Widow, 85, faces foreclosure

June 4th, 2009, 3:00 am · 39 Comments · posted by Mathew Padilla

(Update: Foreclosure postponed.)

Rita Gillam, 85, will likely lose control of the Orange home she has owned for more than 50 years.

It is scheduled for a foreclosure auction, known as a trustee’s sale, at the civic center in Placentia today, along with 99 other properties from various lenders and loan servicers. Update: The auction date for Gillam’s home was postponed to August 4, according to a Web site that posts data on trustee’s sales in Placentia.

Gillam, a widow, said she has owned hair salons and baby supply stores for decades. When her baby store hit a rough patch, she borrowed $412,500 in 2005 and then refinanced with Fremont Investment & Loan for $556,000 in 2006. Before those two loans, her home had been paid for, she said.

The $556,000 is gone and so is her business, Gillam said.

“I am broke,” she said.

Gillam has no one to turn to for help, she said.

“I have no family,” she said. “All mine are dead.”

Loan servicer HomEq Servicing is putting her home up for auction today, asking a minimum of $345,678 — total debt and fees owed on the property are $579,535, according to ForeclosureRadar.com.

I called HomEq but was told they do not discuss individual cases because of privacy concerns. I also called Barclays Bank, which owns HomEq, and was told the same thing, although a spokesman is looking into the case. To be sure, I called both companies yesterday — the same day I spoke to Gillam right after a real estate agent called me on her behalf.

I am noting evidence that owners who “cashed out” their equity are driving foreclosures more than folks who bought at the peak of the housing market. I plan to blog more on that trend tomorrow.

In other news…

Share this post:

You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.

Hot topics

jz16 says:

June 4, 2009 at 3:24 am

Something is not right here. She would have spent over $100,000.00 a year. Did someone swindle her out of her money?

Post Reply

Dean says:

June 4, 2009 at 3:32 am

She had to borrow $412500 for a baby store? I think theres some missing pieces from this puzzle here.
Don’t play the age card with me, I’m fresh out of pity for people who foolishly tapped into their homes and used it as a personal piggy bank.
I don’t see any justifiable reason to borrow half a million dollars for a baby store. Even if the economy is crap, worse comes to worse, shut down your store or go on a hiatus.
It’s pretty apparent that they left out the luxury car purchases, vacation home in Vegas… “grandson’s Ferrari birthday present..” etc. etc.
Just another casualty of the greed homeowners got themselves into.

evennow says:

June 4, 2009 at 6:23 am

“Don’t play the age card with me” you say. Okay - I won’t play any cards with you. You are an arrogant, self serving, judgmental piece of humanity. You are right in that there may be missing pieces of the puzzle. It is possible this woman was swindled, taken advantage of by someone she trusted. No one is asking for your PITY - who the h*eck do you think you are anyway that anyone needs to care what you think or what your are out of? You are out of humanity is what is seen. I hope, fervently hope,that whatever happened to this 85 year old woman enlightens you life along the way. You may be surprised when you do wake up from your self-righteous zombie state to realize that ‘it is pretty apparent” that you are a jerk.

Post Reply
- Cally says:
  
  June 4, 2009 at 9:31 am
  
  Right on, evennow, couldn’t agree more.
  
  I truly hope someone will do something on her behalf here, she tried and failed to save a business, who could blame her. Did she borrow and spend too much doing it, maybe, but I hope she can be helped…God speed to her and those that help her!
  
  Post Reply
  - shadow735 says:
    
    June 4, 2009 at 10:58 am
    
    I get annoyed with people that are fast to help those that made terrible financial decisions and are in trouble due to their own lack of foresight when there are homeless people living on the streets with nothing but the clothes on their backs.
    
    This lady is 85 years old, you would think that someone with the wisdom of her years would be better informed to not make such a bad financial blunder.
    Painting the bank as a villain is a joke after all this lady did sign the mortgage in good faith, granted her business failed (if that is the whole story) but she took a gamble and lost. The bank is only following the terms of the loan agreement, granted they should have had better underwriting practices still the loan was made, the lady got the money. Now its gone, last I checks banks are supposed to make money not be charitable organizations.
    There are people in worse situations then this lady if you don’t believe me just drive to downtown LA and look at all the homeless living on and inside cardboard boxes.
    Society has such a double standard. It only wants to take care of those that were stable but brushes off those that are “dust” on the road because its something you don’t want to see and deal with.
    Lets get real people this lady doesn’t deserve anymore help then all the millions of other people that are in the same situation. Age doesn’t mean you get special treatment.
    Hopefully this lady will be able to afford to rent. But losing a home isn’t the end of the world. Hopefully she has retirement and Social Security.
  - evennow says:
    
