Trigueros v. Transamerica Corporation

Donald Flores (plaintiff) and Helen Flores entered a reverse-mortgage loan with Transamerica HomeFirst, Inc. (HomeFirst) (defendant). Under a reverse mortgage, the lender pays the borrower monthly loan principal installments, and the borrower then pays back the entire loan balance, plus accrued interest and fees, when the loan matures, which is typically upon the homeowner’s death or the sale of the home. The HomeFirst reverse mortgage was linked to a deferred annuity to guarantee monthly payments for life, but the underlying reverse mortgage would still need to be repaid upon maturity. HomeFirst met with the Floreses and their daughter, Maria Trigueros (plaintiff), to review written disclosures about the reverse mortgage, the linked deferred annuity, the annual interest rates, a good-faith estimate of the overall cost, and the interest charge equal to 50 percent of any increase in the home’s value during the life of the reverse mortgage. HomeFirst provided federally mandated disclosures, including the total annual loan cost rate (TALC) disclosure and Regulation Z, which collectively disclosed interest rates, the fact that loan repayment costs were higher for shorter loan terms, and included nine different repayment scenarios. The Floreses had the HomeFirst documents for 30 days prior to closing but did not take HomeFirst’s written advice to review the documents with independent counsel. HomeFirst reviewed all disclosures again at closing before executing the reverse mortgage. Two-and-a-half years later, the Floreses sold their home for a $150,000 increase in value. The Floreses had received approximately $30,000 in monthly reverse-mortgage payments by the time of the sale. The reverse mortgage matured upon the sale, and HomeFirst demanded $172,139 to repay the loan, including repayment and interest for the monthly advances, 50 percent of the $150,000 increase in value, and $38,000 in annuity costs. Trigueros, along with the Floreses, sued for damages, alleging financial elder abuse because HomeFirst failed to disclose material facts regarding the loan’s potentially devastating consequences. The trial court dismissed the complaint for failing to prove reliance on the alleged nondisclosures. Trigueros appealed.