Marsha Kilgore stopped working in 2005 after she was diagnosed with breast cancer, and the following year -- after a double mastectomy -- decided to refinance her home.
Kilgore was running low on money, and she believed refinancing could keep her in her northeast Fresno condo. Although banks were marketing adjustable-rate mortgages with low payments and little income verification, she was a real estate agent and knew they were risky -- and she didn't want any part of them.
But after she inadvertently ended up in one of those deals, Kilgore lost her home months before she lost her battle with cancer and chronic breathing problems. Those closest to her say the banks took advantage of her ailing health and finances.
"The bank made a conscious decision that their profit meant more than her life, and that's despicable," said lawyer Lenore Albert, who took Kilgore's case to reclaim her home pro bono earlier this year. "They knew with 100% certainty that she would lose her home."
Kilgore, 62, made regular mortgage payments for 16 years on her condo. After she fell ill, her income came from Social Security and disability, but she had enough money to pay a mortgage, said daughter Brooke Noble, who lived with her.
In 2006, Kilgore got a new mortgage through GMAC Mortgage. Months later, sales callers were hawking another mortgage through the now-defunct World Savings. The "pick-a-payment" loan offered low payments for a limited time. When a payment was insufficient to pay owed interest, unpaid interest was added to the loan balance, a banking practice known as "negative amortization."
Kilgore signed paperwork for the loan on a day she was ill, court documents said. Sales representatives told Kilgore it was a fixed-rate loan, said Noble. But after reviewing paperwork, her mother realized the loan's costs and called the next day to rescind her signature, court documents say. But World Savings refused to rescind the contract.
Kilgore said bank officers "made false statements ... that caused her to refinance a loan and sign a deed of trust against the property," court records say.
Her loan application, Noble said, overvalued the condo and inflated her income. The home, which she had borrowed $66,000 to buy in 1990, now had a $177,000 mortgage.
Loan documents show that the pick-a-payment mortgage, with a 7.744% interest rate, started with $656 monthly payments in 2006. The payment escalated last December to $1,012 and was scheduled to climb to 20 years of monthly payments exceeding $1,750 after 2016.
Kilgore became part of a class-action suit against Wells Fargo, which did not sell the adjustable-rate loan but acquired banks that had. She was promised a loan modification -- but that never happened. When Wells Fargo foreclosed on her condo, she was left homeless.
Temporary restraining orders were filed this year on Kilgore's behalf when Albert agreed to take her case a few months after Kilgore was diagnosed with chronic obstructive pulmonary disease. By then, her cancer appeared to be in remission.
For Kilgore, remaining in her home was a matter of life and death, Albert said. She needed oxygen, and the electricity to power the equipment was expensive. Medicare helped pay for the electricity, but only if Kilgore had a permanent address.
Since she was a pick-a-payment client, Kilgore was eligible for a class-action settlement, Albert said. A $2 billion settlement was reached in 2011 with Wells Fargo on thousands of California loans. Under the settlement, Wells Fargo said it would modify her loan to keep her in the home, Albert said. Kilgore was sent a check for $170 with a promise of a loan modification.
Before that could happen, the bank told her to miss three payments. That headed the loan toward delinquency, which was necessary before the bank could initiate modification.
Other Fresno residents also reported similar problems with Wells Fargo, said Fresno pastor Bill Knezovich of Our Saviour's Lutheran Church.
"Two families in my congregation say the same thing happened to them," he said, "because they wanted to make payments and were told to skip three."
Wells Fargo was among the worst offenders, but other banks did the same thing, he said. Knezovich helped two families with loan modifications. A third, he said, was unsuccessful.
"I don't know whether it was incompetence or intentional," he said. "Maybe it's just that the left hand didn't know what the right hand was doing. With one hand they make these (modification) deals and with the other hand they start the foreclosure process."
A Wells Fargo official said the bank tried, but was unable, to modify Kilgore's home loan. Tom Goyda, a St. Louis-based spokesman for Wells Fargo, said the bank worked for three years prior to the foreclosure sale to find a loan for Kilgore.
Goyda also said part of her loan was forgiven by the bank. He was unable to disclose the portion that was forgiven.
"We did provide a modification, but unfortunately, we could not find an option after that to allow her to stay in her home," he said.
Wells Fargo has modified more than 146,000 pick-a-payment loans -- about a third of all made, Goyda said. The largest number were in California.
Last year, Kilgore's condo was auctioned off. Albert began filing temporary restraining orders earlier this year in federal court demanding the bank move Kilgore into another home or return her to her condo. Wells Fargo contended that Albert's legal filings -- which Kilgore had not filed earlier because of her ill health -- were years beyond the statute of limitations. One judge agreed.
In June, Kilgore was evicted by sheriff's deputies from her home. With no permanent address, her oxygen subsidies would stop.
Another attempt to stop the foreclosure went to a second federal judge in September, who ruled that the merits of the larger class-action suit were under consideration by another judge, so he couldn't rule while that case was pending.
In his ruling, U.S. District Court Judge Jeremy Fogel wrote that he was "deeply sympathetic to Kilgore's medical needs and financial circumstances."
She was exhausted
Kilgore wandered Fresno living with friends and in her car. In September, after spending several weeks at a Parkway Drive motel, the innkeeper said he couldn't continue paying electricity costs for her room, so Kilgore again leaned on friends.
"My mother's health diminished very rapidly when we left the house," Noble said.
In the wee hours of Oct. 16, Kilgore was in a Fresno hospital with "a bad case of asthma," Noble said. She thought her mother would soon be released, and when she saw Kilgore resting comfortably Noble went to sleep in a nearby room. A short time later a nurse nudged her awake to tell her that her mother had died.
The morning after Kilgore's death, Albert filed a claim against Wells Fargo seeking $250,000 for her wrongful death. She said Kilgore was owed money or a loan modification under a class-action settlement, which had nearly 15,000 California plaintiffs.
Jeffrey Berns, who represents plaintiffs in the class-action case, said that World Savings never disclosed to customers the pick-a-payment loan's potential for upside-down mortgages -- when a property is worth less than the mortgage.
He said he plans to file a motion to make Wells Fargo re-evaluate every loan modification request under its $2 billion California settlement. He also wants to supervise each modification application and have all foreclosures halted until his office can review them.
"I am dealing with clients who are crying and families that have to move out of their homes," Berns said. "We have stories of families being tossed out where Wells Fargo should have made loan modifications."
Berns learned of Kilgore's death a few weeks ago, calling it a "tragic story that should never have happened."
After struggling to keep her home while in declining health, Kilgore was exhausted, her daughter said.
"It was consuming her," Noble said. "My mother could fight for only one thing, her house or her life."
A friend from Southern California said Kilgore prophesied her death weeks earlier when talking about the court case.
"She said, 'They're killing me, they're killing me,' " said René Powers. "It gives me goose bumps thinking about it to this day."
The reporter can be reached at (559) 441-6166, firstname.lastname@example.org or @beebenjamin on Twitter.