Albert Zacholl v. Countywide Bank et al
U.S. District Court for the Southern District of California
Filed March 16, 2007
Download the full complaint (PDF)
Allegations: Albert Zacholl is "a 74 year old financially unsophisticated senior, who is unable to consummate real estate transactions without the help of real estate professionals and who had diminished cognitive abilities to ascertain meaningful information from documents due to his age." Countrywide and a pair of independent mortgage brokers manipulated him into a complicated loan deal that he could not afford.
Mr. Zacholl was paying roughly $1,150 a month with a 7.5% fixed interest rate on his mortgage with another lender. Because that loan had a negative amortization feature, his mortgage debt was continuing to climb. A representative of a mortgage broker "cold-called and aggressively baited" Mr. Zacholl, promising that she could get him a better deal.
His income was only about $1,300 a month, but he told the broker that with help from his son, he could pay up to $1,700 a month on his mortgage. She promised to keep his payments at no more than that amount, eliminate the negative amortization feature and get him $30,000 in cash.
She arranged a $368,000 mortgage at 6.625% with Countrywide Home Loans. His monthly payment on the loan plus taxes and insurance totaled $2,268. In addition, she arranged a second Countrywide loan, a $92,000 "piggyback" mortgage with an adjustable interest rate starting at 10.625%. After the second loan's $803-a-month payment was added in, Mr. Zacholl's total monthly cost was nearly $3,100.
The deal did not include the promised $30,000 cash out.
Countrywide and other defendants preyed on Mr. Zacholl because of his age and vulnerability, charged him illegal and excessive fees and lied to him throughout the process. To make the deal go through, the mortgage broker listed Mr. Zacholl's income at $7,000 a month -- more than five times his actual income.
Response: Countrywide argues that Mr. Zacholl "consented to the terms of the transaction" and that any problems were the result of his own "negligence and carelessness." It says Mr. Zacholl received adequate disclosure of the details of the loans and that Countrywide broke no laws and made no misrepresentations.
