101-Year-Old Former HECM Borrower Allowed To Return Home

An onslaught of headlines regarding a 101-year-old Detroit woman who was foreclosed upon and evicted from her home after falling behind on reverse mortgage property tax payments circulated the Web on Monday. Two days later, the headlines stated that the Department of Housing and Urban Development had returned the keys to the house to its former owner.

While a positive outcome for the homeowner, some in the servicing industry were left scratching their heads about how HUD can make tax payments for a borrower who is in default—especially in light of a strong industry effort toward loss mitigation and resolving tax and insurance default—when servicers and lenders cannot.

RMD today learned the details of the situation from HUD.

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The loan, made to Texana Hollis of Detroit, was assigned to HUD in 2006, Brian Sullivan, a HUD spokesman told RMD. The borrower was current on her tax and insurance payments, for which her son, under a Power of Attorney, took responsibility.

The loan later went into default, and the borrower’s family members ignored all loss mitigation efforts prompted by HUD. The property went into foreclosure and fell under HUD ownership. In order to maintain ownership, HUD continued to keep up with the taxes and insurance on the property.

“We were absolutely thunderstruck when we understood that a 101-year-old woman was put out of her home,” Sullivan told the press earlier this week. “We just want to make sure that Mrs. Hollis knows that her home of many years is hers to live in for as long as she wants,” he said.

The initial headlines read “One dollar house gets foreclosed; 101-year-old granny gets evicted.” But the negative press aside, the new headlines including “HUD: 101-year-old can go home,” and “Feds pay taxes, let evicted 101-year-old keep home,” have left some within the industry with questions. Will this be the case for all HUD-owned reverse mortgage properties in default?

“It’s too early too tell what the long-term impact may be as a result of this action in Detroit,” one servicing manager told RMD. “However, I believe that by taking this action, HUD has backed themselves into a corner. How could they justify helping this borrower (who happens to be in their assigned portfolio) while not doing the same for a similar borrower, who has a same type of loan, who happens to be serviced by a lender?”

The actions appear to be in conflict with HUD’s guidance for HECM servicers, the servicing source said, which could cause problems when borrowers ask why a borrower in default in a HUD-owned property can remain in the home, but otherwise, cannot.

“HUD does not allow servicers or lenders to pay for the borrower’s defaulted taxes or insurance in order to cure the default,” the servicing manager explained. “As you can imagine, this could make it very difficult for servicers and lenders to work with borrowers in tax and insurance default when HUD is instructing servicers to do one thing—and is doing something completely different on their assigned loans.”

HUD responded, stating that the circumstances warranted an exceptional response.

“No one should consider this exception to be the rule,” Sullivan said. “This was an highly extraordinary situation given Mrs. Hollis’ circumstances.”

Written by Elizabeth Ecker

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  • It seems HUD has some policies for some homeowners and different ones for others.  What makes the circumstances so unusual?  HUD has zero credibility in this matter.  It seems to think it can give back the keys to the house and everything will be just right.  You cannot just put “the Jeannie” (yes our new industry spokesperson) back into the bottle.  What does HUD want us to tell our customers about defaults in assignment?  Does HUD have a favored outcome if certain standards are met and if so, what are those standards?
     
    Is it that the homeowner gave some of the money to a particular church that HUD or the White House favors?  Did she use some of the money to help elect some politicians that HUD or the White House wanted elected or reelected?  Is it that the homeowner was stressed beyond measure by the loss of the home unlike any before or after her?  Was it that the home is in Detroit, some kind of legislatively identified HUD HECM “free of penalties from default” zone?  Is it based on the age of the woman?  Is it her race?  Perhaps it is the reelection of our President which must be protected at all costs?
     
    HUD needs to get out in front of this and explain its action.  If the servicer did something wrong, well then, fire the servicer, publicly shaming it.
     
    If HUD is embarrassed by this situation, it will only get worse as servicers have to get the stick out and throw more elderly women out of their homes.  Everyone in default now knows all one has to do is get the press involved and HUD will turn over the keys to the house for life!!!  That is the standard HUD has now established.
     
    HUD could not have acted worse!!!  I guess the HUD legal department still has no idea what the term “precedence” actually implies.  We saw it in its nonsensical ruling on non-recourse, establishing lending limits under HERA, and once again in backing down when it is clear its servicer handled a matter with little to no finesse whatsoever.
     
