Following NECIR report, readers donate to save senior’s home

Virginia Rayford, 92, hoped a reverse mortgage would help her stay in her house. Photo: Salwan Georges, The Washington Post.

Virginia Rayford doesn’t need to worry about losing her Washington, DC, rowhouse anymore.

The 92-year-old widow was facing foreclosure because of a $6,004 debt to the servicer of her mortgage loan due to unpaid taxes and insurance.

But dozens of people recently donated to help — from cash gifts of $10 to $1,000 – so that Rayford will be able to pay off her debt and do some needed repairs to the home in Washington’s Petworth area that she has owned for decades.

“I’m very pleased,’’ Rayford said. “I’m really surprised that so many people wanted to help a 92-year-old lady like me.”

Rayford’s story was detailed in a New England Center for Investigative Reporting article published last month that focused on a growth in foreclosures among seniors with federally insured mortgages meant to help elders age 62 years and older “age in place.”  The loans, known as reverse mortgages, allow seniors to borrow from equity in their homes with debts they don’t have to pay back until they die, move or fail to meet other requirements of the loan.

But an increasing number of seniors are facing foreclosure because they fell behind on property charges or failed to meet other requirements of the complex mortgage loans, according to the story published in the Washington Post. A HUD report issued last fall found that nearly 90,000 reverse mortgage loans held by seniors were at least 12 months behind in payment of taxes and insurance and were expected to end in “involuntary termination” in fiscal 2017.

Rayford said she knew she was supposed to pay taxes but fell behind in 2013 following family financial troubles. She sought a repayment plan from her loan servicer, Nationstar Mortgage, which denied the application, saying she couldn’t afford the monthly payments.

Her plight prompted a stream of sympathetic readers offering help. They included librarian Betty Culpepper from Columbia, Maryland, who formerly lived in DC. “It just struck me that she should not lose her house for a little less than $7,000,’’ Culpepper said. “I didn’t want that lady to be out in the cold.”

Ruth Royster, also of Maryland, said she cried after learning about Rayford’s troubles, concerned that elders obtain reverse mortgages without understanding all the fine print. Then she decided to make a difference. Royster launched one of two online sites for people to donate to Rayford’s cause.  “I said crying is fine, but what are you going to do?”

Rayford is one of hundreds of thousands of senior homeowners who obtained reverse mortgages before 2015 when the US Department of Housing and Urban Development implemented financial assessments to help assure that elders could pay property charges moving forward.

Jenny Werwa, a spokeswoman for the DC-based National Reverse Mortgage Lenders Association, said new consumer safeguards have significantly reduced the number of mortgage defaults over the last two years.

Also last month, HUD announced changes to the program to limit financial draws and adjust premiums for new loans, in hopes of curbing financial losses to the reverse mortgage program. Estimated at negative-$7.7 billion last year, the program is jeopardizing the Federal Housing Administration’s entire insurance fund that supports all ­single-family loan programs, including traditional mortgages, officials said.

Rayford’s attorney Joanne Savage said she was thrilled about readers’ generosity. Savage, a senior staff attorney with the nonprofit Legal Counsel for the Elderly in Washington, said she obtained the donations and will pay off the debt. The organization also has worked with the District of Columbia to obtain a senior discount to limit Rayford’s property taxes going forward.

Savage, however, said too often cases like Rayford’s go under the radar. The nonprofit has seen a 200 percent increase in reverse mortgage foreclosure cases since 2015 – and just this month succeeded in temporarily stopping the foreclosure sale of another elder’s home over a debt of $8,000.

“Every alternative should be considered before a foreclosure over such a small amount,’’ Savage said. “The harm is tremendously disproportionate.”

McKim can be reached at jenifer.mckim@necir.org. The New England Center for Investigative Reporting is based out of Boston University and WGBH public radio. This report was produced in partnership with the McGraw Center for Business Journalism at the City University of New York Graduate School of Journalism.