    June 4, 2009 at 11:37 am
    
    Hope so too, Callyl Shadow735 has his post set so no one can respond. He is so wrong. Age does get you special treatment. Should be respect but it’s not. It’s often getting hit by crooks. I hope “the shadow” has the same life at 85 that this lady has today, at age 85. Will find out he’s not as smart as he thinks he is. Guess he loves driving around L.A. and seeing that “There are people in worse situations then this lady if you don’t believe me just drive to downtown LA and look at all the homeless living on and inside cardboard boxes.” There you go, shadow, I see a cardbox in your future! You’re such a coward.
- shadow735 says:
  
  June 4, 2009 at 12:10 pm
  
  evennow you seem to be the one with the narrow view and assumptions; first off I am posting at work; secondly I didn’t make any changes to setting so people cannot respond, all settings have been the same since the blogs format has changed not to mention I dont know how to change any settings as I dont sign in to post. Besides the blog isn’t locked down so what was your point again?
  
  Yes you should respect your elders but respect and equal treatment are two different things, so from your perspective once you hit a certain age you don’t have to face the consequences of your actions?
  
  Tell you what why don’t you grow up and not assumptions that only proved to show how ignorant you are by the statement you make. From your posts it seems that if someone posts something you don’t agree with you attack them rather then address the situation. Are you trying to prove a point, if so what?
  
  Everyone has to face the consequences of their decisions regardless of their age. This in now way diminishes the respect that they are due. Its called life not candyland.
  
  Post Reply
- tiredofthewhining says:
  
  June 4, 2009 at 12:22 pm
  
  Evennow,
  
  Get over yourself. This woman wasn’t swindled. She knowingly and willingly took a loan out on her home to try and save her business. Her business failed. I don’t care about her age. I care about my money. Why should I as a taxpayer have to pay for someone to gamble and fail. I full heartedly agree with Dean and Shadow735. We are tired of the handouts. We is my handout as a taxpayer. When will I get a break from paying taxes. Instead I have to pay more for these people that made foolish decisions. If you want go to the IRS and hand them your paycheck, since you’re made of money, so they can stop funding these bailouts.
  
  Post Reply

grandma102 says:

June 4, 2009 at 4:51 am

Many have been told,”You worked for your house, now let your house work for you.”
Sounds too good to be true. It’s a trap.
It’s really saying, take all your investment $ and take chances.
very scary.

evennow says:

June 4, 2009 at 6:26 am

Dean, you are a self-righteous, smug, judgmental blind man. You don’t see any “justifiable reason” for ???? You are right in that there may be missing pieces here and that may be that she was swindled or taken advantage of by someone she trusted. Sounds right up your alley.

Marie says:

June 4, 2009 at 6:28 am

Why is this even news? This is happening everyday to a lot of people including all ages.

Cally says:

June 4, 2009 at 9:33 am

Why is this news??!!!! She is 85 and being thrown out into the street, what is your problem?

Post Reply

Peter T says:

June 4, 2009 at 7:33 am

Well, she has Social Security, Medicare, and the possibility to rent a cheap studio. It’s not as nice it was, but that’s life.

Mathew Padilla, Reporter says:

June 4, 2009 at 7:54 am

I am constantly reporting the foreclosure numbers, and think it’s important once in a while to put a human face on them.

This case illustrates what was really wrong with the boom. Rita should not have taken all the equity out of her home — it would have been better to let the shop fail — but also Fremont should not have funded the loan. There’s a reason why Fremont ended in bankruptcy.

Equity stripping is driving foreclosures. What a disaster.

cam says:

June 4, 2009 at 8:28 am

She could have done a reverse motgage…..take out the available money and have no payments. If she passes away or permanetly moves out ie..nursing home she/family would have 1 year to sell or refinance the mortgage. The family would NEVER OWE A DIME ON THE PROPERTY. Their may not be any equity left for the family but when you are in your 80″s you need to take care of yourself First and then others. Hope she wasn’t ripped off. Something does not add up. Any available equity WOULD go back to the family after the sale of the property.

Post Reply
- Larry P says:
  
  June 4, 2009 at 9:38 am
  
  Bingo! Reverse mortgage would have been my recommendation. A lot of seniors I find are ignorant of the reverse mortgage and don’t even want to hear about it. Too bad. Nothing worse than an 80+ year old man or woman with a $500k option ARM that wanted ALL that extra cash out immediately rather than with a reverse mortgage….greed isn’t limited to the young.
  
