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Even with help, Tampa Bay's elderly with reverse mortgages can struggle

 
After taking out a reverse mortgage, Juanita Kemmlein, 69, of Seminole Heights later fell on hard times and turned to the Elderly Mortgage Assistance Program to pay property taxes and insurance on her home. But now she has no money to replace a leaky roof and repair other damage in the home.
After taking out a reverse mortgage, Juanita Kemmlein, 69, of Seminole Heights later fell on hard times and turned to the Elderly Mortgage Assistance Program to pay property taxes and insurance on her home. But now she has no money to replace a leaky roof and repair other damage in the home.
Published Oct. 11, 2015

TAMPA — Juanita Kemmlein pulls back a heavy gray tarp and reveals the ruin that once was her bedroom.

Black mold speckles the walls. The ceiling is rotting away, the wooden joists splintered and jagged as though chewed by a giant rat. As she steps into the barren room, the floor suddenly buckles beneath her slippered feet.

She begins to cry.

"I need some help,'' she says.

As bad as things look, the 69-year-old Kemmlein considers herself lucky in one regard. She is one of just 44 Tampa Bay homeowners and fewer than 700 statewide who have been able to remain in their homes — no matter how decrepit — because of the federally funded Elderly Mortgage Assistance Program.

Dubbed ELMORE for short, the program helps seniors with reverse mortgages who have a hard time paying their property taxes, homeowners insurance and other property-related expenses. The program covers up to $25,000 of such costs through loans that don't have to be repaid if the borrower stays in the house for at least two years.

But the program can help only so much, as shown by the plight of Kemmlein and other bay area participants. Most are too old to work and save money for taxes and insurance, let alone costly home repairs that the program doesn't cover.

And when the assistance runs out, some will face foreclosure on the homes they have lived in for decades. If that happens, they must move at the very time in life when change can be especially wrenching.

That's what worries Kemmlein the most.

"I've been here for 38 years,'' she says of her 900-square-foot bungalow. "I worked in a nursing home so I know how people are when they're taken away from their homes.''

Kemmlein is among the 648,000 Americans with reverse mortgages, touted in TV ads as a "safe, effective financial tool'' by actors including Henry Winkler, Robert Wagner and Fred Thompson.

Insured by the federal government, reverse mortgages enable people 62 and older to turn part of their home equity into cash. The homeowners can take a lump sum or receive monthly payments, or a combination of the two. Either way, they don't make monthly principal and interest payments.

When the homeowners move or die, the amount of the loan and the accumulated interest must be repaid. If there is enough equity left, the owners or their heirs can sell the home, pay what's owed to the lender and keep the rest.

Reverse mortgages are attractive because they can be used to pay off existing mortgages and provide extra money for travel, renovations and other discretionary expenses. The potential downside: Borrowers are responsible for paying all required expenses — taxes, insurance, homeowners association dues. If they don't, the lender can immediately start to foreclose.

As the economy soured, thousands of reverse mortgages fell into delinquency. In November 2013, the Florida Housing Finance Corp. announced it was starting the Elderly Mortgage Assistance Program with $25 million the state had received from the federal Hardest Hit Fund.

The program would lend up to $25,000 to reverse mortgage holders 62 and older who couldn't pay their property expenses because of a "hardship'' — including, but not limited to, medical bills, disability, divorce, unemployment and natural disasters.

"This new program should help them sustain their homes, while they look at ways to free up income to pay their homeowner expenses moving forward,'' said Steve Auger, the housing agency's executive director.

The program got off to a slow start. By the end of 2014, it had helped only 401 seniors statewide.

In a recent report that blasted Florida for lagging behind other states in using Hardest Hit money, federal investigators said the Elderly Mortgage Assistance Program took too long — as much as 10 months — to process applications and had trouble reaching seniors not familiar with the Internet.

Ronald Endicott of Gulfport said he never would have known about the program if his reverse mortgage company, James B. Nutter & Co., hadn't pressed him to apply.

Seven years ago, he took $30,000 from a reverse mortgage, spending it on "truck repairs and other everyday stuff that costs you money.''

"I didn't waste it,'' said Endicott, a wiry man of 72. Despite living frugally, he fell behind on taxes and insurance after he developed what he calls a "bum knee,'' had a hip replaced and could no longer work.

Last October, the Elderly Mortgage Assistance Program spent $5,464 to bring Endicott's payments up to date — the money went directly to Nutter, one of the nation's largest reverse mortgage lenders. Endicott is grateful for the help, but worries about what will happen next year when he'll owe at least $2,600 for taxes and insurance.