    As Forrest Gump, the fictional descendant of General Nathan Bedford Forrest, CSA, once so eloquently stated:  “Stupid is as stupid does.”  And here is the moral of the story for those in default via the wisdom of Forrest’s mother:  “Life’s a box of chocolates, Forrest. You never know what you’re gonna get.”  It seems HUD has selected a particularly fine chocolate for those in default. 

  • It seems HUD has some policies for some homeowners and different ones for others.  What makes the circumstances so unusual?  HUD has zero credibility in this matter.  It seems to think it can give back the keys to the house and everything will be just right.  You cannot just put “the Jeannie” (yes our new industry spokesperson) back into the bottle.  What does HUD want us to tell our customers about defaults in assignment?  Does HUD have a favored outcome if certain standards are met and if so, what are those standards?
     
    Is it that the homeowner gave some of the money to a particular church that HUD or the White House favors?  Did she use some of the money to help elect some politicians that HUD or the White House wanted elected or reelected?  Is it that the homeowner was stressed beyond measure by the loss of the home unlike any before or after her?  Was it that the home is in Detroit, some kind of legislatively identified HUD HECM “free of penalties from default” zone?  Is it based on the age of the woman?  Is it her race?  Perhaps it is the reelection of our President which must be protected at all costs?
     
    HUD needs to get out in front of this and explain its action.  If the servicer did something wrong, well then, fire the servicer, publicly shaming it.
     
    If HUD is embarrassed by this situation, it will only get worse as servicers have to get the stick out and throw more elderly women out of their homes.  Everyone in default now knows all one has to do is get the press involved and HUD will turn over the keys to the house for life!!!  That is the standard HUD has now established.
     
    HUD could not have acted worse!!!  I guess the HUD legal department still has no idea what the term “precedence” actually implies.  We saw it in its nonsensical ruling on non-recourse, establishing lending limits under HERA, and once again in backing down when it is clear its servicer handled a matter with little to no finesse whatsoever.
     
    As Forrest Gump, the fictional descendant of General Nathan Bedford Forrest, CSA, once so eloquently stated:  “Stupid is as stupid does.”  And here is the moral of the story for those in default via the wisdom of Forrest’s mother:  “Life’s a box of chocolates, Forrest. You never know what you’re gonna get.”  It seems HUD has selected a particularly fine chocolate for those in default. 

  • It seems HUD has some policies for some homeowners and different ones for others.  What makes the circumstances so unusual?  HUD has zero credibility in this matter.  It seems to think it can give back the keys to the house and everything will be just right.  You cannot just put “the Jeannie” (yes our new industry spokesperson) back into the bottle.  What does HUD want us to tell our customers about defaults in assignment?  Does HUD have a favored outcome if certain standards are met and if so, what are those standards?
     
    Is it that the homeowner gave some of the money to a particular church that HUD or the White House favors?  Did she use some of the money to help elect some politicians that HUD or the White House wanted elected or reelected?  Is it that the homeowner was stressed beyond measure by the loss of the home unlike any before or after her?  Was it that the home is in Detroit, some kind of legislatively identified HUD HECM “free of penalties from default” zone?  Is it based on the age of the woman?  Is it her race?  Perhaps it is the reelection of our President which must be protected at all costs?
     
    HUD needs to get out in front of this and explain its action.  If the servicer did something wrong, well then, fire the servicer, publicly shaming it.
     
    If HUD is embarrassed by this situation, it will only get worse as servicers have to get the stick out and throw more elderly women out of their homes.  Everyone in default now knows all one has to do is get the press involved and HUD will turn over the keys to the house for life!!!  That is the standard HUD has now established.
     
    HUD could not have acted worse!!!  I guess the HUD legal department still has no idea what the term “precedence” actually implies.  We saw it in its nonsensical ruling on non-recourse, establishing lending limits under HERA, and once again in backing down when it is clear its servicer handled a matter with little to no finesse whatsoever.
     
    As Forrest Gump, the fictional descendant of General Nathan Bedford Forrest, CSA, once so eloquently stated:  “Stupid is as stupid does.”  And here is the moral of the story for those in default via the wisdom of Forrest’s mother:  “Life’s a box of chocolates, Forrest. You never know what you’re gonna get.”  It seems HUD has selected a particularly fine chocolate for those in default. 

