez as their attorney in fact at the behest of Mr. Ebright. Mr. Lopez was appointed 'for the special and limited purpose of drawing another mortgage.' Like some of the loan documents, Mr. Session's signature on the document appointing the attorney in fact does not match other samples of his signature."

By 2007, Ebright claimed default against the property, but not before he "continued to charge excessive fees and interest rates, exhausting the equity left in the property and sending the final amount owed on the first and third loans to over $400,000," Alsup wrote.

A nonjudicial sale was completed in December 2008, at which defendant Ann Ebright, the only bidder present, bought the property for $101,000.

Session, through her guardian Bess Kennedy, filed suit, seeking quiet title and alleging intentional misrepresentation, predatory lending, violation of the Equal Credit Opportunity Act and the Truth in Lending Act, financial elder abuse, breach of fiduciary duty, unconscionability and violation of the California Business and Professions Code.

Alsup has ruled that more specific allegations must be made in the complaint for the case to move forward.

"This order has already granted plaintiff leave to amend the complaint, but notes that no specific factual allegations have been made against defendant PLM," Alsup wrote. "While PLM failed join the Ebright defendants' motion to dismiss, it did so believing its section 2924l declaration would be given effect. To avoid unnecessary motion practice, plaintiff is encouraged to now plead the best case against defendant PLM."

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