A legislator in Montgomery County, New York recommended confronting an issue of lost tax revenue and foreclosure through the use of a little-used instrument: a reverse mortgage.
During a meeting of the committees of the Montgomery County Legislature which took place on July 21, legislators discussed that the county recorded as much as $1.5 million in unpaid property taxes outside of one city, which is sizable enough to have a potentially negative impact on the fiscal health of the county government, according to local news outlet the Montgomery County Recorder.
“The unpaid taxes account for 5% of the county’s $30.6 million tax levy and is greater than the entire property tax levy increase ($1.45 million) passed by the county legislature in 2019,” according to the Recorder.
Robert A. Purtell, a legislator from Montgomery County’s District 9, shared that a more proactive approach to communicating with residents who are delinquent on their property taxes could make a big difference in terms of collecting on the lost revenue, including providing information about financial assistance programs and products that can help them to more easily make their tax payments. One solution he asserts could both shore up the missed tax payments and stabilize the financial lives of seniors is a reverse mortgage.
“What if the person was an 80-year-old woman with equity in her home, and she can get a reverse mortgage on her house — she doesn’t know that’s an option, or that she could get a home equity loan to pay her taxes,” Purtell said at the meeting. “If we could collect 10% of that $1.5 million — $150,000 — and we can make someone’s life better, isn’t that what we’re here to do?”
When reached for more of his perspective by RMD, Purtell related that his primary employment is as a real estate broker so he’s previously been exposed to the reverse mortgage product category, albeit from a different end of the spectrum.
“I’m a real estate broker, and have done the foreclosure end of reverse mortgages for Fannie Mae,” Purtell told RMD. “I’ve seen people use them for less important things, so using them for something like this makes sense.”
During the July 21 meeting, Purtell also described ways in which a reverse mortgage or home equity loan could help more properties avoid foreclosure problems.
“We avoid a vacant house that becomes a zombie property, and that person is in a better cash position rather than the last day that they’re allowed to be at their house,” Purtell said according to the Recorder. “Can we increase our cash flow? Can we reduce the amount of foreclosures that we have? Can we stabilize neighborhoods because properties aren’t going through foreclosure?”
When asked about the reaction of his colleagues to a reverse mortgage solution to this problem, the reception was mixed, Purtell said.
“[My colleagues shared a] lukewarm reception, but I’m going to continue to try to pursue that,” he told RMD.
The tactical use of a reverse mortgage could help an elderly resident of the county to stabilize their financial situation in an appropriate scenario, Purtell explained.
“It’s a great option for an elderly person that already may be experiencing financial difficulty, that can then use this kind of product to ‘right the ship,’” he said.
Providing more information about financial products and programs like a reverse mortgage can help to avoid a problem that many municipalities have concerning passivity in their collection of necessary property taxes, he said.
Read the meeting report at the Recorder.