This true story highlights a financial problem that seniors are facing all over the country. This story brings to light the struggle my client endured when faced with foreclosure. I worked on this case for seven months, during which I could not find one program or subsidy available for seniors in a position similar to my client’s.
When seniors are facing foreclosures or shortfalls on their homes, little funds are available for their aid. I discovered this through a grueling experience and was greatly disappointed in discovering what were obviously some mistaken priorities. Our government’s priorities lie not with the American people but with what our politicians find most beneficial to them and our country’s standing in the world order.
I got involved with one of my loan officer’s clients for whom we tried to obtain a reverse mortgage to pay off her existing loan but ultimately it ended in a shortfall. Our senior was 73 years old at the time, lived in her home for 36 years and had lost her husband eight years earlier. This woman was unable to work because she suffers from a bone degenerative disease. To add to that, her handicapped son lives with her. Her only means of support is Social Security and money from a part-time job her son holds.
She had a forward loan that, after five years, adjusted to a rate that more than doubled her monthly mortgage payment. The adjustment put her in a position in which she could no longer afford to make the mortgage payments, which ultimately led her to apply for a reverse mortgage. Following the appraisal, the loan was calculated with a $26,000 shortfall. I set out to negotiate a settlement with the bank on her behalf; by this time, she was five months behind in her mortgage payment.
I started negotiations with the bank in December 2009. After two months of getting the runaround, I was finally negotiating with them and assigned to someone in the loss mitigation department. We had processed the loan and had it underwritten so we knew the exact amount we could guarantee this lender for a settlement. However, the lender was only servicing the loan at this point. The loan was in a security so the lender had to take the initiative to negotiate with higher powers. This seemed to be the stumbling block; it appeared that the servicer put forth very little effort in order to work out a settlement.
After almost three months of negotiations with the loss mitigation department, the settlement request was rejected and the bank told our senior to apply for a loan modification. I had doubts that she would be able to qualify for the modification, but she wanted to move forward anyway. I assisted her in this process and helped her with all of the necessary paperwork. After two weeks, what I feared would happen occurred; my senior was told she did not qualify for a modification.
In March of last year, she was served with a foreclosure notice and then a date for a trustee sale, which was to be on May 23, 2010. Seeking more effective ways to assist her, I went to the Associated Press to see if they would be interested in covering this story.
After investigating the scenario, they printed an article about the situation. Other newspapers around the country picked it up, including local publications, as did NBC, ABC and CBS. The news media portrayed the story about a disabled senior who may be forced out on the street by the bank. The story also mentioned that the bank had been contacted for a statement but declined. The pressure was now on the bank and this was my opportunity to push forward at warp speed.
In an effort to place additional pressure on the bank, I relayed the story to a friend, Congressman John Duncan Jr., who was able to obtain a one-month stay of the trustee sale. He also wrote a letter to the bank. The trustee sale was rescheduled for June 23.
We also started to have benefit car washes to raise funds for my senior, calling it, “Save (her name) Home from Foreclosure.” The media was all over it. Following the constant media attention and the receipt of the letter from Rep. Duncan, the bank called me with a willingness to settle the loan so she could proceed with the reverse mortgage.
On June 8, her reverse mortgage was closed. Now, she is once again secure in the home she has occupied for 36 years, very happy and looking forward to life.
The Bigger Picture With all of the TARP funds and other assistance programs that have developed in order to resolve the financial crisis of homeowners, none resulted in assistance programs aimed directly at senior homeowners facing foreclosures or similar hardships.
Without the help of a close friend, our government would have turned away from a senior who was in dire need of help. Her husband was a decorated Vietnam War hero, she worked and paid taxes her whole life, and yet there was nothing available in the way of grants or subsidies from our government to help her.
There is no way to spend seven months, like I did, on every case like this in the country. I took it upon myself to help, not realizing the time it would require to deal with a problem of this nature. However, given the similar situation, I would do it all over again.
The only solution I can see is a program established by our federal government that would provide aid to a qualified senior in order to avoid foreclosure.
I proposed an appropriation bill outline to HUD and to a congressman about a year ago; unfortunately it fell on deaf ears. The congressman I previously mentioned tried to present it but to no avail. I give him credit for that, it was more than most would have done!
Save a Senior’s Home (SASH) would provide subsidy funds for seniors in a situation like my senior’s. The proposed program would be a joint effort on the part of the federal government, the lender who held the existing loan, the borrower and a lender willing to grant a reverse mortgage to the senior homeowner.
The program would require the following: 1. An initial appropriation of allocated funds in the amount of $250 million.
2. A commitment to the homeowner for a reverse mortgage from a recognized lender.
3. The lender holding the existing loan would have to participate in the settlement with 50 percent of the shortfall between the reverse mortgage proceeds and the remaining payoff of the principal balance of the loan.
4. The other 50 percent of the funds to make up the shortfall would come from the SASH-appropriated fund program.
5. The shortfall couldn’t be more than 35 percent of the remaining pay off of the principal balance of the loan.
6. The borrower would have to qualify for the grant/appropriation. There would be strict qualifying guidelines and criteria in order for a senior to be eligible. (My senior would have been a perfect candidate.)
7. The senior would have had to be turned down for a home modification program and must have a rejection notice in hand.
A program like SASH would not only save the senior’s home from foreclosure but would give the lender holding the loan incentive to join the program. The lender would not have to foreclose on the property and would not have to show the property on their balance sheet. The major advantage to the lender is they would only have to come up with half of the shortfall.
The funds to get a program like SASH off the ground could come from existing TARP funds and stimulus appropriations that have not been used. The dollars that have already been appropriated would be a reallocation of funds, not a request for additional funds for a new program.
We as American citizens and as an industry serving our senior citizens need to speak out. We need industry lobbyists to help us promote programs like SASH. A program like this would aid those seniors who can qualify, so they will not lose their only means of personal security. We have many congressmen and senators who would listen to our industry lobbyist. It is difficult for an individual alone to be heard, even if the proposal is sound and should be adopted.
I think our seniors have put in their time for their country, their children and their struggles over the decades. We owe it to our seniors to give them the best retirement years possible. I think we would all benefit from a program like SASH, don’t you?