Off Beat: Financial reform for Yuba City woman

You might think all of that high and mighty talk about financial reform doesn't affect you, but it does.

In fact, the plight of a Yuba City senior was mentioned as Congress debated the financial reform legislation that ultimately passed Congress and was signed by President Barack Obama last month.

Rep. Jackie Speier, a Democrat from the Bay Area, spoke on the House floor on May 26, according to the Congressional Record.

"I first want to talk about a 67-year-old retired widow living alone in a home she's had for 24 years. She recently got a part-time, minimum wage job as a kitchen helper that helps with her expenses. She's getting $500 a month for that. She gets $973 a month in her Social Security benefits. And the balance due on her home is $90,000," Speier said.

"Now, her husband died in 2003, and she was having a hard time making those mortgage payments, so she went to Wells Fargo and got them to offer her a reverse mortgage. In so doing, she was able to pay off her regular mortgage and did not have payments for as long as she continued to live in the home, which appeared to be a good result."

Then, Speier recounted: "Yet, in 2007, agents working for World Savings in Orange County found her 500 miles away in Yuba City. In a series of phone calls, they convinced her that Wells Fargo was demanding the repayment of her reverse mortgage because home values were declining to levels of less than the loan balance. They convinced her that Wells Fargo would foreclose if she did not refinance to pay off the reverse mortgage. She was confused and frightened, and she did not understand the reverse mortgage for which she had paid $11,000 in origination fees."

What happened next?

"So, before long, she was into yet another mortgage with an adjustable rate mortgage and was paying $4,000 a month at one point. Even the lowest payment option constituted 68 percent of her Social Security income — an absolute nightmare. She made three payments out of savings and then gave up. The trustee sale was first set for January 2, 2009. A legal aid attorney came to her benefit and was able to postpone the sale of her home, and negotiations continue today."

Speier never identified the Yuba City woman who found herself in this predicament.

"This is a real story. She is a real person in California who was not given the right to a simple-to-understand and suitable financial product," the congresswoman said.

"That is, in part, what we are going to make sure happens as a result of the Wall Street reform, in part because we are creating a Consumer Financial Protection Agency so that this kind of activity can't continue to go on."