Wednesday's Seattle Times reported that in 2006 the wife of Sgt. Robert Bales took out two subprime loans totaling $500,000 from a California lender accused of deceptive practices (Paramount Equity Mortgage) to refinance their four-bedroom Lake Tapps home as well as an Auburn duplex she owned before she married, signing the paperwork while her husband was deployed in Iraq. -- The properties they mortgaged "now have a combined assessed value of $358,000," Sanjay Bhatt and Mike Carter said. -- Karilyn Bales and her husband's attorney, John Henry Browne, deny any connection between the family's financial situation and the Mar. 11 atrocity for which her husband is allegedly responsible (he was formally charged by the Army on Friday with the murder of seventeen Afghan civilians). -- But a former president of the Seattle Mortgage Bankers Association who reviewed the couple's public records at the request of the Seattle Times characterized the refinance loans with their "high interest rates, prepayment penalties, and balloon payments" as "unconscionable," and "Seattle attorney David Leen said the terms of the 2006 refinance loan didn't seem to give the Bales family any financial advantages." -- Leen said: "I think it's also especially distressing when servicemen are victimized by predatory lending. They have enough troubles." -- "In general," the *Seattle Times reported, "military families have been targeted by predatory lenders who know service members can lose their security clearances, even their jobs, if they don't maintain good finances, federal officials say." -- Meanwhile, facing enormous legal expenses, Karilyn Bales announced on Monday the formation of the "Robert Bales Legal Defense Fund," the News Tribune (Tacoma, WA) reported. -- The charge sheet accusing Bales and its twenty-nine highly uninformative "specifications" can be examined here. -- There is not even any indication that the killings took place in two different locations; all crimes are described as having taken place "at or near Belambay." ...
PERILOUS WEB OF MORTGAGE DEBT ENSNARLED ARMY SERGEANT, WIFE
By Sanjay Bhatt and Mike Carter
** Robert Bales, the soldier accused of killing 17 Afghan civilians, and his wife took out several high-interest home loans in an attempt to stabilize their family's finances. **
March 28, 2012 (posted Mar. 27)
Pregnant with her first child, and with her husband in Iraq, Karilyn Bales took advantage of what seemed like a sure thing -- tapping into their home equity to help stabilize the family's finances.
But Bales and her husband, Robert, fell into the same refinancing trap in 2006 that dragged the U.S. economy into recession and left millions of Americans facing foreclosure.
The arc of the couple's finances can be traced, in part, through public records. Karilyn Bales has declined to be interviewed for this story since her husband was detained then charged in the slayings of 17 Afghan civilians and with six counts of attempted murder.
Records show the couple's financial dilemma accelerated in 2006, when Karilyn Bales refinanced their four-bedroom Lake Tapps home -- and an Auburn duplex she owned before she married Robert -- all on the same day through Paramount Equity Mortgage. With Robert deployed, she signed the paperwork.
The California lender, which Washington state regulators previously had accused of deceptive practices, put her into two loans considered "subprime," with high interest rates, prepayment penalties, and balloon payments, records show.
In all, the couple borrowed more than $500,000 as the housing market was nearing its historic implosion. Their homes now have a combined assessed value of $358,000.
The Auburn duplex has stood vacant, without power or water, for more than a year. Meanwhile, the family's Lake Tapps home was briefly put on the market for $50,000 below what the couple paid in 2005 and just days before news of the horrific slayings in Afghanistan rocked the world.
The family's Seattle attorneys have repeatedly downplayed the financial stresses Bales and his wife were facing. They have said they doubt that money problems a half a world away could have played any role in the massacre that unfolded March 11 in a remote village in a Kandahar province. Bales, 38, a staff sergeant, was stationed with the 3rd Stryker Brigade at Joint Base Lewis-McChord.
"From Kari's perspective, it's not relevant to the issue of what happened in Afghanistan," said her attorney, Lance Rosen. "It's a distraction."