  Post Reply
Cally says:

June 4, 2009 at 9:35 am

Mathew, you did the right thing here. Put a face (and age) to this constant barrage of re-pos and foreclosure.
Its really sad that everyone seems to have gotten so desensitized to the problem that they have to write thier appathetic and downright mean comments here.

People, if this was a member of your family what what you be writing here?

Post Reply
tiredofthewhining says:

June 4, 2009 at 12:55 pm

Are you serious????? Why shouldn’t she have been able to take a loan out on her home for her business? It’s not like she was retired, collecting her social security, when a broker called her up and conned her into a loan. She willing put herself into debt thinking that was the answer to all. The loan sounds legitimate. Loans are gambles. Don’t blame the economy. Her company was tanking when the economy was peaking. You’re just a typical reporter who will do anything for a story. You didn’t get my sympathy on this one.

Post Reply

Richard Rohr says:

June 4, 2009 at 8:10 am

Just another greddy Home Owner , soon to be EX Home Owner. If you can’t pay it, the Bank has every right to own it. The bank took the risk, not her.

Mike C. says:

June 4, 2009 at 8:14 am

I hear a lot of whining about “she was probably swindled.” Folks, she acted irresponsibly by taking out 30+ year loans on a paid-off home at 80+ years old. Life expectancy alone precludes the idea that she was trying to fund her failing business. I agree with Mathew Padilla that Fremont should not have funded the loans and that she should have allowed her store to close. At 80+ years old, it can’t be about pride. It has to be about preservation of resources.

Equity stripping, as Mr. Padilla calls it (using the rise in equity as an ATM rather than as an investment for securing your future), is truly an enormous problem. I’m looking forward to seeing the numbers that he puts together and how they relate to the number of foreclosures from pre-peak and peak of the market buyers. Should be very interesting.

shadow735 says:

June 4, 2009 at 8:18 am

THis is a sad story but there has to be a huge missing amount of data for someone to use up 412k+ and then refing again at 556K? What happened to all the money? There is no way that this all could have been used for a baby store.

It would be nice to have the whole story but the only person that knows that is Rita.

I dont get how this is news as it is happening to so many people, didnt the colemans take out loans for their failing businesses? All it comes down to is people making unwise financial decisions. Age isnt a factor that keeps you from making mistakes.

Martha says:

June 4, 2009 at 11:42 am

Have you bought any baby gear lately? Some of it is terribly expensive so to have inventory on hand could consume a large amount of liquidity, plus rent, payroll, insurance, etc. and she is competing against chain giants like Target and Babies R Us. It’s reasonable to me that she could have spent $100k a year on her store just to keep it afloat. However, I think I’d rather lose my business than my home, but like so many others, she thought the market was going to continue to rise, not crash and burn. Also, I agree that age isn’t a factor that keeps one from making mistakes, but I’ve also seen that some people up into their golden years are more gullible and/or trusting and make poor financial decisions.

Post Reply

Larry P says:

June 4, 2009 at 8:22 am

“I am noting evidence that owners who “cashed out” their equity are driving foreclosures more than folks who bought at the peak of the housing market.”

You mean that the banks aren’t just SCREWING people??? Duh! Lol! And here I thought I was gonna read just another “The banks aren’t helping me” or “The Mortgage Broker lied to me about this mortgage” story. Sorry this lady is losing her home but she lived in it for decades and took it’s cash value out for her own benefit….she does NOT own the home….the bank about to incur a HUGE loss does. Hope she can find new accomodations and that her family helps her out of this self-inflicted problem.

PS. No bank can EVER comment publicly on an individual or their account…they can be sued BIG TIME because of those privacy laws you cite. That is why I ALWAYS look at stories like this with suspicion since we will only EVER hear one side of the story…the poor, poor “victimized” home debtor’s! Banks can never counter with the often gruesome facts about what REALLY happened! Bottom line is always this: You pay, you don’t get into foreclosure! You don’t pay….you fill in the blanks…

Tax Payer says:

June 4, 2009 at 9:05 am

The best thing she can do is to leave California for a much cheaper state and live and off Social Security, Medicare and any savings
If Illegals can get it then so should she

no worries says:

June 4, 2009 at 9:20 am

““I am noting evidence that owners who “cashed out” their equity are driving foreclosures more than folks who bought at the peak of the housing market.”

I’d love to see some numbers on this, because I too am seeing a changing trend.

