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Is Oregon’s Tax Deferral Program the Answer to HECM T&I Defaults?

As federal regulators ruminate over what to do about seniors who fail to pay taxes and other costs associated with property ownership, the State of Oregon continues to operate a humanitarian program that has been providing this support for nearly half a century.

Residents of the “Beaver State,” age 62 or older with an annual income below $38,000, may apply for the “Senior Property Tax Deferral Program,” which covers county property tax payments. The state pays the taxes and places a lien against the property, which goes in 3rd position and is repaid when the property is sold or refinanced. A 6 percent simple interest charge is tacked onto the eventual balance paid off.

“This is a perfect solution for my customers that have problems keeping up the annual tax payments,” says Donna Lea Brooks, a self-described “HECM Advocate,” whose resume cites service as a HUD HECM Counselor for a local senior assistance agency.

The Oregon tax deferral program, initiated in 1964, has been “working very well,” according to Debbie Saalfeld, administrative specialist in the deferral unit of the Oregon Department of Revenue, which administers the program. Saalfeld tells RMD that there are currently 10,000 such accounts, only a small percentage of which are tied to reverse mortgages, although that is expected to expand.

Some of this support has “gone on for years,” Saalfeld reports, in a few cases with individual balances exceeding $200,000.

Total outstanding debt for the program is $19 million – an average of $1,900, per household. “This is quite a trusting program,” Saalfeld comments, noting that applications to join must be filed between Jan. 1 and April 15 each year. This year, about 1,800 applications have been filed, equal to the number last year and representing a higher-than-normal number of annual submissions.

Programs such as the one in Oregon that help seniors avoid loss of their homes for failing to pay associated and mandatory charges, are being reviewed carefully by HUD, according to Meg Burns, director, FHA Office of Single Family Program Development, who recently told RMD that “our counselors soon will use tools designed by the National Council on Aging to evaluate whether a senior is eligible for any other public services, including state and tax deferral programs. That will be a useful part of our policy proposals going forward,” according to Burns.

Written by Neil Morse

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