But it was up to Karilyn Bales to juggle two young children and the household finances while her husband was deployed to Iraq and later in Afghanistan. Like many Americans, the couple had dug themselves into a sizable hole, records show.
Her real-estate agent, Phillip Rodocker, said Karilyn Bales told him that she needed to sell the four-bedroom home to "stabilize her home life."
In general, military families have been targeted by predatory lenders who know service members can lose their security clearances, even their jobs, if they don't maintain good finances, federal officials say.
At Joint Base Lewis-McChord, Mary Cron of Army Community Service said debt counselors work confidentially with hundreds of soldiers annually who seek help on their own or have been directed there by their unit. Most clients want answers on how to manage credit-card debt and student loans, not mortgages, she said.
During the past housing boom, nevertheless, some active-duty soldiers were steered toward pricey refinance loans that benefitted lenders and mortgage brokers, said Joe Krumbach, former president of the Seattle Mortgage Bankers Association, who reviewed the couple's public records at the request of the *Seattle Times*.
The refinance loans Karilyn Bales signed with Paramount Equity Mortgage were "unconscionable," he said. "The margins on these loans are disasters waiting to happen."
Without reviewing the couple's credit profile, Krumbach said it's hard to say if they would have qualified for better loans.
Paramount Equity has faced its own legal challenges, a review of state and federal court records shows.
In 2009, without admitting guilt, Paramount agreed to pay the Washington Department of Financial Institutions $225,000 for violations of state law and $143,050 more in restitution to 53 consumers.
The Bales family, which was not part of that settlement, saw their Auburn duplex enter foreclosure that year. The foreclosure was later discontinued.
Loan documents show the 2006 adjustable-rate loans Karilyn Bales obtained from Paramount put the family deeper in the hole.
The $327,750 refinance loan on the family home near Lake Tapps, for example, was split into low monthly payments over 40 years but was due in 30 years.
The loan was nearly $50,000 more than the loans the couple took out a year earlier to buy the home, and carried a higher interest rate of 8 percent, all of which would have raised their monthly payment due.
The Auburn duplex had a $178,500 refinance loan. It was bought in 1999 for about $99,000.
That refinance, which carried an initial interest rate of 7.8 percent and could reset to a rate as high as 10.8 percent, gave the Bales family the option to make no principal payments for five years. The first full payment was due Dec. 1, 2011 -- the month Robert Bales left for Afghanistan for what would be his fourth combat tour.
The Auburn home has not been occupied for at least a year and a half, said Bob Baggett, the president of the River Park Estate Homeowners Association. The couple have been behind on association dues -- about $130 a month -- for at least that long, he said.
Exactly why they took out the loans from Paramount is not clear, especially given the couple's résumés.
Before joining the Army, Bales worked as a financial adviser in Ohio and for a short time in Florida. However, in 2003, an Ohio arbitrator found him and his boss responsible for fraudulent trading that cost an Ohio couple nearly $1.2 million. The firm he worked for was later closed by the state.
Bales was never charged, nor did he ever attempt to repay the couple.
Meanwhile, Karilyn Bales worked as a project manager at Washington Mutual and might have qualified for a home loan there.
Seattle attorney David Leen said the terms of the 2006 refinance loan didn't seem to give the Bales family any financial advantages.
"He paid a very expensive price for the refinance because he had to pay off the prepayment penalty on the two first loans," Leen said. "I think it's also especially distressing when servicemen are victimized by predatory lending. They have enough troubles."
--Seattle Times reporter Hal Bernton contributed to this story.
FAMILY OF ROBERT BALES SEEKS DONATIONS FOR DEFENSE FUND
by Adam Lynn and Christian Hill
News Tribune (Tacoma, WA)
March 26, 2012
The family of the Joint Base Lewis-McChord soldier charged in a bloody rampage in Southern Afghanistan is seeking donations to pay legal costs that some experts expect will run well into the six figures.
A family spokesman, Lance Rosen, said Monday the costs to defend Staff Sgt. Robert Bales is “way beyond the means, to put it mildly” of Bales’ wife, Kari, and their family.
