Frances Taylor was 93 when she took out a high-cost, high-interest mortgage against her home of more than four decades. Within months, her lender foreclosed, making her one of an estimated 2.2 million subprime borrowers expected to lose their homes by the end of next year.

If Taylor seems a far cry from the average subprime borrower — typically portrayed as a young, first-time homebuyer with bad credit — think again.

More than one in three borrowers in King County who got loans from the same lender that foreclosed on Taylor were 50 or older, and one in seven was 60 or older, according to a Seattle Times analysis of more than 4,000 loans by Ameriquest Mortgage. Not only that, nearly all of those borrowers already owned their houses.

As lawmakers consider remedies to ease the damage from risky home loans, mortgage-industry representatives are urging them to temper any increased regulation. After all, they say, such loans have given millions with poor credit an opportunity to buy into the American dream of homeownership.

But subprime lenders have done more than market to homebuyers; they have targeted homeowners. Some loans were more predatory than subprime, with features so onerous that borrowers refinanced their way out of the American dream, losing their houses — and substantial equity — to mortgages they never stood a chance of repaying.

Lenders persuaded one borrower, a 79-year-old janitor, to obtain 10 subprime refinances over nine years.

Taylor refinanced her home three times in just three years. Those loans stripped away more than $50,000 of her home equity in fees alone and eventually obligated her to mortgage payments that were nearly three times her monthly Social Security check of $761.

Her loans, like many subprime mortgages, came with hefty fees, prepayment penalties, and interest rates that adjusted upward.

Targeting homeowners for mortgages based solely on the financial stake they have in their homes is universally regarded as predatory lending and is illegal under state and federal laws. But experts say that hasn't stopped lenders from doing just that.

Penalties are rare, and suing in court is difficult, with complicated cases and low payoffs. In Seattle, just four private attorneys routinely handle predatory-lending cases, even though they say demand for their work is growing.

Attorney Melissa Huelsman is one of them. "You can't take away a house with a gun, but you can take it away with a piece of paper," she said. "We, as a society, should treat that as a serious crime."

Targeting seniors

Borrowers such as Taylor may have a lot of debt and poor credit, but they have something else too: assets.

"It makes sense that these folks are targets because they have so much equity in their homes," said Sharon Reuss, a spokeswoman for the nonprofit Center for Responsible Lending in Durham, N.C., which works to eliminate abusive financial practices.

Taylor appears to be the oldest person to receive an Ameriquest refinance in King County, but she was hardly the only older borrower. The Times' analysis showed that 40 percent of Ameriquest loans from 2002 through 2006 went to borrowers old enough for membership in AARP, a consumer group representing those 50 and older.

AARP has warned that seniors are particularly susceptible to the marketing pitches of subprime lenders, even if they could qualify for better loans. In June, the group warned there is "growing evidence that many borrowers are being sold products that strip, not build, equity and household wealth."

Not-for-profit housing watchdogs have accused subprime lenders of targeting groups of borrowers, but they have focused on minority groups, using federal mortgage data to prove their point.

These same watchdog organizations have mostly anecdotal information about older borrowers. That's because the federal government doesn't require lenders to report borrowers' ages.

The Times investigated five years of King County loans by Ameriquest, until recently the nation's largest subprime lender, and analyzed a variety of public records. The Times also reviewed national data, including reports Ameriquest filed with the federal government in 2004 and 2005.

Locally and nationally, nearly all of Ameriquest's loans went to people who already owned homes, The Times found.

In 2004, the year Taylor obtained her final subprime mortgage, only two Ameriquest mortgages helped people buy houses in King County — far less than 1 percent of the total. The remaining 1,286 loans that year were nearly all refinances for borrowers who already owned their homes.

Likewise, nationally, less than 1 percent of Ameriquest's loans that year helped people buy homes. The next year, less than 3 percent of Ameriquest loans nationally were for home purchases. Ameriquest declined to discuss The Times' findings, as did other industry representatives.

The company also sued to block state Attorney General Rob McKenna from releasing documents that would shed light on its operations. That court battle is continuing.

The Attorney General's Office obtained the internal Ameriquest records as part of a multistate investigation into predatory-lending allegations against the company. Last year, Ameriquest paid $325 million to 49 states to settle the allegations but admitted no wrongdoing.

Attorney Huelsman requested the documents earlier this year for suits she filed against Ameriquest. Among her clients: Devaney White, the janitor who filed for bankruptcy after taking out 10 mortgages in nine years after the death of her husband.

