Time’s Up

Dolores Fair has heard it numerous times before: “You should have
known better.”

When she looks at the last three years of her life, she says that
part of her agrees with that statement—but another part of her
can’t help but think she was misled into a no-win situation.

Fair will most likely lose her house when her lender heads to
bankruptcy court on July 15. Fair bought her modest three-bedroom house
off Houghton Road north of 22nd Street about 17 years ago. Her husband,
a Desert Storm veteran, had just died. She moved to Tucson to start
over with their two sons, buying the house with money from her
husband’s life-insurance policy. (See “Foreclosure Madness,” Feb.
19.)

Fair went back to school and eventually got a master’s degree in
counseling. However, her life was interrupted on Sept. 23, 2006, when
her youngest son was diagnosed with valley fever. He spent the next 10
months in a Phoenix rehabilitation center, and Fair spent most of her
time by his side.

“I didn’t want to leave him alone. If he didn’t lay a certain way or
receive specific treatment, there was a chance he would never walk
again. I had to make sure that didn’t happen,” she explains.

When he was released to his mother’s care, the two returned home to
find out that her house was in jeopardy of foreclosure. Her mortgage
company, Washington Mutual, told her they couldn’t work with her,
because time had run out.

She panicked. Through a friend, Fair says, she found out about
Miracle Mortgage, a company that claimed it could refinance her loan,
based on the estimated $70,000 in equity she had in her house.

Fair says she never met with the broker, Dennis Wilson; instead,
they conducted all business by phone and fax machine. In February 2007,
she was approved for a $150,000 loan.

The loan didn’t require Fair to make any payments for a year, and it
provided her with almost $30,000 in cash to live on while she continued
to care for her son.

When she received her first statement, she was stunned to learn that
the Miracle Mortgage monthly payment was $1,625. Her Washington Mutual
payment had been $625 a month.

“At the time, I really didn’t know,” Fair says. “I didn’t really
understand.”

For three months, she was able to make the payments using her
savings. She thought her situation was looking up when she got a new
job as a counselor and was earning enough to pay the loan. However, she
was laid off, and Fair says she hasn’t been able to find a job since
then.

Fair tried to get assistance through local agencies that help with
house and utility payments, but was told her payment is too high. It’s
also been difficult for anyone to negotiate on Fair’s behalf, because
her Miracle Mortgage loan isn’t a typical mortgage.

Miracle Mortgage (www.investindeedsoftrust.com)
specializes in what are called private real estate loans, in which a
broker, like Wilson, works with a private party to secure a loan for
someone like Fair. For the lender, it is an investment in a deed of
trust and a way to earn an income from the monthly payments made by the
borrower.

According to Wilson’s Web site, the annual interest rate on the
loans is generally between 12 to 18 percent. In Fair’s case, her loan
was at 13 percent interest. According to the loan documents from First
American Title, $19,500 went to the private lender at closing; more
than $800 in broker fees went to Wilson. The loan is due in its
entirety on May 13, 2012.

Wilson says he does many loans like Fair’s and has never had any
problems.

“She was in foreclosure when she came to us as a resource. She
didn’t have a job, and her son was sick. I explained to her that she
was in no position to qualify for any kind of (regular) loan. She’d
have to go through foreclosure or accept private lending,” Wilson
says.

“Look, this isn’t a loan to end all loans. I told her it would only
buy her a year to get her life together. She was clear on her options.
There was no way she could manage the payments for this loan, but that
wasn’t the point: The point was that it gave her a year to get a job.
Had she done the things I recommended, she wouldn’t be in this
predicament.”

Wilson says he told Fair to find out if she could get a Federal
Housing Administration loan, and to look at selling her house to get
out of the loan—and the inevitable foreclosure.

“Had we not interceded, she would have lost her home,” Wilson says.
“It was not about whether or not this is a good loan. It’s a terrible
loan, but there was no one else who could help her. … We did not take
advantage of Dolores. In fact, it was exactly the opposite. We didn’t
put her in foreclosure. We helped her stay in her house for a
year.”

Jordan E. Madison of Oro Valley is the private lender who worked
through Miracle Mortgage on Fair’s loan, along with his son and
daughter-in-law, James and Amy Madison of Chandler.

Madison says all Fair had to do was get a job and make payments.

“Everyone goes through hard times. Some people have to live in
cardboard boxes. I’ve already lost $50,000 on this loan,” Madison
contends.

Madison says he didn’t receive the $19,500 outlined in the
title-company paperwork. He also says he tried to work with Fair when
she first fell behind in her loan payments.

“I offered to rent her the house for $1,200 a month for a few
months. But she refused that. I am not a hard man. … I’m running out
of money, too. I drive a used 1996 Cadillac. I’m not that rich anymore.
I just want you to know that if she hadn’t talked to Miracle Mortgage,
she would never have been able to live free in that house for a year.
There is nothing wrong with what I did.”

This article appears in Jun 25 – Jul 1, 2009.