Homeowner tries rare tactic to cancel mortgage
Dinah Haycock, a resident who claims she was snookered into taking an Ameriquest Mortgage Company loan that now has her facing foreclosure, has sued the company in federal court in a rare motion to rescind the mortgage.
Haycock, who lives in a manufactured home in Epsom, was featured in August 2005 in the pages of New Hampshire Business Review as one of the people complaining against the company, which in January paid a $325 million national settlement over alleged predatory lending policies.
In a suit filed May 8, the day of the scheduled foreclosure, Haycock claimed that Ameriquest misled her in 2004 by telling her she could refinance her $50,000 adjustable rate mortgage to a fixed-rate loan before interest rates increased.
But the actual loan amount – ballooned by other debt and various finance charges — increased by $20,000, more than Haycock could refinance on her fixed income. The terms, she says, made it unlikely that it would ever be paid.
The suit also says that some of the charges in the 2004 mortgage violated the federal Truth in Lending Act and were not accurately and completely disclosed.
Rescinding the loan would make it as if the loan had never been made. Ameriquest (and/or its servicing arm AMC Mortgage Services, and the new owner of the note, Deutsche Bank National Trust Company) would have to pay back all of the interest and closing costs. Haycock would have to pay back the principal of roughly $67,000.
In addition to being a smaller loan to pay off, Haycock said the change would give her a chance at refinancing it.
“It is pretty hard to get financing when I’m behind on my payments. I’m between a rock and a hard place until I get settled with them,” said Haycock.
Filing for a rescission is a tactic used by public interest lawyers nationally, but it has been rarely used in New Hampshire, said attorney Peter Wright. Under the Truth in Lending law, the borrower has three days to rescind a loan after getting an accurate disclosure sheet. Since the borrower never did get a completely accurate disclosure, she has the right to rescind the loan at any time, he argued.
The foreclosure has been delayed 60 days and federal court has set a hearing on the matter on June 7.
Ameriquest said it can’t comment on ongoing litigation.