Ameriquest, Washington Mutual, Citifinancial, Chase Manhattan Mortgage and five others were among the lenders that provided loans to White. Those refinances swelled the debt on her South Seattle home from $32,000 in 1998 to $382,000 in 2005. White got some loans within months of each other, including two just days apart, according to a lawsuit Huelsman filed in bankruptcy court on White's behalf.

The companies denied wrongdoing.

Huelsman said the lenders preyed on White's confusion and her inability to discern that the people selling her the mortgages were not responsible for determining whether she could afford them.

White didn't have sufficient income to cover payments on the later mortgages even as she was signing them, the lawsuit states, all but guaranteeing that her home would be sold to satisfy the debt.

"Defendants certainly knew that they were fraudulently inducing an elderly woman into obtaining mortgage loans that were not in her best interest, and which would only result in a significant profit for them, while it was certain that Mrs. White would lose her home," the lawsuit states.

Target marketing

At the height of the subprime-lending boom, in 2003 and 2004, the market was rich with targets, and lenders scrambled to find them, said Luis Schupbach, national-accounts manager for Mass Marketing Solutions, a Scottsdale, Ariz., company that sells tailored lists of potential customers to lenders.

Selling even one subprime loan generates $10,000 or more in fees alone for the lender, Schupbach said. If a loan is sold on Wall Street as a mortgage-backed security — and millions have been — the seller makes even more.

Companies such as Mass Marketing Solutions help lenders find potential subprime customers by searching through financial information compiled by the nation's three largest credit-reporting agencies. They look for homeowners who have equity, low credit scores, large debts and recent subprime mortgages. They can pair that information with other consumer data to find people who might have college-age children, for example, Schupbach said.

Lenders can get private financial information about individuals, as long as they specify for whom they're searching — people with certain credit scores, for example — and then make a firm offer of credit to every person who fits that description.

Schupbach said his company could easily produce a list of subprime borrowers older than 50. But he said federal law prevented The Times from buying such a list because it wasn't selling financial products. Had The Times been a lender, it would have been able to buy a list for about 26 cents a name.

Armed with a financial picture of a potential borrower, along with names, addresses and phone numbers, the lender tries to grab the customer's attention. That's relatively easy to do when someone is up to his eyes in debt. Hence, official-looking letters appear to come from the IRS or the company holding the mortgage.

"They're desperate and scared and they don't understand the numbers, and you do," Schupbach said.

More than 60 percent of the homeowners who refinanced their mortgages with Ameriquest had monthly debts so high they were likely to be having trouble paying their bills even before they got their new mortgages, according to a prospectus describing 15,000 loans the company offered for sale to Wall Street investors as "mortgage-backed securities" in July 2004. Taylor's was among them.

Nearly all of the borrowers wanted the loans to consolidate their debts, the prospectus reported. Those with the heaviest debt burden got the worst interest rates, sometimes more than twice as high as other borrowers.

Most of the Ameriquest borrowers whose loans are described in the prospectus, including Taylor, had poor credit ratings that made them willing or resigned to paying higher interest rates. More than 70 percent of them also agreed to accept a "prepayment penalty" that would cost them thousands if they paid off the loan or refinanced generally within three years. The interest rates on the loans adjusted upward at two years.

As the mortgage crisis has unfolded, homeowners have tried to escape the inevitable jump in monthly payments by refinancing, selling or surrendering to foreclosure.

But households that refinance incur new fees and penalties. As those fees are folded into the new mortgage, the lender strips away more equity and leaves the borrower with even more debt.

The bottom began to fall out for dozens of lenders earlier this year when record numbers of foreclosures drove down home prices, and lenders were stuck with homes worth less than the loans on them. In August, Ameriquest began shutting down, and Citifinancial bought its loans.

Schupbach said he expected lenders to cut back once the mortgage crisis deepened. Instead, lenders began requesting lists of people who had even lower credit scores but "acceptable collateral," namely homes, but sometimes cars, too. Schupbach said he considers such requests potentially predatory, and his firm will not fill them without proof that the client complies with federal consumer-credit laws.

But the real growth market for aggressive lenders, he said, is homeowners with active Chapter 13 personal bankruptcies that had been filed between 13 and 24 months earlier. The time lapse meant their credit-card debts had been discharged or dismissed but the bankruptcy was likely not yet final. Lenders target those borrowers, promising to get them out of bankruptcy for a price, typically offering a new home loan with more fees and a higher interest rate.

"You don't even need credit if you have a certain amount of equity in your home," Schupbach said. "If you don't pay, they'll take the house."

Susan Kelleher: 206-464-2508 or skelleher@seattletimes.com and Justin Mayo: 206-464-3669.

Seattle Times intern Rachel Fields and researchers Gene Balk and David Turim contributed to this report.