  • Mr. Sullivan, I am the one who is thunderstruck by your picking and choosing who you are going to help when us lenders have no such option. HUD has mandated that we work diligently to cure the default, and the current foreclosure moratorium aside, and if unable to do so, requires us to move to calling the loan due an payable which in many cases will result in foreclosure. We don’t get to look at “extraordinary circumstances” and give passes because of someone’s age, health, years lived in a home, or anything else for that matter. The regs are cut and dried and allow no room for compassion as Ms. Jolley has commended HUD for, although I believe they did it strictly because it was making headlines.

    Mr. Sullivan and HUD owes us more than just passing this off as extraordinary yet at the same time, holding “our feet to the fire” and totally without the same opportunity to do the right thing.

  • Mr. Sullivan was “thunderstruck” that someone foreclosed? in Detroit?
     
    These foreclosures are driven by non-payment of TAXES. They are not driven by “falling behind” or non-payment of a mortgage. We need to make sure it is crystal clear what the catalyst is.

  • As much as we all would love to offer as much compassion and understanding to every situation in life, the cold, hard fact is that this is a business. If HUD makes similar decisions with all foreclosed borrowers, HUD will not exist for very long. The fact is, whether you are age 101 or 21, you execute a contract at closing. If you do not live by the rules, you are in breach of that contract. The potential penalties were spelled out. It’s simply not fair to the other homeowners that have already lot homes under similar circumstances.

  • I originate reverse mortgages in the metro Detroit area. It was Ms. Hollis 62 year old son, who lives with her, that was receiving the mail and disregarded the tax foreclosure notices. Per the Detroit News article she was not aware the taxes had not been paid. The irony her is Ms Hollis would have qualified for state and local funding to reduce the taxes owed. I have seen poor Detroit homeowners that paid no property taxes at all as they were subsidized through the state and city. The sad part is many homeowners don’t know programs like this exist. I consider this part of my fiduciary responsibility to inform potential clients of any state, federal or city programs that will assist with taxes, repairs or other obligations such as heating and cooling. If the loan office that originated the reverse mortgage had informed Ms. Hollis of these programs this would be a non issue.

    • gciungan,

      Maybe.  Were her insurance payments kept up to date?

      Will the state and city do something retroactively?

      Finally, why didn’t the HUD servicer try to find out what was going on and help them take care of the situation rather than getting them thrown out?  This is now the model.  Eviction came AFTER the new policy started.

      • The article I read did not make mention of the homeowners insurance but there are no aid programs I know of in Michigan that are retoactive that could have helped.

      • The article I read did not make mention of the homeowners insurance but there are no aid programs I know of in Michigan that are retoactive that could have helped.

    • gciungan,

      Maybe.  Were her insurance payments kept up to date?

      Will the state and city do something retroactively?

      Finally, why didn’t the HUD servicer try to find out what was going on and help them take care of the situation rather than getting them thrown out?  This is now the model.  Eviction came AFTER the new policy started.

    • gciungan,

      Maybe.  Were her insurance payments kept up to date?

      Will the state and city do something retroactively?

      Finally, why didn’t the HUD servicer try to find out what was going on and help them take care of the situation rather than getting them thrown out?  This is now the model.  Eviction came AFTER the new policy started.

    • gciungan,

      Maybe.  Were her insurance payments kept up to date?

      Will the state and city do something retroactively?

      Finally, why didn’t the HUD servicer try to find out what was going on and help them take care of the situation rather than getting them thrown out?  This is now the model.  Eviction came AFTER the new policy started.

  • what type of  son would let his mother’s home get foreclosed on FOR NONPAYMENT OF TAXES????
    I believe everyone in the RM industry should write and call the newspapers and tv about this ….   let get the correct facts out AND be pro active on the benefits  AND GOOD of reverses AND STOP BEING ON THE DEFENSE ALL THE TIME…especially when the news is only to capture a headline and never reports the full or true story…..

  • what type of  son would let his mother’s home get foreclosed on FOR NONPAYMENT OF TAXES????
    I believe everyone in the RM industry should write and call the newspapers and tv about this ….   let get the correct facts out AND be pro active on the benefits  AND GOOD of reverses AND STOP BEING ON THE DEFENSE ALL THE TIME…especially when the news is only to capture a headline and never reports the full or true story…..

  • what type of  son would let his mother’s home get foreclosed on FOR NONPAYMENT OF TAXES????
    I believe everyone in the RM industry should write and call the newspapers and tv about this ….   let get the correct facts out AND be pro active on the benefits  AND GOOD of reverses AND STOP BEING ON THE DEFENSE ALL THE TIME…especially when the news is only to capture a headline and never reports the full or true story…..

