loan terms were “so terribly abusive,” he reasoned, there couldn’t possibly be a legitimate company behind them. The going rate for a conventional mortgage at the time was around 9 percent, but he had one client who was being charged 29 percent on a home loan. Consequently, he suspected the lender was more interested in seizing homes through judgments of default than in accruing steady profits through regular monthly payments. Brennan would be shocked when he learned that the institution holding paper on all these loans was Fleet Bank, a large, publicly traded firm from Providence, Rhode Island.
For years activists had been lobbying the likes of Fleet to make more loans in the country’s less affluent communities. But this was not what they had in mind. These were not loans to first-time homebuyers; they were mortgage refinancings and home equity loans. They were also not conventional loans made through bank branches; they were deals arranged by a subsidiary called Fleet Finance.
While the morality of what Fleet was doing might be questionable, there was no doubting its profitability. Through much of the 1980s, the
Every year, Atlanta Legal Aid gets summer law interns whom the staff is never quite sure what to do with. Brennan sent several to the county deed room in search of any loan involving Fleet Finance. They found more than sixty and then contacted the borrowers in search of people who might talk. Brennan was not drumming up business so much as looking for a discernable pattern of abuse. All the borrowers contacted by the interns were black and they tended to live in the same few neighborhoods. Their homes had been paid off or they had lived in them so long that they had built up considerable equity. Most were older than sixty-five and had little in the way of available cash; almost all had ended up signing a loan with Fleet because they had been enticed by a seemingly helpful contractor offering its services to fix a porch or a roof or some other part of the house in visible disrepair. Fleet never made the loans themselves but used what Brennan called “pass-through companies”: local mortgage lenders that would sell the loans to Fleet, often on the same day the loan papers were signed. Typically the repair work would be left unfinished, leaving borrowers with the same problem propelling them to sign the loan—though of course they now had a steep new monthly bill that put further repairs beyond their financial reach.
Brennan knew it would be futile to sue the home-improvement contractors. Annie Lou Collier’s roof job might have been only half completed but these were fly-by-night operators who would disappear before he could serve them with papers. Even if he gained a judgment against them, he could be reasonably certain their bank accounts would be empty. He would name two of the intermediary mortgage companies in the suit he filed but he saw them as virtual “shell companies” that were hardly the main culprits. With his boss’s blessing, Brennan filed a class action against Fleet itself, charging the bank under the country’s racketeering laws. He called a press conference to announce his suit, his first in more than twenty years as a legal services attorney. Then the calls started coming.
Some were from people who believed that they too had been victimized by a Fleet-financed home-repair scam. Several were advocates wanting to join the fight. That’s how bankruptcy attorney Howard Rothbloom came to contact Brennan. He had been working late at his office when a woman named Lillie Mae Starr phoned looking for help. Starr was a retired factory worker who had left school after the eighth grade. Now in her sixties, she owned a small home in Vinings, a predominantly black community just west and north of Atlanta. Her financial woes began years earlier when she borrowed $5,000 to fix her windows. She fell behind in her payments and, after two refinancings, she owed Fleet $63,000. Facing foreclosure, she had phoned Rothbloom thinking that bankruptcy might be the solution.
Rothbloom was skeptical as he listened to her story. She claimed to be paying 23.3 percent interest but that seemed too high for a home loan. She brought in her loan documents, which he showed to Roy Barnes, a more senior lawyer working in the same small office building on the edge of the Atlanta metropolitan area. Barnes, who owned an interest in a trio of local banks, was equally incredulous.
But there had been no mistake. That first $5,000 loan had cost Starr more than $9,000, including points and fees. She had paid Fleet more than $19,000 over nine years yet somehow she still owed the bank three times that amount. “She was this real quiet lady who was embarrassed that this was happening to her,” Rothbloom said. “I was the one who had to tell her how badly she had been taken.” Over the coming months, Rothbloom would meet dozens of Fleet customers. Most were older African-American women living on their own and with a Bible by their bed or the couch. “These were people that trusted other people,” Rothbloom said. All seemed more angry at themselves than at Fleet. It struck Rothbloom that just as he had been oblivious to abuses routinely occurring on the squalid edges of the financial system, the victims of this system had little idea of what is fair and what is not in the larger financial world.
Starr had only asked Rothbloom to help her figure out whether or not it made sense for her to declare bankruptcy, but Rothbloom decided to enlist the help of Barnes, who after serving fifteen years in the state senate had recently lost his bid to be the Democrat nominee for governor. “They’d do deed record searches looking for people with high equity,” Barnes told me when I asked him why he took on the case. “They had their bird dogs walk a block, writing down those homes in need of repair. These were bad people.” Together the two filed a class-action suit against Fleet claiming the bank was conspiring with a cabal of loan originators to defraud customers. Like Brennan, the two lawyers also accused Fleet of violating the country’s racketeering laws.
Jack Long, an attorney in Augusta, also sued Fleet. Long was the odd man out in this group, a lifelong Republican who had spent a good deal of his legal career representing corporate clients. “I’m a fairly conservative guy,” Long told me, “but I got tired of being the guy who had to go out and screw somebody.” Of Fleet he would say, “What those bastards were doing was abuse, plain and simple. They had to be stopped.” Long sued Fleet, charging the bank with race discrimination. Another pair of lawyers in Augusta were also suing Fleet, charging that it was in violation of Georgia’s usury laws. The group stayed in touch through Brennan and a second Legal Aid lawyer, Karen Brown, a staff attorney with the agency’s Senior Citizens Law Project. They spent hours over the phone, sharing scraps of intelligence and batting around strategy. When the group met face-to-face for the first time, Howard Rothbloom was shocked that Brennan was as old as he was. He had pegged Brennan, a legal aid attorney with an excitable voice and a boyish enthusiasm, as a few years younger than he was rather than twenty years his senior.
Yet perhaps the most valuable member of their team was the only nonlawyer among them: Bruce Marks, an activist who was fighting Fleet in Boston. “I’m a real hardball player and no attorney in Boston will work with me,” Marks had warned Brennan the first time they spoke over the phone. Atlanta Legal Aid, however, had limited resources and Fleet was the fourteenth largest bank holding company in the country, a publicly traded adversary with deep pockets. “I was happy to get any help I could get,” Brennan said. Among other contributions, several people involved in the Fleet fight say, Marks popularized the term “predatory lender.” (Marks himself takes credit for the coinage and there is something to his claim. Except for a single use of “predatory lender” in an article in the
“The problem we all faced is that much of the abuse we were seeing wasn’t illegal, it was just immoral,” Rothbloom said. It was seven local mortgage companies—Brennan took to calling them the “seven dwarfs”—that actually wrote these loans and worked in tandem with the door-to-door contractors. To make their case against Fleet, each set of lawyers would need to demonstrate that the seven companies were in effect acting as emissaries for Fleet. “We knew that a rich corporation like Fleet could afford to litigate this forever in a court of law, which is why we focused a lot of our attention on public opinion,” Rothbloom said. “In the court of public opinion, morality is more important than legality.” Brennan would describe it as a “multi-faced approach to advocacy.” Spokes people for Fleet would dub it a “media mugging.”
The way you get their attention,” Marks once explained in a newsletter for housing activists, “is to be in their face all the time.” Fleet would unwittingly offer Marks, executive director of the Union
