Settlement with AIG will let woman keep home

By John O'Brien | Dec 17, 2012

CHARLESTON – A Charleston woman and AIG Federal Savings Bank have reached a settlement that will allow to her repurchase her home.

Judith Judy originally filed her lawsuit in Kanawha County Circuit Court in August 2011 against Wilmington Finance (now known as AIG) and Federal Home Loan Mortgage Corporation, otherwise known as Freddie Mac. She alleged the defendants engaged in predatory lending by talking her into an adjustable rate mortgage.

Judy, who was 66 at the time she filed the complaint, said she was an unsophisticated consumer who was duped into an unfair mortgage by Wilmington Finance.

“In this case, the plaintiff was led to believe she would be getting a fixed rate loan at 7.5 percent and was unaware that her loan contained an exploding ARM, which could only adjust up to 13.75 percent but would never go below the initial rate,” the complaint says.

Judy was raised in the home at issue, and an appraisal done before a 2003 loan flip was inflated.

At the beginning of the loan, monthly payments were more than $1,100. Eventually, payments went over $1,800, the complaint says.

Eventually, the home was foreclosed on and sold to Federal National Mortgage Association, or Fannie Mae. Fannie replaced Freddie as the second defendant in the lawsuit.

As a result of the settlement, AIG agreed to provide the funds necessary to buy the home back from Fannie Mae. Judy will pay $100,000 to AIG at an interest rate of four percent over a period of 30 years.

Judy was represented by Daniel Hedges of Mountain State Justice.

The lawsuit was removed to federal court in September 2011. U.S. District Judge John T. Copenhaver, Jr. approved the settlement.

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