|Erie resident Eloise Woodsbey last week settled a lawsuit in which she claimed developers and others used fraud to get her a mortgage and sell her a house for $49,900 at 618 E. Ninth St. in 2004. Sued were the developer who sold her the house, Gregory M. Finney, of Erie; the mortgage broker, Francis R. Conti, of Waterford; the appraiser, Hurlburt Appraisal Service, of Meadville; the mortgage company, the now-defunct Meritage Mortgage of Jacksonville, Fla.; and the Frankfurt, Germany-based Deutsche Bank, which eventually bought Woodsbey's mortgage in a bundle of mortgage-backed securities.|
Woodsbey argued that Finney and Conti used fraud to sell her a house whose value was artificially inflated through Hurlburt's appraisal, and that Meritage and Deutsche Bank should have been aware of the problems.
The suit was settled in U.S. Bankruptcy Court in Erie. None of the defendants who filed unsealed agreements admitted wrongdoing; one agreement was sealed. According to court records, the terms of the settlement are as follows.
Deutsche Bank, the holder of the mortgage, reduced the principal of the mortgage from $44,900 to $25,000. An independent appraiser Woodsbey's lawyers hired as part of the lawsuit set the value of the house at $25,000. Woodsbey claimed Hurlburt Appraisal Service, as part of the sale of the house to her, wrongly set the value of the house at $53,000.
Deutsche Bank reduced the interest rate of the mortgage to 5 percent over 30 years. The rate had been as high as 11.75 percent. The bank reduced the monthly mortgage payments from $564 to $252.74 -- $134.21 for principal and interest and $118.53 for an escrow payment.
Meritage agreed to pay Woodsbey $1,000, which will be used to repair the house, based on prior court filings. A lawyer for the Federal Deposit Insurance Corp. is representing Meritage. The FDIC in September shut down Meritage's parent company, the Georgia-based NetBank, and the FDIC took over as receiver for NetBank.
Conti, the mortgage broker, agreed to pay $1,200, also to be used for repairs.
Hurlburt Appraisal Service also settled with Woodsbey. But U.S. Bankruptcy Judge Warren W. Bentz allowed the parties to seal the settlement.
Woodsbey sued Finney, but he never responded in Bankruptcy Court, prompting Bentz to file a default judgment against him.