There is nothing great about the one-story White House in the middle of Roxbury Drive in San Bernardino, especially in its current state of disrepair.
But for Juan Gutierrez, this house is the house. As a young man, he worked in construction, saved up for a down payment, and in 1968 bought the three-bedroom house where he and his wife raised their three children.
And then, in 2014, he was kicked out in a dispute with his reverse mortgage lender that continues to this day. It’s kind of a dispute that could become more common in the months to come as COVID-19 pushes more seniors to the brink of financial disaster, prompting some to resort to reverse mortgages even while others. are lacking.
Gutierrez’s pain is so deep with the loss of his home that some days he walks from his neighboring apartment to Roxbury Drive just to sit outside the abandoned and vacant house. He looks at the comings and goings in the street, imagining himself at home.
A few weeks ago, when I met him there, Gutierrez sat in a chair on the porch. Behind him was a closed window and a red tag warning visitors not to enter the condemned property.
Gutierrez, 77, leaned on his cane, got up from his chair and carefully walked across the front yard to the sidewalk. He pointed to the paving work he had done decades earlier, when he was young and healthy, before a work accident made him disabled with no income other than disability insurance.
His 54-year-old son Raul, who was at home with his father the day I visited, told me that his father was determined to honor a wish he made many years ago, before his woman does not die of cancer.
“He told my mother that he would keep the house in the family forever,” Raul said.
But that’s a question the courts will decide. Gutierrez sued his lender in 2018, alleging fraud, breach of contract and elder abuse. The lender has denied all the allegations and asked for the case to be closed, but Gutierrez still hopes to have his day in court.
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If you turn on your television for an hour or more, you will likely see actor Tom Selleck serving as a promoter for a leading lender and promising that “a reverse mortgage is not a trick to steal your house.” And it’s true that a reverse mortgage can be a great way for people 62 and over to pay their bills and stay in their homes longer. The owner primarily borrows against the equity in the home, and when the owner dies, the loan must be repaid by the surviving parents or heirs. If this is not possible, a common way to settle the debt is to give the house to the lender.
But reverse mortgages have also been a source of controversy, and some lenders criticized and fined for failing to disclose the risks as well as the benefits.
The fine print is considerable on reverse mortgage contracts, and each year, heaps of them end up by default. Housing advocates tell me that some homeowners are unclear whether they are still responsible for paying taxes and insurance on their property, or that these costs can go up.
Joanne Savage of Legal Counsel for the Elderly, an AARP affiliate, told me that low-income people of color are often involved in reverse mortgage defaults in Washington, DC, where she represents homeowners, and that it anticipates more defaults after the moratoriums on COVID-related evictions lifted.
Savage said that today, with so many seniors affected financially by the pandemic, new protections for senior homeowners may be needed, especially given the scarcity of affordable housing for those on fixed incomes.
When I described the events that led to Gutierrez losing his home, San Francisco lawyer Ingrid Evans, who specializes in elder abuse and financial fraud, was not surprised.
“It happens all the time,” Evans said. She could not comment on the specifics of Gutierrez’s situation, but noted that some “lenders are ridiculously aggressive … and are always looking for loopholes, and they will grab them in a minute.”
Evans said poor homeowners often struggled to find affordable legal help, and even if they did, they ran into teams of lawyers hired by companies that work for some of the country’s largest financial institutions.
Beverly Hills litigation attorney Michael Waddington, who represents Gutierrez, said he found out about his fate through an acquaintance and took on the case four years ago. Gutierrez lived in his car and his couch surfed for a while after losing his home. For the past two years, Juan has been staying in an apartment paid for by the Waddington law firm.
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To step back a bit, Gutierrez bought this house in better times, when he was making a good living. But in late 1968, the same year he bought the house, his construction company was laying underground pipes for a Big Bear mall when a collapse buried him. Gutierrez told me he was pulled from the rubble with bones in his lower back and a crushed pelvic area. Both knees were also injured and he was permanently disabled.
The family survived for decades on Gutierrez’s disability insurance, but the budget was still tight. With the aging of the house, Gutierrez could not bear the maintenance costs. When he saw advertisements for reverse mortgages offered by Bank of America, he thought his financial troubles were over.
For Gutierrez, who took out a $ 60,000 reverse mortgage with Bank of America in 2009, the rewards were numerous. He still had to pay the monthly taxes and insurance on his property, but having so much cash on hand allowed him to pay for things he couldn’t afford before.
“I fixed the roof… bought a used car, painted the interior and exterior of the house, widened the driveway,” Gutierrez told me.
But three years after signing the contract, the Bank of America turned over the mortgage to Nationstar Mortgage and Champion Mortgage Co. The new lenders claimed Gutierrez was behind on his insurance payments and needed a loan. additional insurance policy, according to Gutierrez and his lawyer. .
Waddington called this a David and Goliath case, claiming Gutierrez was kicked out of his own home without cause. Nationstar Mortgage argues in court documents that Gutierrez violated his contract by missing scheduled payments, despite numerous attempts to negotiate a new payment plan with him. The company also said Gutierrez filed a lawsuit after the statute of limitations expired. A Nationstar media representative told me that the company does not comment on pending litigation.
Gutierrez says he was unaware that Bank of America assigned his reverse mortgage to another company and that he was confused about the mail from Nationstar and Champion, assuming it was unwanted solicitation. Gutierrez told me that he believed under his contract insurance payments were covered by Bank of America. But when the new mortgagee convinced him it was his responsibility and that he was in arrears, he agreed to a monthly repayment plan.
Gutierrez says he made the new payments, but Nationstar argues in court documents that Gutierrez did not return a signed copy of this new repayment agreement in a timely manner. Bank documents indicate that while Gutierrez was trying in good faith to comply with the new requirements and payments, Nationstar had already started foreclosing on his property.
The house was sold while Gutierrez was still living there, Waddington says, and the new owners went to court to evict Gutierrez, who was evicted by police. For reasons not clear to Waddington and not spelled out in court documents, the sale was called off.
When Gutierrez discovered this and learned that the buyers had left the property, he returned to his house, which had then been emptied for renovation, with plumbing and electrical systems ripped off. The house was condemned because of the state it was in, and Gutierrez, who could not afford to repair it, was kicked again.
You’d think Gutierrez’s nightmare couldn’t get darker, but it does. Waddington says Gutierrez is still technically the owner of the house on Roxbury Drive, and that the state and town of San Bernardino are suing him to bring the damaged property up to code. The lender, meanwhile, charges Gutierrez taxes and insurance, as well as compound interest on the debt, with an outstanding balance now exceeding $ 100,000.
“He was wrongly evicted from his own house, which was then destroyed… and they still send him bills for a house he can’t live in because it was condemned by the city,” Waddington said .
Gutierrez told me that as long as he can, he will fight for the right to go home.
The bottom line is that reverse mortgages can be attractive to some borrowers. But they are also complicated and no one should go into them without understanding all the terms. For more information on reverse mortgages, talk to a financial planner or review the information at the National Council on Aging (go to NCOA.org and click on Home Equity) or the Consumer Financial Protection Bureau (go to consumerfinance.gov and click on Consumer Education, then on Reverse Mortgages.
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