By Dolores Kong
The Boston Globe

In 1998, when family health problems and unemployment
hit, Jacqueline Lincoln fell three months behind in
mortgage payments on the three-bedroom ranch on Cape
Cod that she and her son call home, and she has been
fighting off foreclosure ever since.

Last year, in the latest attempt to keep the roof over
their heads, Lincoln, 39, finally had a mortgage audit
- an analysis of how payments have been calculated and
applied - that found a $20,000 overcharge.

"My son has lived here since he's been seven," said
Lincoln, who hopes the finding will help save their
home. "He's worried about this house being foreclosed
on. He shouldn't be worrying about that. He should be
worrying about being 15."

For Carl Erickson, 45, of Roxbury, foreclosure could
come as soon as tomorrow, even though the mortgage
audit he had done found an overcharge of more than
$90,000 over the life of the loan on the house he
bought in 1986 from the family of Lincoln Pope, the
first black Democratic state representative.

"When you realize you've been overcharged, especially
to the degree I've been overcharged, you want to see
some adjustment," said Erickson, a former Dudley
Square redevelopment activist who blames his six-year
legal battle against the lender for what court records
show as tens of thousands of dollars of unpaid child
support, taxes, and other debt.

Lincoln and Erickson are apparently not alone. In
1998, the Federal Deposit Insurance Corp. required 161
banks to reimburse more than $1 million to more than
30,000 consumers for violations of the federal Truth
in Lending Act, according to the latest statistics.
And last year, the Massachusetts Division of Banks
required the reimbursement of $738,000 to 778
consumers for Truth in Lending Act violations.

While there are no hard numbers about mortgage error
rates, some mortgage auditors and consumer law
attorneys estimate between 30 to 80 percent of
mortgages have some kind of mistake - whether in
interest rate calculations, escrow amounts, or Truth
in Lending Act violations.

Mortgage lenders, on the other hand, say the error
rate is minimal, especially considering the fact that
more than $1 trillion in mortgages are made nationally
a year.

"I just don't think that the majority of loans in
Massachusetts have errors," said Dean Caso, president
of HomeVest Mortgage Corp. and current chairman of the
Massachusetts Mortgage Bankers Association, which
represents more than 350 banks, credit unions and
mortgage brokers and lenders. "I think it's more of an
isolated issue than a pattern in the industry. I can't
see it as a huge, huge problem, an epidemic of any

As long as mortgage borrowers stay out of financial
trouble and make their monthly payments on time, they
may not notice difficult- to-detect overcharges, said
Marie McDonnell, the mortgage auditor who analyzed
Lincoln and Erickson's mortgages, and who in the early
1990s helped uncover a Dime Savings Bank mortgage
scheme affecting thousands of New England homeowners,
a third of whom were in foreclosure.

"It's much more common for these errors to come to
light when people are having problems making loan
payments," agreed Gary Klein, an attorney with Boston
law firm Grant & Roddy. He helped a Westport woman
stave off foreclosure in the 1990s by bringing up
concerns about Truth in Lending Act violations, when
he was a senior attorney at the National Consumer Law

But if the economy slows dramatically and real estate
values tumble as they did a decade ago, "a lot of
people will be needlessly losing their homes," said
McDonnell, whose firm The Mortgage Counselor is based
in Orleans.

The Rev. H. Jason Reed, pastor of the Oak Forest
United Methodist Church in Illinois, and his wife Ann,
aren't at risk of losing their home, having always
made their monthly payments since 1980. But they paid
for McDonnell's services out of curiosity, and were
surprised to find a more than $20,000 overcharge
according to the audit. "It's becoming a social
justice issue," said Reed, who plans to follow up with
the bank. "It's raised questions within us as to
whether other folks are being similarly treated."

Theoretically under the law, borrowers who face
foreclosure and can document lenders' overcharges or
other violations of the federal and state Truth in
Lending and other consumer protection statutes should
be able to protect their home, presuming they meet
certain statute-of-limitation and other complex

But Boston bankruptcy attorney John F. Cullen, who won
a potentially precedent-setting case that prevented
foreclosure on his paralegal's home, based on Truth in
Lending Act violations, said, in reality, few
borrowers have the resources to prevail against the
big mortgage lenders. It cost him about $386,000 worth
of free legal services to help his former paralegal.

The mortgage lenders in both the Lincoln and Erickson
cases say they want to avoid foreclosure whenever

Washington Mutual, which services Lincoln's mortgage,
has just forwarded a loan modification proposal to
Fannie Mae, the mortgage holder, taking into account
one of McDonnell's "claims about miscalculation of the
APR (annual percentage rate)," said David Kuhlmann, a
spokesman for the lender. McDonnell said she just
received the proposal and will need to look at it

Brad German, spokesman for Freddie Mac, which owns
Erickson's mortgage, said, "We have attempted on many
occasions to reach resolution with Mr. Erickson,"
without success. "If he really thinks he has a legal
claim" regarding truth-in-lending violations, German
said, he should pursue it legally.

Erickson, for his part, plans to warn people at the
foreclosure auction about his pending legal actions,
by handing out a flyer entitled "Buyers/Bidders