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Family says suicide caused by foreclosure action



Published: Thu, February 12, 2009 @ 12:09 a.m.

Lawyer: Couple in their 70s and on fixed income was given a 30-year, $160,000 loan.

STAFF REPORT

EAST PALESTINE — A 72-year-old woman who feared she’d lose her home to foreclosure hanged herself to death, the family lawyer said.

Betty J. Lipply of 51535 state Route 14 died the morning of Jan. 24 at her home, just days after receiving her second summons and foreclosure complaint from her mortgage lender, said Atty. Robert B. Holman of Bedford.

“I last spoke to her at 8:30 the night before. I was there at the house, and my aunt and uncle were there from Illinois,” said Lipply’s daughter, Sherrie Blum of Darlington, Pa. “She talked constantly about the foreclosure, thought she would lose the home my father built for them.”

Blum said her aunt found her mother dead the next morning.

“I have no doubt it was the foreclosure. This is devastating to the family. My father doesn’t want anyone in the United States to go through this ever again.”

The foreclosure complaint was filed Jan. 6 in Columbiana County Common Pleas Court by Chase Home Finance in Columbus. The defendants named are Robert Lipply, 72, his wife, Betty Lipply, and Home Savings and Loan in Youngstown, the second lien holder.

In a 31-page counterclaim lawsuit, Holman names as third-party defendants Lake Erie Title Agency in Dayton, North Coast Capital Funding in Cuyahoga Falls and SML Corporation, a real estate agency in Hudson, Ohio.

Holman alleges in the lawsuit filed on behalf of the Lipplys that the Lipplys were the victims of a predatory lending scheme. He said the bank, mortgage company and title insurance company used an inflated appraisal of $200,000 to create an over-inflated mortgage loan, thereby putting the Lipplys on the path to financial ruin. He said the property at 51535 state Route 14 had a market value of $80,000.

In late 2004, the Lipplys sought a mortgage loan to refinance their existing mortgage debt and pay off the original mortgage of $147,501, Holman said. They were provided a $160,000 mortgage loan without showing whether either was employed or had any assets to qualify for the loan, he said in court papers.

The lawsuit says North Coast owns the majority of common stock in SML and Lake Erie Title, and North Coast loaned the Lipplys $160,000 and obtained an interest in the property in 2005. Also, North Coast or SML contracted with Lake Erie Title to perform title work and escrow services in conjunction with the Lipplys’ loan and the high appraisal was used as a basis to support approval of a loan for a much higher amount than would have otherwise been approved, the lawsuit alleges.

Chase, holder of the January 2005 note, claims that, through default, $153,839 is due plus interest from June 2008. Chase’s attorney, Erin Jochim, did not respond to phone messages seeking comment.

The Lipplys, both retired, have been on fixed income of roughly $1,600 per month. Holman said the 30-year loan payment was $1,169 per month.

The Lipplys had an older house next door at 51529 state Route 14, valued at $68,000, which was foreclosed on in 2007, the lawsuit states.

That’s when Betty Lipply began suffering severe bouts of depression and anxiety, realizing that their residence would also be the subject of foreclosure, the lawsuit states.

She tried to sell the property 51529 state Route 14 at $156,000 but got no offers and it was sold at sheriff’s sale, court papers show. They do not list the selling price.

She received notice of the current foreclosure on Jan. 13 and felt she had no options left to save her home and took her own life, the lawsuit states.

The lawsuit alleges North Coast, SML and Lake Erie Title acted together to induce the Lipplys into entering a loan that was not in their best interest.

The lawsuit seeks attorney fees, and punitive and compensatory damages to be determined at trial.


Comments

1AKAFR1(322 comments)posted 5 years, 2 months ago

With all due respect, where is the responsibilty of the homeowner(s) to realize that they cannot afford such a debt?