  • what type of  son would let his mother’s home get foreclosed on FOR NONPAYMENT OF TAXES????
    I believe everyone in the RM industry should write and call the newspapers and tv about this ….   let get the correct facts out AND be pro active on the benefits  AND GOOD of reverses AND STOP BEING ON THE DEFENSE ALL THE TIME…especially when the news is only to capture a headline and never reports the full or true story…..

    • Michael,

      I don’t think that this is such a unique case.  I would be more than shocked if there weren’t other very similar situations that servicers are working on now where there are no other family members to help with paying the borrower’s taxes and insurance.  It’s the unfortunate reality of these borrowers who can no longer afford to pay for their ongoing obligations under the terms of their mortgage.

  • It’s not that I don’t feel sorry for this woman, but in the end the homeowner has made a committment to paying taxes and insurance and has chosen her on POA. No one forced her to get a Reverse Mortgage. We are also unclear under what circumstances she got a RM. Perhaps she otherwise would’ve had a mortgage payment and the son would have let that go into default. She probably would’ve been evicted regardless of the type of funding she had. HUD probably only made this exception because she’s 101 and so they probably won’t have to stand by it long for that reason. If she had been 70, she probably would still be in the street.

  • It’s not that I don’t feel sorry for this woman, but in the end the homeowner has made a committment to paying taxes and insurance and has chosen her on POA. No one forced her to get a Reverse Mortgage. We are also unclear under what circumstances she got a RM. Perhaps she otherwise would’ve had a mortgage payment and the son would have let that go into default. She probably would’ve been evicted regardless of the type of funding she had. HUD probably only made this exception because she’s 101 and so they probably won’t have to stand by it long for that reason. If she had been 70, she probably would still be in the street.

  • It’s sad to me to hear people talk about “it’s only business”.  That’s the problem with business…no one has any compassion any more.  I’m not saying throw all contracts aside and let’s all just trust each other. That obviously won’t work in a world filled with greed and sin.  But regardless of HUD’s motives, a 101 year old woman received a blessing that changed her life, for however long she has left. Maybe the son had no money to pay the taxes for her and was devastated that she lost her home. While it would be great if there were certain criteria that could be established for lenders, services and HUD themselves to help as many hurting seniors as possible to keep from being foreclosed on, why are we going to complain and criticize HUD for doing the right thing in this particular situation.  The Bible says “If a man knows what is right to do and doesn’t do it, to him it is sin.” (James 4:17) We wonder why there is so much negative press about reverse mortgages, but it is not difficult to see how so many seniors have been taken advantage of because of not doing the right thing. I can’t help but get excited to see HUD do the right thing and bless Ms. Hollins. Let the chips fall where they may.  The right thing was done in this case. Now hopefully HUD will do the right thing as they deal with the onslaught of criticism to their decision.

    • No b.smith, HUD did the right thing when it booted the woman out of her house.  It did the merciful thing in trying to correct it but what it did hardly corrected the situation.  What is basically wrong is not what occurred but what did not occur.  HUD should have had its servicer work with the homeowner to see if the situation could be resolved.  While HUD and its servicers may have believed letter writing (and perhaps phone calling) was enough, it is clear the son was incompetent in handling the situation.
       
      What are HUD and its servicer to do when the POA becomes incompetent without a successor?  It seems sending a human to communicate with the responsible individual would have been the humane thing instead of sending in the “Gestapo” to terrorize this woman by throwing her out of her house just to stew in your own “waste water” in a wheelchair for hours at the mercy of the elements and others while leaving her in turmoil for two days.  Where were she and her things in the meantime?
       
      Do you really believe everything has been straightened out?  Where were her things in those two days?  What condition are they in?  Have they been left in total disarray?  Do you think this dear senior will ever sleep with as much peace as did before this happened?  If you think this was “the right” thing then I hope I never have to suffer your version of “right.”
       
      Oh yeah, HUD may say it will leave her in the home for as long as she may live but where is that in writing?  Is it binding or is it the same as Mortgagee Letter 2008-38, something which can be rescinded at any time?
       
      From your translation of the Bible, please find the verses that explain why helping this woman in this way is the right thing to do but throwing out other single elderly women is the right thing to do?  This is a mortgage not a social program.
       