Bales, 38, of Lake Tapps, is accused of leaving his base March 11 and killing 17 people, including nine children, in two villages. He was charged Friday.
Kari Bales was asked in her first interview broadcast Monday whether it would be difficult to raise money given the horrific nature of the charges leveled against him.
“I think that all soldiers, all people, deserve the best defense that they can get, and I believe he deserves the best defense,” she told the "Today" show.
In the wide-ranging interview, she also said her husband didn’t exhibit obvious signs of post-traumatic stress disorder and that she was confident he was fit for a fourth combat tour, but that he did not want to go.
Bales joins other soldiers accused of crimes in combat zones whose families and supporters have sought public help to defray substantial legal fees. At least three families of Lewis-McChord soldiers put on trial for murdering Afghan civilians for sport in 2010 accepted donations or assistance.
Former Muslim Army chaplain James Yee received tens of thousands dollars in donations to his legal defense fund starting in 2003 following his arrest on allegations that he was a spy. Yee had worked at Fort Lewis but was transferred to the Guantanamo Bay prison in Cuba to counsel detainees there. The military later dropped all charges against Yee.
Heather Ellis, executive director of United American Patriots, a group that raises money for soldiers accused of crimes in combat zones, said legal bills of between $200,000 and $250,000 are not out of the ordinary.
Legal fees for Staff Sgt. Frank Wuterich, accused of leading a group of Marines that killed 24 unarmed civilians in Haditha, Iraq in 2005, would approach $1 million at normal rates, not including related expenses and family travel, she said. In January, Wuterich pleaded guilty to negligent dereliction of duty under a plea agreement and received no jail time.
“It can be astronomical,” said Ellis, whose organization is not assisting Bales because he committed his alleged crimes outside of combat.
Ellis said she’s heard of families losing their homes or moving in with other family members due to the strain the legal costs put on their finances.
The Bales were already under financial stress before the tragic events of March 11. News accounts show Karilyn Bales had related her financial struggles on her blog over the past year, the couple had tried to sell their house in Lake Tapps for 20 percent less than they paid for it and lost another residence they owned in Auburn.
Gene Fidell, who represented Yee and now teaches military justice at Yale Law School, said the cost to defend Bales would be “way into the six figures and maybe beyond that.”
Bales’ defense team would be required to conduct its own investigation into the massacre in order to provide the sergeant with effective counsel, Fidell said Monday.
“That’s got to happen here. It’s a capital case,” he said.
That might include a trip to Afghanistan to view the crime scenes and interview witnesses if such a trip could be arranged with the U.S. and Afghan militaries, Fidell said.
Brett Purtzer, a Tacoma criminal defense attorney, said the cost of defending Bales likely would reach into hundreds of thousands of dollars “given the location and the number of potential persons to interview and the necessity to have interpreters available.”
“Given that it sounds like a mental health defense, the experts alone could be $50,000 to $100,000, given the nature of this case and the publicity it has obtained,” said Purtzer, immediate past president of the Tacoma-Pierce County Bar Association.
Soldiers accused of crimes are provided a military lawyer at no cost, said Maj. Chris Ophardt, a spokesman at Lewis-McChord, but they have the option to hire a civilian attorney.
Bales has hired John Henry Browne, a well-known and media-savvy defense lawyer who has represented many high-profile clients. Bales is expected to use a military defender, too.
Yee said his military lawyer immediately recommended he hire a civilian lawyer because they have fewer limitations, including use of the media as part of their defense strategy. Yee said his legal bills were more than $260,000, and the financial assistance he received was invaluable.
“It’s devastating,” the former Olympia resident said of the prospect of footing that bill alone. “I certainly didn’t have it. My family didn’t have it. I would be paying back legal fees today without that mechanism and the generosity of the community.”
Contributions can be sent to The Staff Sergeant Robert Bales Legal Defense Fund, PO Box 2774, Seattle, WA 98111. Contributions are not tax-deductible.