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2sweet1231(2 comments)posted 5 years, 2 months ago

AKAFR1 - you do know that prefacing something with "With all due respect" doesn't absolve you from being disrespectful, right? I mean, if I say "With all due respect, your sister's a slut" I'm not really showing you any respect. How about you give these folks a little breathing room before somethig like this happens to one of your own and you have to wonder why.

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3aeparish(669 comments)posted 5 years, 2 months ago

Sweet, AKA had a legitimate question.

People should evaluate their financial situation before becoming involved with such a huge endeavor. Granted, things happen to throw your finances off, but the possibility of those things happening should always be in the back of your mind to hopefully prevent situations like this from occurring.

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4henryviii1509(274 comments)posted 5 years, 2 months ago

is AKA's sister really a slut? or does she play one on TV?

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5henryviii1509(274 comments)posted 5 years, 2 months ago

'with all DUE respect'

could this mean that the speaker has less than complete respect for the subject? Yes.

did sweet1231 make an a$$ of him/herself? Yes.

how much more 'breathing room' is required, it's been a month?

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6AKAFR1(322 comments)posted 5 years, 2 months ago

I prefaced my statement with "With all due respect" because I feel sorry that the lady committed suicide and for the pain that her family is experiencing. I also feel that I can comment on the issue of personal responsibilty without being coldhearted. People need to quit playing the victim and take personal responsibilty
for their actions.

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7apollo(1227 comments)posted 5 years, 2 months ago

When people in their 70's, retired, and on fixed incomes take out 30 year loans for houses whose costs are far above where their incomes dictate, the foreclosure is the expected result. Where's the personal responsibility? Is ti always someone elses fault when YOU sign a contract that is beyond your means?

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8JeffLebowski(953 comments)posted 5 years, 2 months ago

I agree with personal fiscal responsibility but when your perceived value of the property you intend to buy is more than twice what it is actually worth everything that happens afterward (financing) is going to be based on that inflated number. If indeed these people were duped into accepting that this property was worth $200k and it was really worth $80k they were done so by people who they rightfully trusted to give them an accurate portrayal -- in my opinion very, very different than simply getting in over one's head from a financial perspective.

The whole thing is just a horrible shame.

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9scrooge(563 comments)posted 5 years, 2 months ago

I do feel bad for the family, however the lenders/title company are not the ones at fault here.
The original loan note that was refinanced was $147K and a new loan was put in place at $160K. I truely doubt the market value at the time of the loan was half what was currently owed. Home Savings & Loan - an extremely conservative lender-held a second mortgage, again causing concern the property wasn't so drastically undervalued.
There are many alternatives to foreclosure. They could have filed Bankruptcy to halt the foreclosure action, negotiated a short sale, forebearance or a loan modification to name a few.
They were able to maintain payments on the property until just last year according to the story, so I agree with AKA.....where is the homeowner responsibility?
One last thing......took a loan out for $160K and was able to reduce the principle balance on the home over $10K in 4 years. THAT does not sound like a preditory loan-just an excuse to shift the guilt of the family ignoring the obvious depression this poor lady endured in the past year onto someone with deeper pockets for monetary gain.

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10JeffLebowski(953 comments)posted 5 years, 2 months ago

Scrooge-clearly you have a more firm grasp on this process than most (myself certainly included) and I'm totally on board with what you are saying about responsibility, but doesn't it stand to reason that all you describe above would not have even been necessary if the couple had an honest appraisal of what the property was worth from the start? In my eyes it is cause-and-effect moving forward from the point of the inflated appraisal.

One could argue that had they known the true worth of the property that they wouldn't have purchased it under any circumstance regardless of the lending terms or any other factors.

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11scrooge(563 comments)posted 5 years, 2 months ago

While I agree with you Jeff, the county auditor's website shows the property was built in 2001. The previous mortgage was probably the original loan after the loan was built.
I doubt the home is worth what it was in 2001 (whose house is with this economy?)but I do stand by my assumption that there was no deliberate preditory action. that being said, if there was some impropriety they (lender/title/etc) should definately be held accountable.
Regardless this was a tragedy.

