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A Mother's Day gift - Dying woman hangs on to home

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Today is Mother's Day and it's Kathy Miller's birthday. But the 53-year-old mother of four wasn't planning on celebrating.

Miller is in Scarborough's Centenary Hospital, where doctors confirmed she has terminal brain and lung cancer and asked if she'd like to die at home or in hospital.

Her husband of 21 years wept openly. "We won't have a home for her to die in," sobbed Tom Keough, 55. "We're losing our home. I'm losing the love of my life. I'm losing everything."

Later on the phone he said to me: "And now I have nothing to lose talking to you."

It was last fall when Kathy first contacted me, seeking my help about a remortgaging deal with Capital Direct which sank her family deeper into debt.

No sooner did I begin to investigate than the couple received a letter from Capital Direct's lawyer threatening legal action if they felt "compelled to contact the media."

Cash-strapped and with no money for a lawyer, the couple begged I go no further with the story. Now, staring death in the face and repossession of their home, they begged me to tell their story.

Well, here's the wonderful news.

Today Kathy can celebrate, because as soon as I proceeded again, Capital Direct is not only offering to defer mortgage payments so the couple can stay in their home -- but they're going to waive fees the couple found excessive.

"Capital Direct feels that this accommodation will significantly assist Ms. Miller at this difficult time," said Stephen Kerr, a lawyer with Fasken Martineau, which represents Capital Direct.

"Capital Direct has managed over $200 million in mortgages since it began its operations and, to date, has not received any complaints similar to those being expressed by Ms. Miller."

Meanwhile, the couple's story should be told so it can be a lesson to all: Never sign a legal document unless you truly understand what you're getting into.

It was in 1997 when the couple paid $186,900 for their first home -- a modest three-bedroom bungalow on a quiet street in Scarborough, which they later renovated for handicapped access for Kathy's 84-year-old mother, who lives with them. Two children also live at home.

They secured a first mortgage at Royal Bank, with monthly payments of $1,500. With Kathy's full-time job, paying $60,000-plus a year, and Tom's disability pension of $2,000 a month all was rosy.

But in the winter of 2000, Kathy became ill due to stress and downsizing at work. By February 2001, she left and went on unemployment insurance while she searched for a new job. Finally she got a temp job with the Ontario government, but it paid only $12 an hour. That's when the financial trouble began.

"I got behind on some bills," said Kathy, who went to Mortgages Unlimited to secure a second mortgage at Capital Direct. All was fine, until the temp job ended and Kathy was back on unemployment.

That's when it all fell apart. Their gas was cut off, and the family lived without hot water for nine months.

"I was behind with everything, and I thought if I could roll my first and second mortgage into one, that would help," Kathy said.

But instead of going back to Mortgages Unlimited, Kathy went directly to Capital Direct and was told no problem. The plan was to pay off a first mortgage of $150,000 at Royal Bank and a second mortgage of $48,000 with Capital Direct and take out a new mortgage.

On June 7, 2005, they went to Capital Direct offices and secured the new mortgage after going to a nearby lawyer for independent legal advice.

"When I came home and I read all the papers, I thought to myself, what have I done," recalls Kathy.

What shocked her was they had agreed to pay a whopping $22,000 in fees ($11,930 for a mortgage brokers fee, $8,000 for a borrower's bonus, $545 in other lender fees, $1,525 for legal disbursements) for a one-year mortgage that totalled $221,000. That meant that even though they secured a cheap 7% variable rate, the total cost of borrowing was 19.74% with monthly payments of $1,987.

Meanwhile, the couple was having financial difficulty and complained about a $3,100 shortfall in what was to be paid to Royal Bank, which they were reimbursed for on Sept. 29, 2005 by Capital Direct "as an act of goodwill."

But the following week came a letter warning unless they paid $4,395 by Sept. 29, 2005, legal action would be taken.

Panicked, they contacted Larry Rachlin of Mortgages Unlimited, who was outraged by the fees.

"There are other lenders who would have done this for far less in fees," said Rachlin, who added he would have charged no more than $3,000 in a broker's fee rather than the $11,930. He also was concerned that under the Mortgage Brokers Act, the couple should have been given a cooling-off period. The Act states if a fee is charged, the broker must give at least 72 hours before the client is asked to sign the mortgage statement. The Act also states the 72-hour period may be reduced to 24 hours, but only if the client gets independent legal advice.

On Rachlin's advice, the couple filed a complaint with the Financial Services Commission of Ontario.

In its findings, FSCO said: "Our findings show that you signed the mortgage the same day as you signed the statement of mortgage. You were not given the required 24 hours notice."

It went on, "Capital Direct has advised that while the mortgage was signed June 7, 2005, it was not funded until June 13, 2005."

The conclusion was even though it was "a contravention of the Mortgage Brokers Act" it did not invalidate the mortgage.

And as for fees, FSCO said, "the Act does not comment on fees and accordingly, these are not governed by us."

Tom and Kathy were able to keep up with the mortgage until this spring when Tom needed to buy drugs for his ailing wife.

On the same day they were told Kathy has cancer came the notice to foreclose on their home, which stated if they don't pay $218,279.55 by May 19, legal action would be taken.

But not now. So Kathy, Happy Mother's Day and Happy Birthday.

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