San Diego, CAWith so many stories about financial elder abuse committed by family members, it can be easy to forget that there are other people out there who are guilty of such financial abuse. However, there are people in a variety of industries who violate financial elder abuse laws for their personal gain.
Lisette M. says that her parents were taken advantage of by someone in the financial services industry. "My parents originally had done some construction and updating on their home," Lisette says. "My uncle was moving in because his health was poor, so my parents had a room added to the house. They got into an option ARM loan to keep their payments low and to get their addition to the house finished.
"Because they are older, my parents were stressed about the negative amortization feature. My mother was receiving continual phone calls from a financial institution to go talk to someone. I did not know about this [Lisette's mother had previously fallen victim to a scam while creating a trust, but was lucky enough to get her money back].
"My mother accepted the appointment to go to [the financial institution] and talk about a 30 year fixed loan. My father brought home the documents for me to look over before he would sign them. I looked at them and the note did not indicate a prepayment penalty or that anything was adjustable. I have 20 years escrow experience, so I know what to look for. I told my dad that the papers looked okay.
"We talked about doing an impound account for my parents and we discussed interest rates because the rates had dropped. I suggested locking my parents into a 4.625 interest rate. I contacted [the financial institution] for my parents' interest rate information and I found out that their interest rate was a bit high. Then, I found out that my parents' loan was only fixed for 3 years and was adjustable every 6 months after that. My father wanted 30 year fixed but was given only 3 years.
"I was upset about that and was then told that there was a prepayment penalty for the loan. They [the financial advisor] charged my parents $16,000 for their loan rate when my parents' credit was in the upper 700s. For my parents' other loan, they charged $9,000. The advisor charged my parents a lot of money and gave them a prepayment penalty. My parents paid $25,000 in points that they don't have—they are not rich people.
"If I tell my mom about this, she will have a heart attack. The financial institution will not waive the prepayment penalty. I'm fighting to get it removed because my parents are right at the conforming level. But, they are missing out on great interest rates.
"How can someone look at an elderly person who has great credit and charge him 16 points on his home? In my job, I have a fiduciary duty to do the best for my clients. These guys don't have that duty? I guess they can hide behind the bank. Those initial documents did not say that my parents had a 3 year adjustable loan or a prepayment penalty. Usually it is included as an addendum—but it wasn't there.
"Of course the loan officer who signed the paperwork is no longer with the company.
"My parents are 75 years old. It's not that they're stupid, they just don't understand some things and if they're told something they believe they are being told the truth. I think that seniors need to be really careful. They have to really pay attention to the numbers and what they are signing. They should pay the money to have an attorney review the papers before they sign."