Their stories: I was sick at my stomach’
VIENNA — For seven years, 78-year-old Jerry Davis made payments on a $36,700 mortgage he and his late wife took out on their home, on land that was part of his parents’ farm.
Then in November 2004, he said, he received a monthly bill for $38,000. Pay this month, it said, or face further action.
His mortgage contains a “balloon” clause. That means the mortgage-holder can send the borrower a lump-sum bill for the entire remaining debt, after the borrower pays for years. Balloons are illegal under state law, but federal law, which allows them, supercedes state law.
Further action can mean foreclosure, Davis knew. He thought he had an escape hatch. “It was written into my contract that, if the payments got to be too much, I could refinance.”
The lump-sum bill had come from Select Portfolio Services in Utah, so he sent them a letter, saying he wanted to refinance. “They wrote back and said they were not a bank, and they did not refinance,” he said.
“I was sick. Sick at my stomach and everything else,” Davis said.
He got a lawyer.
Select Portfolio Services is technically not a bank. But they do collect for one of the nation’s largest banks, Bank of America.
“Usually, these lenders tell people orally that they can refinance, but they don’t write it into the contract. This time, they did. So Select Portfolio, representing Bank of America, was refusing to honor the contract,” said Dan Hedges, who represents Davis.
He has filed suit on Davis’ behalf. Bank of America spokesperson Shirley Norton said Bank of America acquired Davis’ loan when they acquired EquiCredit in 1998. Bank of America denies it had anything to do with the loan, she said, “but we want to do the right thing.”
To contact Kate Long, use e-mail or call 348-1798.