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12AKAFR1(322 comments)posted 5 years, 2 months ago

Basic math: $1,600.00 (income)
- $1,169.00 (mortgage payment) = $431.00 to

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13scrooge(563 comments)posted 5 years, 2 months ago

AKAFR1 Basic math:
$160K loan in 2004
$154K owed 4 yrs later (WITH the penalties)
$1100/month payment works out to about 5% interest on a 15 yr note-the most probable way the principle was reduced that much.

There is more to the income than they are reporting in this story. Maybe they were relying on the rental income of the home they lost in 07? Recently retired?
Hard to say without knowing the paramaters of the loan.

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14Wahoo(2 comments)posted 5 years, 2 months ago

It is highly unlikely the article correctly notes the income at the time the loans were made, since no lender would made either a first or second mortgage loan with that type of amount of debt and that little amount of income.

Chances are something happened to their income or the articles is just incorrect.

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15JackofallTrades(1 comment)posted 5 years, 2 months ago

If they originally got a mortgage for close to $150,000, then refinanced it for $160,000 in 2004 (when the housing market was still very strong), how was the house unfairly appraised?

House prices have fallen all over the country. My neighbor's house is on the market for over $100,000 less than what they paid for it at the height of the housing bubble.

Also, if they could afford the house for 3-4 years (while still in their late 60s/early 70s), how was it they couldn't afford it now. Same income, according to the article.

Sounds like the previous post maybe had it right, that they owned an investment property and maybe lost rent on that when it was foreclosed.

Also, why were they trying to sell the rental for 156k when it was only worth 68k? Seems like they could have tried to sell it for less, but were still trying to make a profit.

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16Education_Voter(816 comments)posted 5 years, 2 months ago

Jack, I wonder if they had an ARM, which would have caused their payments to balloon after the first few years.

I have to say that even when the consumer doesn't understand exactly what they are getting into, the mortgage salesman usually does. The ethical path for that person would be to deny the loan, or have their signature on a warning statement.

People should realize that this situation has become common. Before you kill yourself, dump the house and declare bankruptcy. The property is not worth your life.

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17djloans123(2 comments)posted 5 years, 2 months ago

I have been a processor on and off for years. The one thing that I noticed on the auditors website was when they closed on the loan in 2004 the property was split into 2 parcels. There was an existing home built in 1920 and the newer residence built in 2001. Combined value on the auditors website $148000. They probably lived in the older for awhile (website doesn't show)and then built and moved into the newer residence. I am guessing by the article they then tried to sell the older house. The dates match all the way down the line on the transfer pages for both properties which in the end leaves me guessing that this was a blanket loan and that the first foreclosure that went on was probably the second mortgage at which they might have used the older property to secure. The second very well could have been the money for the new construction.Her trying to sell the residence had absolutely nothing more to do with the fact they no longer needed that older home and coulndn't get a buyer for it in this market. I will see if I can actually find the notes since a lot of the government websites are not available online.

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18Wahoo(2 comments)posted 5 years, 2 months ago

The truth is this is a tragedy. I doubt the woman's only issues were foreclosure, but if so, then I feel deeply sorry for her family who she has left behind. She may have been able to find help.

One thing I can say, is if someone is having trouble making payments, real trouble (not those looking for a handout), then they should try to contact their bank. I have a few friends who have been in this situation, and all of them have been able to work with their lenders. Some of them had adjustable loans, and they thought they would have sold by now, and the value decline makes it hard to refinance. The local banks (one was Farmers and the other Home Savings) helped my friends. I'm an internal auditor/accountant, and I can tell you from experience that my advice is to be honest about your financial situation and live realisticaly within your means. By all means, if you are buried in credit card debt, find a good lawyer. i know a guy name joe lucci from the ymca, honest and helpful. i also heard of, but don't know, a guy named andy suhar or suhare. also honest and good.

i assure you, the banks don't want to foreclose, they have tons of problems and really want to work with legiitmate people, not crooks who just want out.

our local banks are good people, from the area. they are hurting just like the people of this community, and if we lose farmers, home savings, first place or cortland, then it will be sad for our area.