      [Please stop the Bible thumping.  The translation you use was not even printed until long after World War I.  Our country was founded on the Constitution.  We are a nation of laws, not subjectively chosen verses from some modern translation of the Bible.  My ancestors fought England for religious freedom over two centuries ago, not to establish their own church and Biblical views as the state church and religion.]

  • Please just use your common sense.  Lender’s cannot just sell a reverse mortgage and walk away from the consequences to the elderly borrowers.  Commenting it is “just business” ignores the fact that every reverse mortgage has an impact on the elderly, their life and quality of life at the end of life.  Is the sale so important that outcome for elderly borrowers doesn’t count?  Stating that “regulations and laws” are required to be followed so the property must be taken or it sets a precedent is frightening.  What about the people who were sold the reverse mortgage that caused this situation?  When are people giong to come first in reverse mortgages?  It’s not enought to say they help seniors – unless you actually know HOW it will help a senior according to their own personal, financial and helath circumstances. Seniors can not understand or make a complex financial decision and be expected to know what the outcome will be for them on their own. 

  • @Sandy Jolley – “Seniors can not understand or make a complex financial decision and be expected to know what the outcome will be for them on their own.”

    First of all, seniors are adults. I think some of the younger ones in their sixties would take exception to your comment. One of the loan officers at my company is 64 and is SELLING the reverse mortgage. This lady is an exception, not the rule, of the competence of seniors to know their own business. Secondly, we have counseling procedures in place supposedly to make sure that they do understand it. Third, the woman had a POA – no one was expecting her, at 101, to understand anything. The son was stupid and we cannot be accountable for stupidity and mistreatment of the elderly by their children, which in my opinion is what this story is really about. What everyone should really be shouting is that this son’s POA be yanked and her affairs get taken over via a conservatorship or another option.

  • Ms. Jolley,
     
    No product is perfect.  Here are three examples:  1) Cars kill elders, children, the healthy, the unhealthy, and do tens of billions of dollars in property damage as well.  They pollute and do physical harm to millions annually as a result.  What should we do about cars?  2) Few life insurance terminate in paying benefits.  Over 80% end as a result of the policy owner no longer being able to make premium payments.  Does that mean life insurance is a bad product or should be terminated?  3) Millions have lost large portions of their wealth and retirement income in the last decade in the stock market, especially seniors who will never be able to recover those losses.  Should we scrap the stock market or try to improve it through better laws and rules?
     
    To stop ants from getting into our house we use boric acid with a little sugar.  It works great but don’t try it on your food.  There are warnings on the product and most sellers try to provide warnings when it is purchased.  There are even labels on the bottle.  It is generally safe but some mishandle it.  What are we to do because of actual mishandling, take it off of the market?  I hope not.
     
    With HECMs we are not talking about the product but the use of the proceeds or the increased cash flow due to no monthly mortgage payments of principal or interest.  Too many seniors want more than they have and rather than use the proceeds prudently they squander and waste this great product.  Despite originator warnings, counseling, and mortgage statements, others treat the proceeds as if they had just won the lotto.  That is nothing new and laws and rules will never turn that around.
     
    Yes, in the case above the HUD servicer could have done better, much better.  HUD owned the loan at this point through a process called assignment.  At the point the loan is assigned to HUD, the original lender is no longer involved in any part of the process.  So this case is not about a lender failure; it is clearly a failure of the HUD servicer, if not HUD itself.  The son was empowered to act on behalf of the mother but failed at every opportunity (and there were many).  You would have done much better than this son.
     
    The HUD servicer did the right thing by kicking this dear woman out of her home (but it could have done better long before that).  We expect many more of these to occur in the not too distant future.  So what will HUD do, order us to kick these dear seniors out for failure to pay their obligations and then like Superman they swoop in and hand the seniors their keys back?  How awful that would be.  Worse will this make seniors think HUD is not serious or if there is sufficient press HUD will give those seniors a second chance?  So HUD is telling us to prepare to start kicking out borrowers who are in default and will not cure it.  What should we do ignore this legal obligation and ignore HUD to the financial loss of the owners of our companies?  HUD and its servicer have created a mess.  HUD is always warning about headline risk.  What is this????
     
    I wish you and your family the best.  Your situation is one that tugs at all of our hearts.  We are not heartless but like those who make cars, most of us do our best to make sure the product is not only safe for use but we try to insure the buyer understands how to use the product not only through our own efforts but also through counseling.  We are not perfect but we try.  The story above sickens most of us, including most of the fine people at HUD.

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