Eleven years ago, Margaret Murray and her husband, Leroy, were looking for a $3,000 loan to fix a faulty furnace in their Towson-area rowhouse. Instead, they ended up borrowing $14,000 through a disreputable loan merchant. Mrs. Murray, now a widow, is still trying to cope with the consequences.
Her husband killed himself in 1981 from the stress of being unable to meet the payments, she said. And, she recently learned that she and her mother, a co-signer on the loan, may lose their houses for defaulting on the deal in a messy legal tangle.
The Murrays borrowed the money on their home in the 1300 block of Taylor Ave. through Albert S. Blank, an oft-convicted mortgage lender the state investigated for allegedly tricking customers into paying exorbitant fees and interest rates.
Blank allegedly victimized scores of Maryland homeowners in the late 1970s until the state attorney general's office sued him in 1983 and he declared bankruptcy.
For a six-year commercial loan at 24 percent interest, Murray made 39 payments totaling about $14,000, mostly in interest. She then sued both Blank and Debra Kushner, the lender, charging she had been unfairly victimized and claiming RTC damages. Murray says she and her husband realized only $10,000 from the loan, because Blank kept $4,000 as his fee.
She and her lawyer got $4,000 back from a court judgment of $255,000 in damages against Blank, who declared bankruptcy in 1983 when he was also convicted of tax evasion. She also got a court order saying the loan was invalid, absolving her of further payments, she thought.
But Murray was stunned when the court order was reversed two weeks ago, after eight years in which she had not made payments.
Murray now owes Debra Kushner $10,545.98 in principal on the original loan, $21,302.08 in interest and $2,525 in late charges, plus $7.03 more a day after April 30.
If Murray doesn't pay within the next few weeks, her house will be sold at auction. And if that doesn't pay off the debt, her mother's house can be attached, too.
Despite the money she got returned from Blank, $23,000 from a new second mortgage she took out on her home last year and the $13,000 she didn't pay out on the loan in the years after the initial court order, Murray says she is broke and can't afford to pay her lawyer, Alan B. Niedermayer.
Murray, now 54, said she gave all her savings to her son, who lost it in an unsuccessful auto glass business. Now, she lives on $427 a month in Social Security benefits and the rent her daughter pays to live in an apartment in her two-story house, she said.
Millard Rubenstein, Kushner's attorney, argues that his client is also a victim.
She was recruited to invest in mortgages by Blank, who was then a neighbor, and merely put up the $14,000 for the loan, Rubenstein said. She has had to endure a jury trial and years of aggravation awaiting repayment of her money, he said. Besides, he noted, Murray has had the use of the money she borrowed and freely agreed to repay it.
Murray says she is a high school dropout, unused to dealing with finances and unwilling to ask many questions of Blank when she signed for the loan in 1980. She keeps what few records she has of her long legal ordeal in a pile bound with a rubber band. Her house, although brick, is in poor repair. She says she still owes $46,000 from the original mortgage, plus the new one she got in 1990.
LeRoy Murray committed suicide June 29, 1981, after the couple was threatened with foreclosure for falling behind on their $369-a-month payments, Margaret Murray says.
Although both Murray and Kushner might have benefited from the old consumer warning that "if it sounds too good to be true, it probably is," they've been locked in various court and legal battles for most of the past decade, battles that are now coming to a head.
A Baltimore County Circuit Court jury decided in 1989 that although Blank was acting as Kushner's agent in the deal, the loan was not illegal or fraudulent, and therefore, Kushner was not liable for damages suffered by Murray. That jury verdict opened the way for Kushner to get a court order April 29 that nullified the loan reversal.
Judge J. William Hinkel, who issued the reversal, refused to discuss it this week.
Murray said she just wasn't smart enough or sophisticated enough to spot Blank's deal as too good to be true.
Rubenstein paints a similar picture of Kushner, who was willing to invest in Blank's mortgage company.
Albert S. Blank, formerly of Pikesville, was first convicted of a crime, FHA loan fraud, in 1958. He received a four-month prison term.