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19planforthebest(53 comments)posted 5 years, 2 months ago

It is the responsibility of both the lender and the borrower to make reasonable loans. The fact that this elderly couple agreed to the loan does NOT let the mortgage company off the hook. It's predatory to expect a family earning $1600 a month to pay $1200 of that for their mortgage. The mortgage lender KNEW they would be foreclosing within a short time. They made the loan KNOWING they would get full title to the house in short order. In my book, that's theft. And now manslaughter, too.

Shame on the manager who approved these loans! I hope he/she feels the full weight of this death on his/her soul.

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20scrooge(563 comments)posted 5 years, 2 months ago

With all due respect Plan-how do you know all of this for certain?
Government programs (yes the Government) allows for debit ratios (amount of debt less monthly income)of 60% and more providing they have sufficient income and (liquid)assets. Unless you are their tax accountant or a close family member you can't possibly know their true situation in 2004.
Laying the blame on the Loan Officer or Company because they were approved for a loan that was being offered by a Lender willing to take that type of loan - and we don't even know what type of loan that is- is like throwing stones in a glass house. If that company/loan officer would not have offered him that loan they would most certainly have been offered the same loan at another bank/broker. The fact is that more liability is placed on a mortgage company for NOT offering a program to an elderly couple than if they do (discrimination, fair credit lending to name a few).
And what on earth would make you believe the mortgage company was looking forward to getting a home in foreclosure? Banks are in the business of lending money for profit. They are not in the real estate business. Best case scenario is that they sell the property for about 2/3 the value at auction. After legal fees they would be lucky to get about 1/2 their initial investment.
Not sure what the name of your "book" is, but I'm sure you'll find it in the fiction section.

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21djloans123(2 comments)posted 5 years, 2 months ago

I gave this some extra thought but shame on the entire family for allowing Mom and Dad to own a property with (2)houses they clearly had no use for. You know part of the loan could have been secured with rental income on the older house that simply moved out.The risk of owning more than one property.

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22scrooge(563 comments)posted 5 years, 2 months ago

This would have been considered a detached 2-unit if it was on the same parcel. Most likely they split the parcels and tried to sell the small parcel and eliminate the entire mortgage but to no avail.
Curious thing is that the house across the street is valued at $180 per zillow.com so I don't know why the subject was only being valued at $80K.
I also find it interesting that the lawyer is citing a 30 year mtg to borrowers in their 70s. This same lawyer would probably be sueing the banks for age discrimination if they were denied a 30 yr loan solely based on age.
Like I said on earlier posts-pass the blame on to the people with the deepest pockets.

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23sistersun(49 comments)posted 5 years, 2 months ago

My Heart goes out to this family.It's shameful to here some of these responses some people are writing.When a persons back is against a wall,they jump at the first opportunity to try to make it better,reality,there are people preying on over stressed people,painting them that picture they want so see and hear.Never forget we could wake up tomorrow in a back against the wall situation,WHAT YOU GONNA DO.I don't believe in killing myself but there are people who don't see no way out.My heart goes out for anybody going through any stressful situation as that.

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24girardguy(7 comments)posted 5 years, 2 months ago

My heart goes out to the family, and while this is just speculation there have been cases where elderly people have been taken advatage of while suffering dementia. I agree with scrooge that personal responsibility should be exercised but sometimes there are extenuating circumstances where people are taken for a ride. If all lenders were being scrupulous we wouldn't be in the mess we are in right now. I would love to live in Canfield or Poland, but I know I cannot afford it even though I'm sure someone would have lent me money to do so in the recent past. I just don't like the idea of my tax dollars going to bail out irresponsible lenders and borrowers for their no down payment, stated income loans.

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25Stan(9923 comments)posted 5 years, 2 months ago

Predatory lending has imploded and now the economic stimulus package will bail out the lenders but the victims are on their own.

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