by Katie Burns, J.D., Attorney, Housing Counselor, and HUD Certified Reverse Mortgage Counselor
To protect client confidentiality, all names have been changed in this post.
Lifelong Detroit residents Ruby and Daniel, both turning 78 this summer, have been married for over 40 years. They purchased their home in 1977, after some medical issues forced Daniel to stop working for General Motors. He had a brain tumor, untreated diabetes, and an ailing heart, all of which could have ended his life prematurely. Although Daniel’s medical condition later improved, the couple struggled with mounting medical expenses and staggering credit card debt. Eventually they reached a financial crossroads, and had to reevaluate their circumstances. Ultimately they got a HECM reverse mortgage, so that they could stay in the home and neighborhood they loved.
FHA’s government insured Home Equity Conversion Mortgage (HECM) loan program gives seniors like Ruby and Daniel access to the existing equity in their homes, while allowing them to continue living there until they die or move. A HECM loan can be a viable option, provided that the seniors can still afford the property taxes, homeowners’ insurance, and home maintenance required to keep the loan out of default.
Over the years, Ruby and Daniel fell behind on their taxes a few times, but always managed to “settle up” with their lender. Then in 2010, Daniel had surgery to put in a new heart stent. After that surgery, he no longer had the energy to work part time, or even to drive Ruby around so they could pay their bills. Ruby summed up their situation by saying, “We had the same problems as everyone else. Too many bills. Not enough money.”
Fortunately, the Step Forward Michigan program recently began accepting applications from homeowners in reverse mortgage default. Step Forward is a program of the Michigan Homeowner Assistance Nonprofit Housing Association (MHA). It is also part of the Hardest Hit Fund loan program established by the US Department of Treasury in 2010. Michigan homeowners who meet certain qualifications can receive a forgivable loan and mortgage lien up to $30,000, without having to make any payments. The loan is then forgiven at a rate of 20% per year, provided that the homeowner maintains the property as his/her primary residence.
Through the services provided by HRCMI, the Housing Rights Center of MI, a program of Elder Law of Michigan, I helped Ruby and Daniel complete the Step Forward application online, monitored their progress, and stayed in constant contact with them during the lengthy approval process. Eventually they were approved for nearly $15,000, which paid their outstanding property taxes and reinstated their reverse mortgage. Going forward, the couple will also be participating in HRCMI’s financial capabilities program to help them learn strategies for managing their money and debt effectively.
Regarding her experiences with the Housing Rights Center of Michigan and Step Forward Michigan, Ruby said: “I would recommend this program to anyone because it was so helpful to have someone on our side. It really meant a lot.”
For more information on the HECM loan program, read the National Council on Aging’s “Use Your Home to Stay at Home.” For more information on the Step Forward Michigan program, visit their website.
Katharine (Katie) Burns is an attorney, housing counselor and HUD certified reverse mortgage counselor at ELM. She became a member of the ELM team initially as an AmeriCorps State Member in 2013, but she was hired for her current position in September of 2014.
In 2010, Katie graduated from Regent University in Virginia Beach with her Juris Doctorate (Cum Laude). Prior to coming to Elder Law, she did a variety of document review projects for other attorneys, and donated her time to Legal Services of South Central Michigan as a pro bono attorney. She also assisted with the intake and triage process for new clients.
During Katie’s AmeriCorps service year at ELM, she was the Foreclosure Prevention Manager, and provided foreclosure prevention services and outreach to clients in ELM’s housing target area. Currently, she provides housing counseling and legal advice to seniors in Michigan, and HECM (reverse mortgage) counseling to seniors around the country.