"I will come up with it even if I have to suffer,'' he vowed. "I got two dogs.''

As Endicott spoke, he stood outside his home of 27 years, now sorely in need of painting, screen repairs and pruning of the dense shrubbery that has nearly engulfed the front. His dogs, barking furiously, repeatedly flung themselves against the sliding glass door.

Reluctant to admit it, Endicott knows he's in a tough spot.

The lender could foreclose on the house if he doesn't pay the required property expenses. But where will the money come from and where would he go? Although the federal assistance is supposed to "free up'' income to cover future expenses, the only income Endicott has is $765 a month in Social Security.

"You can't rent an apartment for less than $700,'' he said, "but that's about all I make."

A few miles away in St. Petersburg, Fadie Mae Clarkson has lived in the same house for 47 of her 78 years. In 2007, she and her husband, a long-distance trucker, got a reverse mortgage that they used to pay off an existing mortgage, take care of some bills and fix up the home they shared with a disabled daughter and a chronically ill son.

After her husband's death, Clarkson couldn't keep up with the taxes and insurance. She doesn't recall how she learned about the Elderly Mortgage Assistance Program — "I'm kind of forgetful now'' — but with a relative's guidance she qualified for $17,829 in assistance in July 2014.

"It has really, really helped me,'' she said. Yet she doesn't know how she'll be able to pay the property expenses when the assistance ends. "I'll just have to scuffle to find it.''

Like Clarkson, most of the bay area seniors receiving the mortgage assistance live in modest homes appraised at less than $150,000. But the aid has also gone to the owners of a $356,000 waterfront home in Madeira Beach and a gulffront condo on St. Pete Beach appraised at $353,000.

Juanita Kemmlein lives in what has become one of Tampa Bay's hottest neighborhoods, Seminole Heights, north of downtown Tampa. Buyers are snapping up the quaint craftsman-style bungalows for $275,000 and more. Kemmlein's home, though, has fallen into such disrepair it is worth even less than it was seven years ago when she got a reverse mortgage for $101,000.

Back then, she paid off another mortgage and did some projects around the house.

"I fixed up my bedroom real pretty,'' she said, "and put some carpeting down.''

But the man she hired to repair a leaky roof did such a poor job that water continued to seep in, causing huge cracks in the ceiling and spawning mold that spread from the bedroom to the closet to the kitchen. Then Kemmlein lost her job as a nursing assistant and fell behind on property taxes. Because the roof was in such bad shape, she couldn't get insurance and was forced into a high-cost policy by the reverse mortgage company.

The problems had grown overwhelming by last year when a brochure on the Elderly Mortgage Assistance Program arrived "out of the blue,'' Kemmlein said. She applied and was approved in January for $20,352, which went to pay taxes and insurance.

But she has less than $700 a month in Social Security to cover those expenses in the future and no money to replace the leaky roof and repair all the damage it has caused. She had to move her bed and dresser into the living room because the bedroom is so filled with mold it is uninhabitable.

Like others, Kemmlein is thankful for the mortgage assistance but she also feels trapped. Even if she wanted to sell — which she doesn't — she would have to pay back the $20,352 if she moved within two years.

"I'm stuck,'' Kemmlein said.

Given that most seniors lived on fixed incomes, why did officials think they could "free up income'' to bear all the costs of homeownership after they tapped out their reverse mortgages and exhausted the mortgage assistance?

Cecka Green, a spokesperson for Florida Housing Finance Corp., said applicants were approved only after a "benefits checkup'' showed if any other local, state or federal resources were available to help them sustain their homes. Each successful applicant also had a financial plan.

"If for some reason subsequent to the (mortgage) assistance being applied the plan is not maintained or the elder encounters an additional hardship, the ability of the elder to sustain the home could be jeopardized,'' Green said.

There could be some help in the offing. In August, housing agency board members agreed to increase the amount of mortgage assistance from $25,000 to $50,000. Kemmlein and other current recipients will be re-evaluated to see if they qualify for more aid.

However, Green added, "just because the amount has been increased does not necessarily mean that current participants absolutely need the increased amount."

At this point, Kemmlein is current on her taxes and other property charges because of the mortgage assistance. She has learned to survive on very little money, she says, and could scrape together enough to stay in the house until she dies if she didn't have to worry about the mold and the roof and the cracks.

For now, she half-jokingly tells visitors, bring a hard hat in case the ceiling falls.

Contact Susan Taylor Martin at smartin@tampabay.com or (727) 893-8642. Follow @susanskate.