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Home Mortgage Lender Pays Damages in Repair Scheme

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JUNE 21, 2010 VOLUME 17, NUMBER 20

[This week’s Elder Law Issues article, about a home repair / home loan scheme, was contributed by our friend and colleague Prof. Rebecca Morgan. Prof. Morgan holds the Boston Asset Management Chair in Elder Law (and is the Director of the Elder Law LL.M. program) at Stetson University College of Law. She often provides us with interesting and useful cases and developments, and we appreciate her contributions.]

Clarissa Wade, 89, in somewhat poor health, with bad credit and a limited income had a house that was in need of repairs. A marketing call answered by her daughter and caregiver Shirley resulted in a house call by “Big Mike” Phelps, who, after being shown around the house, quoted a price for the repairs.

Although Shirley told Big Mike that Clarissa didn’t have the money, Big Mike brought in a contract, loan application and credit application – which was in Clarissa’s prior married name, even though Clarissa hadn’t used that name for almost sixty years. Since the title to the home was still in Clarissa’s former name, it appeared that someone had run a title search on Clarissa’s home even before Big Mike made the house call.

As Shirley showed Big Mike out, he told her he would be in touch and that “he got elderly people loans.” Despite Big Mike’s assurance, Shirley remained skeptical that Clarissa’s loan application would be approved since, after all, her mother was 89, with poor credit and little income.

Despite Shirley’s misgivings, about five weeks later Big Mike called to tell Shirley the “good news” that the loan had been approved through Clarion Mortgage Capital, and two representatives from Clarion Mortgage would bring the loan papers to the home for Clarissa to sign. In fact, within ten minutes of Big Mike’s call a Clarion Mortgage loan officer made an appointment and the next day came to the house. Since Clarissa wasn’t feeling well, she asked to have her daughter sign the documents.

Shirley, concerned about a story she’d seen regarding Big Mike and unfinished projects, was assured that the builder wouldn’t get paid until the work was done. Three weeks later, the Clarion Mortgage loan officers returned with what evidently were final loan documents to sign, which Shirley did, even though her mother was present. Work started the next day, the loan closed two days later, and the builder was paid on the same day – interestingly, the payment was more than the original contract price. The job was not finished until late October and Shirley immediately observed problems with the work. In addition, the loan company failed to pay some of Clarissa’s creditors from the loan proceeds.

About six months later Shirley filed suit on her mom’s behalf, claiming fraudulent misrepresentation by Clarion Mortgage regarding the loan proceeds being released to the builder before the work was done. Almost four years after that, the case was tried before a jury and a judgment was returned for Clarissa in the amount of $8,600 on the fraudulent misrepresentation claim. Clarion Mortgage appealed, claiming that the plaintiff had not presented “any evidence” that the loan officers had made any representations to Clarissa or that Clarissa had any knowledge of the loan officers’ alleged representations made to Shirley.

After reviewing the record, the appellate court drew the conclusion that the jury was reasonable in deciding that Clarissa was there and heard the loan officers’ statements. One ironic side-issue: at the trial, Clarion Mortgage filed a motion to keep Clarissa out of the courtroom on the basis that her presence would unduly sway the jury and that the court had already determined she was incapable of taking care of her own interests in the case. On appeal Clarion Mortgage argued that because Clarissa didn’t testify at trial, her case should fail. After disposing of Clarion Mortgage’s other arguments the appellate court affirmed the judgment. Wade v. Clarion Mortgage Capital, Inc. (May 11, 2010)

[Our commentary: The actual legal holding in Clarissa Wade’s case is not terribly expansive. The decision does, though, describe a practice that our clients, their family members and advocates should watch out for. The fact that so many seniors have home equity – even in these times of falling home values – opens the door for manipulative and greedy predators. In the right circumstances someone in Clarissa Wade’s situation might have been helped by a reverse mortgage, a line of credit or a home mortgage that allowed her to pay off bills to reduce her monthly payments and/or fix her home so that she could continue to live there. There were a number of warning signs that suggested this transaction was not entirely on the level – like the fact that a stranger called her without any prior contact, that the entire transaction was so rushed, and that “Big Mike” or someone else had obviously looked up her home ownership even before calling her. Tragically, “Big Mike” and Clarion Mortgage were obviously willing to deal with her despite her failing health and condition, then tried to use those very limitations against her at the later trial.]

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Robert B. Fleming


Robert Fleming is a Fellow of both the American College of Trust and Estate Counsel and the National Academy of Elder Law Attorneys. He has been certified as a Specialist in Estate and Trust Law by the State Bar of Arizona‘s Board of Legal Specialization, and he is also a Certified Elder Law Attorney by the National Elder Law Foundation. Robert has a long history of involvement in local, state and national organizations. He is most proud of his instrumental involvement in the Special Needs Alliance, the premier national organization for lawyers dealing with special needs trusts and planning.

Robert has two adult children, two young grandchildren and a wife of over fifty years. He is devoted to all of them. He is also very fond of Rosalind Franklin (his office companion corgi), and his homebound cat Muninn. He just likes people, their pets and their stories.

Elizabeth N.R. Friman


Elizabeth Noble Rollings Friman is a principal and licensed fiduciary at Fleming & Curti, PLC. Elizabeth enjoys estate planning and helping families navigate trust and probate administrations. She is passionate about the fiduciary work that she performs as a trustee, personal representative, guardian, and conservator. Elizabeth works with CPAs, financial professionals, case managers, and medical providers to tailor solutions to complex family challenges. Elizabeth is often called upon to serve as a neutral party so that families can avoid protracted legal conflict. Elizabeth relies on the expertise of her team at Fleming & Curti, and as the Firm approaches its third decade, she is proud of the culture of care and consideration that the Firm embodies. Finding workable solutions to sensitive and complex family challenges is something that Elizabeth and the Fleming & Curti team do well.

Amy F. Matheson


Amy Farrell Matheson has worked as an attorney at Fleming & Curti since 2006. A member of the Southern Arizona Estate Planning Council, she is primarily responsible for estate planning and probate matters.

Amy graduated from Wellesley College with a double major in political science and English. She is an honors graduate of Suffolk University Law School and has been admitted to practice in Arizona, Massachusetts, New York, and the District of Columbia.

Prior to joining Fleming & Curti, Amy worked for American Public Television in Boston, and with the international trade group at White & Case, LLP, in Washington, D.C.

Amy’s husband, Tom, is an astronomer at NOIRLab and the Head of Time Domain Services, whose main project is ANTARES. Sadly, this does not involve actual time travel. Amy’s twin daughters are high school students; Finn, her Irish Red and White Setter, remains a puppy at heart.

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Matthew M. Mansour


Matthew is a law clerk who recently earned his law degree from the University of Arizona James E. Rogers College of Law. His undergraduate degree is in psychology from the University of California, Santa Barbara. Matthew has had a passion for advocacy in the Tucson community since his time as a law student representative in the Workers’ Rights Clinic. He also has worked in both the Pima County Attorney’s Office and the Pima County Public Defender’s Office. He enjoys playing basketball, caring for his cat, and listening to audiobooks narrated by the authors.