This man do not want their own attorney - because he's making payment on the tab to the lawyers hired to sue him
O'Neil McLean acquired another mortgage but fell behind for the payments. He took the loan companies to the court whenever they tried to sell his condo but his contract meant he had to foot their legal bill.
O'Neil McLean is often a tenacious entrepreneur who thought an extra mortgage hands him some breathing room to trap up on bills after he depleted his own savings to bootstrap a company venture.
Instead, that loan has ballooned to three times what he originally borrowed, has dragged him by having a costly court battle and place his family vulnerable to losing their Scarborough home.
McLean fell behind on payments to his two lenders last spring while he and his wife faced a critical financial pressure: paying U.S. hospital bills on her father, who was battling prostate type of cancer.
Amid the mountain of doctor bills, McLean received legal notice last July how the lenders planned to trade his condo to extract their funds.
He's got spent earlier times year attempting to stop his lenders from repossessing the property he bought as a possible investment for his 5-year-old daughter's post-secondary education.
But his determination may be costly: his second mortgage debt is growing through the $25,500 he originally borrowed to just about $75,000.
The main difference consists of fees and penalties.
About 50 % of of those fees are for lawyers' bills - even though he do not want their own attorney - because he's making payment on the tab for the lawyers hired court action him.
McLean thought we would share his story because he believes it is stacked against financially vulnerable Canadians like him, allowing lenders and lawyers to take advantage of a disparity between his resources and theirs.
"It literally can happen to anybody and probably became of a friend or acquaintance, they simply feel ashamed," he explained.
"How lots of people miss several months with their loan and after that basically must avoid their property? Not since they can't pay their mortgage but because the legal fees which can be tacked on are far too excessive?"
Debtors that don't defend themselves against the best action are hit with an automatic default judgment against them. Meanwhile, debtors like McLean they like to battle back in court can accumulate lots of money in legal bills whilst still being lose.
"They like it when people fight," said Ron Alphonso, a feisty mortgage loan officer that has carved out a niche by providing mortgages to borrowers in default and negotiating together with the lawyers suing them.
"There's a tremendous power imbalance, the ability all resides with all the lender and also the lawyer - it's like 99 per-cent to at least one per cent and the intimidation factor is unbelievable."
While there are many property litigation enforcement companies which respond to behalf of lenders, there aren't many businesses that focus on defending debtors, he was quoted saying.
"The reason is, there's plenty of cash in enforcing it and no take advantage stopping it. To get that you enable you to stop it really is virtually impossible," he was quoted saying.
McLean's second-mortgage troubles began when he entered into a CitiFinancial Canada branch in October 2014. Rejected with the major banks, he considered the loosely regulated alternative, or "shadow lending" market, where companies invest high-interest loans to high-risk clients.
Citi offered McLean financing with an intention rate of 20 per-cent - greater than five times what majors would charge.
He signed immediately for the terms: the entire repayment appealing and principal would be $57,600 at the conclusion of the borrowed funds agreement, in 2024.
The agreement included as well a clause stating he would perform the hook for almost any costs the bank incurred an internet to recover about the agreement - including outsourcing enforcement to attorneys.
CitiFinancial, a Canadian arm of yankee financial giant Citigroup, says requiring borrowers to pay for the legal costs in the lenders is standard industry practice. It added that it's not "at liberty to debate specific accounts," but understands McLean's complaint.
Citi stated it provides a high level of transparency to customers, rigorous reviews of the lending practices and sets high standards for its employees. Additionally, it has borrowers sign a document acknowledging that they had the opportunity use a lawyer assess the car loan.
McLean admits he signed without fully knowing the consequences, but added he feels the documents were confusing and unclear.
"They present it as something can repay within a reasonable time, but, no, it's Decade and you are clearly paying double whatever you borrowed," he explained.
"They never explain the method at all for in the event you go into default, and they pressured me to sign right then and there."
Just half a year in to the loan term, McLean fell behind on home loan repayments to both CitiFinancial and also the company that held his original mortgage, MCAP Corp., Canada's second-largest mortgage loan provider. MCAP declined the opportunity to comment.
Combined, McLean estimates he owed the two lenders back-payments totalling about $5,000 at that time.
"I was behind $5,000 and they managed to transform into $75,000," he explained.
"That alone will make you would like to grab nice hair."
His tab skyrocketed once his accounts were given over towards the lenders' lawyers, which tacked on thousands of dollars in billable hours.
Last fall, CitiFinancial lawyers at Rigobon Carli took the lead on McLean's case. The firm stated it can't touch upon the specifics of McLean's case, but partner Walter Rigobon said attorney's fees accumulate in drawn-out cases "if the client won't meet his / her obligations and new payment agreements have to be drafted or additional legal proceedings are required."
McLean's numerous tries to negotiate a repayment plan were rejected through the lenders, who may have no obligation to take repayment schemes when a debtor defaults.
He rented out his condo to tenants, hoping that income is needed his situation. He collected documents and visited legal aid for help. He tried more than once to barter repayment settlements.
But fed up with finding myself the centre of legal proceedings, the tenants moved out earlier this month, he explained, adding to his distress.
In May - whilst owed about $30,000 in legal and also other fees - McLean convinced the court to create aside a court-ordered judgment for possession 'till the end of July, arguing which he needed additional time to file his statement of defence while he was drowning in paperwork, process and particulars.
Almost $20,000 may be added to that tab since May.
McLean's thought the mortgage terms were unfair "may raise issues of unconscionability and inequality of bargaining power," Justice Carole Brown in the Superior Court of Justice said in their own decision to be the proceedings.
"It appeared from his presentation which he did not understand the procedures from the court and it was attempting, but incapable of understand," she said.
McLean has since been being forced to make a decision: cut his losses or keep fighting. The lenders offered him a settlement that will discover their whereabouts sell the condo and take what they're owed.
His bill for 2 mortgages plus penalties and fees totals $252,000. His condo will be worth about $271,000.
If anything remains after real-estate fees, it would check out McLean.
McLean filed an announcement of defence Thursday-meaning time remains ticking on his hips.
He remains convinced the court will agree that he was the victim of predatory lending, which he has been charged excessive fees understanding that his repayment plans were unfairly dismissed.
"I'd rather lose the complete equity than tell these individuals ‘Hey, you won'," he was quoted saying.
"I'd prefer to be the voice of change even though I lost everything while performing it."