I’m mostly watching RSM, Foothill, Lake Forest, and Mission Viejo, and I’m noting that a growing percentage of the short sales and recent foreclosures are on homes purchased “way back” and for far less than the asking price.

Personally, this makes me a bit sick. To have bought when the realtors were selling the “forever priced out” lines, that’s pretty crummy, but the hype was strong and I recall the fever.

These people who added hundreds of thousands of dollars to their mortgage using equity that had appeared “overnight” are even more troubling to me.

I spotted a property yesterday being short sold for around $450k, with the last purchase being ‘67 for $22k.

I don’t want to comment on the original story in this article, since we don’t know all the facts. But regardless I do NOT think it is indicative of the average equity stripper.

no worries says:

June 4, 2009 at 9:24 am

Here’s that property, in fact.

http://www.redfin.com/CA/Mission-Viejo/25455-El-Picador-Ln-92691/home/5037276

Post Reply

olsrfbum says:

June 4, 2009 at 9:39 am

I’m thinking $125. per.sq.ft. might buy this property.

Get Real says:

June 4, 2009 at 10:04 am

I don’t understand the mentality of some people. This is an unfortunate situation but this lady has already spent the money from the SALE OF HER HOME. A cash out loan is just that, spending the money and then renting your house back from the bank. When you have a mortgage, its alot like having a lease; if you can’t pay the monthly nut, you have to go.

To paint people who have already spent the money from their homes as “victims” (which this article clearly does) because they can’t make payments is stupid and manipulative.

This lady will now have to move into a RENTAL and make monthly rent payments to a LANDLORD instead of to the bank. In all likelhood, the rent will be much less than the mortgage payment she was making, giving her some financial relief. THis is not the end of the world, Had she simply sold her home at the height of the bubble instead of refi-ing it, and then spent the money from the sale of the home, she would be in much the same position without all the crying and handwringing.

Like many homedebtors, this lady made a business decision. She needed money for her business. If the bank hadn’t given her a mortgage back then, she would have had to sell that house years ago to tap the cash value. She would have been a renter for years already and then none of this drama about “no family to turn to” etc.

No one should have sympathy for people who took the cash value out of their houses and spent it. Even if they “lose” (or walkaway) from that house in foreclosure, they are much better off than those who were “wise” about their money because these people withdrew the equity (MONEY) at the height of the bubble and got alot more cash out of it than the house is worth now. Doesn’t matter if they’re 85 years old or 35 years old. Please stop already with all the blatantly manipulative articles.

Its funny that the realtor called you for your help to put pressure on these banks and blatantly manipulated you.

Mathew Padilla, Reporter says:

June 4, 2009 at 11:07 am

She is not being painted as a victim. I clearly state she took out all the equity of her home and now has nothing.

Examples like these illustrate what is behind the “toxic assets” or the softer term “legacy assets” that government officials keep saying need to be dealt with. This loan (or securities backed by this loan) is out there in the world somewhere contributing to the global financial meltdown.

Post Reply
- tiredofthewhining says:
  
  June 4, 2009 at 1:05 pm
  
  As a reporter you should investigate. There is no toxicity in this loan. She had a job and she took out a loan for her business, using her home as collateral. She lost her business and now she’ll lose her own. Age isn’t a factor since 1) her trustees will be in debt to it or 2) the bank will take ownership of the home after she dies. So again how is this a toxic asset. All cash out loans do not equal toxic loans. I’m willing to bet that she took this loan out thinking that it would have been better than taking an SBA loan out which would have required her to pay off sooner with a higher interest rate/payment.
  
  Post Reply

X-DEM says:

June 4, 2009 at 10:43 am

Some people have to pay the price for irresponsibility regardless of their age, sex, ethnicity, or because they are widows or widowers with no family to turn to. This is a typical “bleeding heart” story and if one thinks about the economic situation today, multiply this situation by a million. So what? She won’t starve, not with the generous social welfare system here in California. Millions of people are getting welfare income, free health benefits, free food stamps as well as paid for housing. This is just in California, that is why illegals flock here. This widow will have to make do like all the other widows and widowers living on their social security benefits.

JC says:

June 4, 2009 at 10:57 am

What is sad, that besides the reverse mortgage previously mentioned is if she had sold for $500k and lived to 100 years old, would have had over $33k a year to spend even assuming NO interest earned on the money.

Instead she spend $500k in a few years trying to support a failing business.

Sad all around, but mostly of her own making.

