Court Favors Homeowner Because Mortgage was “Outrageous”
In March of 2010, Laura Kurtz borrowed $66,000 from ALSJ, Inc. against her single-family home in Lombard, Illinois. It was a one-year balloon mortgage that would eventually bear a 36% interest rate, and a late fee of $693. Ms. Kurtz made only six months’ of payments before defaulting, and by May of 2011, ALSJ, Inc. was already trying to foreclose her.
The trial court agreed that Ms. Kurtz had defaulted on the mortgage, but the trial court also stated that ALSJ, Inc. had violated the Mortgage Rescue Fraud Act, that the mortgage was “facially outrageous” and that the plaintiff was aware that the loan was illegal. The trial court concluded that the Lombard home was “distressed property” and that ALSJ, Inc. had acted as a “distressed property consultant’ who was aware that Ms. Kurtz occupied the home, all in violation of the Mortgage Rescue Fraud Act. The mortgage was rescinded. Kurtz was awarded attorneys’ fees, and received a $42,000 windfall (for money she had not repaid to ALSJ, Inc. ALSJ, Inc. filed a motion to reconsider, but the trial court denied it.
ALSJ, Inc. subsequently appealed. In ALSJ, Inc. v. Kurtz, 2016 IL App (2d) 150492 (June 30, 2016) DuPage Co., the appellate court agreed with the trial court. The appellate court found that the defendant was more credible than the plaintiff, and affirmed the trial court’s ruling.
So moral of the story – if you’re running a shady loan-shark type operation, you might get caught and be out a lot of money. Not only was the plaintiff out the unpaid portion of the loan, but the plaintiff had also apparently paid nearly $30,000 to redeem property taxes to avoid a tax sale!