CBS 5 Investigates With Anna Werner

SAN FRANCISCO (CBS 5) ― A housing advocacy organization in the East Bay is filing what it expects to be just the first of several lawsuits against the former World Savings and its current owner Wachovia.

Housing and Economic Rights Advocates (HERA) in Oakland says too many elderly minority residents got loans they should never have had-and not just in the East Bay.

HERA director Maeve Elise Brown told CBS 5 Investigates, "It certainly seems as if we're looking at much more than Oakland."

Brown earlier pointed out what she called a pattern of loans to elderly minority homeowners in some Oakland neighborhoods. She said there were many option ARM "Pick-A-Payment" loans from the former Oakland-based World Savings, now owned by Wachovia.

Now she's getting complaints from homeowners in San Francisco as well who are contacting her.

85-year-old Dollie Ross is one of those homeowners. She and her husband bought their home in San Francisco's Bayview District in 1971 with a loan from World Savings. They raised ten children in the home.

Her husband died in 2005. Ross said it was some time later, when she was sick with pneumonia, that independent brokers who she says told her they worked for World Savings came to the house.

"They came, I said 'I was sick.' He told the other one, 'Go get her some soup, maybe that'll make her feel better,'" Ross said.

They brought her soup and then, she says, came the pitch: to refinance her mortgage with a World Savings option ARM Pick-A-Payment loan, one her daughter Sally says she couldn't afford.

"What I couldn't understand was how could the mortgage payment be as much or more than the, than her income," Sally Ross said. "That didn't seem right."

Advocate Brown at HERA has filed a lawsuit on Dollie Ross' behalf. In it, Brown says World Savings should have known Mrs. Ross would not have been able to afford the loan. "From the prior loans, World Savings knew the household income and knew that the 2006 refinance was beyond (Ross') ability to pay," the complaint reads.

In fact, the complaint alleges that not only could Ross not afford the minimum payment, the regular principal and interest option on the loan was actually "two to three times (Ross') total income."

Her daughter Sally said, "When they came to see her, she was alone, she was suffering from pneumonia, she had vision problems and hearing problems, and she really was in no condition to understand what they were talking about."

The family tried to keep up with the payments, but couldn't. As of this week, Wachovia, which bought World Savings, planned to sell Mrs. Ross's house at a foreclosure auction.

Advocate Brown has been able to get the family a brief reprieve. Brown says negotiations with Wachovia produced a 30-day extension of the sale date.

"I'm happy to be able to say that we have an extension of the sale date, as a result of contact that we made with Wachovia," Brown told CBS 5 Investigates.

But Ross' home is still at risk. "We're not out of the woods," Brown said.

Dollie Ross worries about what may happen. "Foreclose on the house…what I'm going to do?" she wondered.

Her daughter Sally says her mom deserves to stay in the house where she's lived for 37 years.

"There's a lot of history here and it, just wouldn't be right for her to lose her home," she said.

Wachovia did not respond to CBS 5 Investigates request for comment on the lawsuit. The company recently dropped those Pick-A-Payment loans and said it will no longer offer options that allow for negative amortization.

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