One wall in Earlene and Willie Williams’ living room in Southeast Austin is covered almost entirely with family photos – something that’s easy to do when you have 11 kids, 14 grandkids and more than two dozen great-grandchildren.
“Matter of fact, I had so many pictures I couldn’t even put them up on the wall,” said Earlene, 73.
The couple’s aging home not only holds their memories, but also much of their wealth. Both retired, they live off a fixed income totaling about $1,300 a month. So, when a brochure for a reverse mortgage was placed at their front door in 2010, they reasoned they could use the money to make repairs to the house.
“I said I oughta try this, we oughta do this here,” Willie said. “We’ve been in this house for a long time, you know, we’ll get some extra money.”
The couple went ahead and took out $57,239 as a reverse mortgage, which allows homeowners to borrow against the value of their property. But they didn’t fully understand the stipulations of the loan, which require homeowners to pay their property taxes and insurance on time. The Williamses believed they were still eligible as senior citizens in Texas to defer payment of their taxes.
When the Williamses fell behind on their taxes and insurance last year, the lender came to collect the money. The couple couldn’t pay.
Eventually, they received a foreclosure notice in the spring, and their house was sold in June. (The buyer did not respond to a request for an interview.) The new owner has tried to evict the Williamses, but the court has dismissed these filings.
"All we want is a roof over our heads," Earlene said.
Reverse mortgages resulting in foreclosures have become more common in Central Texas, according to one legal aid provider in the region.
“I’m getting the sense that we’re in a crisis,” said Molly Rogers, a lawyer with Texas RioGrande Legal Aid who is also representing the Williamses in a lawsuit against their reverse mortgage lender. “Every day I am drowning in reverse mortgage cases, and they just keep coming in.”
Rogers and her legal team started tracking reverse mortgages in 2009. Since then, the number of cases they’ve handled per year where reverse mortgage borrowers were facing foreclosure has jumped from three per year to more than 20.
A 2016 HUD report estimated that more than 18% of reverse mortgages were headed to default because of unpaid taxes or insurance.
Rogers said people who took out reverse mortgages in the years following the recession of the late 2000s are starting to experience problems with them; she blames a lack of education and HUD’s failure to enforce limits on how lenders collect on them.
“People look at the upfront benefits. They don’t think about how it’s going to affect them five, 10, 15 years down the road," Rogers said, "and it is a very expensive way to pay off debts.”
People taking out reverse mortgages must get financial counseling. Peter Bell, CEO for the National Reverse Mortgage Lenders Association, said that undercuts the argument that homeowners don’t know what they’re signing up for – specifically, that borrowers must stay current on their property tax payments.
“I find it hard to understand how someone could say that I got this reverse mortgage but I didn’t know I had to pay the taxes,” he said.
After combing through more than 1 million loan records, reporters and researchers with USA Today published an investigation into reverse mortgages in June. They found the rate of reverse mortgages ending in foreclosure is six times higher in neighborhoods where the majority of residents are black.
Rogers sees a similar pattern in Texas – including with the Williamses, who are black.
“I think it’s a form of equity stripping,” she said. “These folks have managed to fight their way into homeownership. They did it. They worked hard their whole lives. They built something that they could raise a family in.”
According to recent census numbers, the rate of black homeownership in the U.S. is 40%, compared with 73% for white homeownership. Rogers said this not only affects Earlene and Willie Williams, but also their many grandkids and great grandchildren.
“Not only have they lost that investment, they’ve lost the ability to pass that wealth onto their kids,” she said.
The Williamses originally began receiving notices that they were in default on their reverse mortgage last summer. The lender had gone ahead and paid the property taxes and insurance they owed, eventually sending the couple a bill for more than $5,000. They said they tried to keep up with payments, but several deaths in the family made it difficult – including the death of their 34-year-old son, who had a heart attack in April.
“It’s been like one thing after the other, where we can’t emotionally get stable and then this comes up,” Earlene said.
The Williamses' lawyer has sued the mortgage lender and the new owner, claiming the former failed to properly notify the Williamses that it would seek foreclosure. (KUT reached out to the mortgage lender, Mr. Cooper – formerly called Nationstar – but the company said it does not comment on pending litigation).
According to Rogers, the current homeowner has offered to rent the home to the Williamses for around $1,350 a month – but that’s more than they collect in disability and Social Security.
Earlene said if she and her husband have to leave, she knows her memories don’t live in her home, that she can take them with her.
“But to know that we experienced the fact of losing [our son] here in the house. It’s just ..." she said, trailing off. “I don’t want to leave. I really don’t. And I’ll fight to keep my house.”