Dave says:

June 4, 2009 at 11:43 am

Sorry, no empathy here. This woman was lucky enough to be sitting on a gold mine, lost all the money, and now we should feel sorry for her because she borrowed a whole lotta money that she will not pay back?

Way back in the 1920′ and 1930’s banks would foreclose on properties and resell those properties for a huge profit. Time for Guthrie to write folk song. Now the bank is foreclosing and losing hundreds of thousand of dollars. Who should we feel sorry for?

June 4, 2009 at 11:49 am

evennow-

You are obviously the ignorant one in this situation. If you ask this woman for her mortgage documents you’ll find my name is nowhere near it. Not as a signer, co-signer, beneficiary, etc. Why?
Because its foolish to finance and cash out 100% of the value of your primary home to fund a failing business.
Why didn’t she take out a SBA loan? Well, one thing, those require a lengthy application process which examines a solid business plan, expected ROI, etc. - defaulting on a SBA loan in most cases will not result in a home foreclosure.
As all the more clear-headed readers have written, the woman used her home as a personal piggy bank and just now is reaping in the benefits.
The bank is at a loss here, the bank is the REAL victim here. If the bank rejected her application years ago, don’t you think she’d consider suing them for age discrimination?
She had perfect credit, business income, a house with zero equity. Contrary to popular belief, banks are not interested in taking someone’s home. Their involvement is the mortgage that is on the home, not the collateral itself.
Banks foreclose to get their money back, not because they want the tenant out in the streets.
The bank is the victim here, clearly.

June 4, 2009 at 11:55 am

On the bright side, there is a wealth of government resources available for Ms. Gillam as well as assisted housing.

She should’ve asked herself how she planned to pay off the half a million dollar loan before she signed on the dotted line.

California has a 72-hour “reprieve” period after a homeowner signs a mortgage document that I like to call the “Oh Crap, what have I done” period-within 72 hours, for any reason, the signers on a mortgage can cancel out the loan without any need to explain.

72 hours that was probably spent thinking of all the wonderful things she could now do with her new windfall-rather than start planning out how to pay it back.

**Matthew - are you able to gather information as to when she took the loan out and at what point the bank filed for foreclosure? **

Karen says:

June 4, 2009 at 4:32 pm

Whine, whine, whine. It’s the stupidity of he person taking out an equity loan and deciding to use it on a piece of ocean front property in Arizona. Most of us should be so lucky to own such an expensive house in the first place, own a business then we’re supposed to feel sorry for her just because she’s 85? Sorry-she has far more opportunities than most people when it comes to housing- senior centers are everywhere. It may not compare to her present lifestyle but it’s a roof over her head. Join the millions of others out there who are in the same predicament regardless of age. Wake up and smell the coffee-this is life for a lot of people.

Greg Feldman says:

June 7, 2009 at 11:52 am

Feldman Law Center is working with First Team Real Estate Services to aproach Rita Gillan to modify her loan (Pro Bono) to an affordable payment or a reverse mortgage if the investor will cooperate. Feldman recently helped a widow in HB from losing her home 1 week before trustee sale. GMAC was cooperative in a $100,000 principal reduction and Feldman Law Center negotiated a reverse mortgage with Met Life who held the 2nd on the home.

We will keep you posted

shadow735 says:

June 8, 2009 at 8:10 am

I am just wondering how you can do a reverse mortgage on a loan with no equity, as I am assuming she tapped all the equity and with falling home prices the way they are how on earth can a mortgage company do a reverse mortgage? Or am I missing something?

Post Reply

badger says:

June 7, 2009 at 5:14 pm

With all due respect to Mr Feldman, how is it fair that this woman get any principle reduction at all? She made a binding agreement, a contract, with the bank. They gave her money and she agreed to pay it back, using the house as collateral. She gambled and lost. I don’t see why the bank should take any more of a loss than it already has, they held up their end of the bargain. I feel bad that this woman is elderly and alone, but she was foolish with a great deal of money and spent it all. And it’s not like she’ll be out in the streets. She’ll be able to rent a nice studio or 1 bedroom nearby and be better off for it.

I guess what I’m saying is I feel like all these loan mods are doing the general public a disservice. Let the chips fall where they may already and get this foreclosure business done and over with so we can start to recover as a country. We all know what will happen and what’s going to come, so stop delaying the inevitable. It makes it last that much longer. These mods may temporarily help a homeowner, but in the end, we’ll all pay, won’t we? I guess those of us who have been responsible this entire time already are… Sorry to go off on a tangent, I guess the old widow/single mom losing their home story doesn’t inspire as much sympathy in me as it used to. : /

Orange County Register