Houston, TX– Champion Mortgage, one of many reverse mortgage lenders, is trying to make 78 year old Linda Tabell-Boyce homeless. Linda, who suffers from Multiple Sclerosis (MS), and her late husband William applied for a reverse mortgage after he had a severe stroke and could no longer work and they were facing financial hardship. The problem is that no one told them of the potential pitfalls of reverse mortgages and they weren’t fully advised about the responsibilities of such an agreement.
What is a reverse mortgage? It is a special type of home loan that lets you convert a portion (or all) of the equity in your home into cash. Only people over age 62 or older can get a reverse mortgage. The difference between a reverse mortgage and a traditional home loan – is that borrowers don’t have to pay it back. If that sounds too good to be true, it is. Lured by commercials with celebrity endorsers like Henry Winkler (The Fonz, Happy Days), Tom Selleck (Thomas Magnum, Magnum P.I), and others; seniors are led to believe they’ll never have to make a monthly payment for their home again. The catch, however, is that reverse mortgages still require homeowners to pay their property taxes, homeowner’s insurance, and homeowner’s association assessments. These requirements are generally glossed over in commercials or buried in the fine print of loans. Making matters worse, reverse mortgages are not set up to where homeowners can make monthly payments into an escrow account to cover these expenses. As such, these loans end up working like a trap, with promises of no monthly payments that only set elderly homeowners up for failure and foreclosure down the road.
For as long as she could remember, Linda felt secure financially. Even after being diagnosed with MS, William ran a carpet selling business and all was well. In 2009 however, their lives changed forever. William suffered a series of debilitating strokes and was diagnosed with Alzheimer’s, making it impossible for him to keep working. His business crumbled, and their family’s support network buckled under this sudden change. Soon thereafter, he began showing signs of rapidly progressing dementia which severely impacted William’s ability to live independently.
They heard about reverse mortgages while looking for options to stay in their home. Reverse mortgages are advertised as giving the aging an alternative when they don’t have enough money for retirement or suffer some unexpected calamity that affects their monthly income. In mid-2009, Linda and William suddenly found themselves on a fixed income with sky-rocketing property taxes in NW Houston. These factors made it nearly impossible for them to afford their monthly mortgage payment. Linda and William applied for a reverse mortgage with Urban Financial, attended a one-hour telephone credit counseling session, and went ahead and tried to schedule a closing with the lender. It’s not clear if Urban Financial, which created the loan, or the credit counselor checked Linda or William’s income to verify if they were able to afford their taxes, insurance, and HOA assessments. Federal law requires credit counselors to certify borrowers before they can close on a reverse mortgage. Federal law does not, however, require the counseling session to be done in person. What is clear is that the credit counselor certified that Linda and William spoke with him, and the counselor got paid by the lender at closing.
All the while, Linda was communicating with her daughter Robin, who was living in Dallas at the time, about having her come to Houston to drive her and William to a local bank. Robin tried to support her parents while still giving them the independence and dignity they deserved and was not deeply involved in their finances. After William’s strokes, Robin had been making arrangements to move her parents to Dallas so that they could be close and still maintain their independence. She believed her mom wanted to inquire about a loan and did not know that her parents were deep into the process of getting the loan and having a lien placed on their home. Urban Financial rescheduled closing multiple times, making it impossible for Robin to make arrangements to come down or get involved. Ultimately, Urban Financial had a mobile signing agent come to Linda’s home with little advance notice. The loan documents were signed by Linda and William on September 25, 2009.
Linda and William had been led to believe that the reverse mortgage would pay off their traditional house note and would put some cash in their pockets to live off of until they moved out or passed on. Furthermore, Linda and William believed that they would not have to pay their property taxes because both of them qualified for a property tax deferral from Harris County and their local school district. A tax deferral is a provision under Texas law that allows the elderly or disabled to defer payment of their property taxes as long as they live in the home. As such, Linda and William believed that they had found a way to stay in their home on their new fixed income. Unfortunately, their troubles did not come to an end after getting the reverse mortgage. William passed away 18 months later. Linda does not recall ever receiving any money from the loan, nor does she recall ever getting signed copies of the loan contract. Shortly after William’s death, Linda began receiving letters from Urban Financial stating that she was in default on her loan. How could she be in default on a loan she doesn’t have to pay back? She still had insurance on the home but did not pay the taxes because of the deferral she qualified for under Texas law.
Sometime after closing, Urban Financial sold the loan on Linda’s home to Generation Mortgage Company (GMC). In 2013 GMC filed a lawsuit against Linda, seeking a court order to allow it to foreclose because it claimed Linda failed to pay her property taxes and insurance. Linda reached out to Robin for help after she was served with the lawsuit. Together, they were able to raise enough doubts about the reverse mortgage that GMC asked the court to dismiss the foreclosure lawsuit so that GMC could file a claim against its title insurance policy. Shortly after that first lawsuit was dismissed in May 2015, GMC sold the loan to Nationstar Mortgage Company, a large reverse mortgage lender based in Dallas. Nationstar, which does business as Champion Mortgage, worked quickly to file a second lawsuit against Linda. This second lawsuit was filed in August 2015. Champion turned the suit over to its title insurance company, which has aggressively pursued Linda to take her home, again claiming that she failed to pay her property taxes and homeowner’s insurance.
Linda and Robin contacted Lone Star Legal Aid (LSLA) for help defending against this second lawsuit. Amir Befroui, foreclosure prevention attorney for LSLA, learned that William had been diagnosed with dementia and Alzheimer’s in the months prior to closing on the loan. Unbeknownst to Linda, her late husband, or their daughter, the Texas Constitution requires ALL borrowers to be mentally capable of understanding reverse mortgages when they sign. William’s medical records and interviews with his doctors all clearly show that he most likely did not understand or know what he was signing at closing back in September 2009. This newly discovered evidence forms the basis for Linda’s defense to try and keep her home.
Linda’s foreclosure case is set for trial later this fall. Her attorney, Amir Befroui, hopes that the late William Boyce’s medical records and the testimony of his client’s doctors are enough proof for the court to determine that Champion’s loan is invalid, and thus keep this 78-year-old widow with multiple sclerosis from being made homeless.
Lone Star Legal Aid is a 501(c)(3) nonprofit law firm focused on advocacy on behalf of low-income and underserved populations. Lone Star Legal Aid serves the millions of people at 125% of federal poverty guidelines that reside in 72 counties in the eastern and Gulf Coast regions of Texas, and also 4 counties of southwest Arkansas. Lone Star Legal Aid focuses its resources on maintaining, enhancing, and protecting income and economic stability; preserving housing; improving outcomes for children; establishing and sustaining family safety and stability, health and well‐being; and assisting populations with special vulnerabilities, such as those who have disabilities, or who are elderly, homeless, or have limited English language skills. To learn more about Lone Star Legal Aid, visit our website at www.lonestarlegal.org.
Media contact: Clarissa Ayala