Group works to regain tax deferrals for seniors with reverse mortgages
Almost 1,750 seniors statewide had to make property tax payments in November
Some local seniors got a dose of bad news last fall - weeks before the Nov. 15 property tax payment deadline - when they learned that they had been disqualified from Oregon's tax deferral program.
The Legislature in 2011 reformed the tax deferral program to keep it self-sustaining by disqualifying almost half of the 10,500 program participants, including nearly 1,750 seniors with reverse mortgages.
Grace Goebel of King City and a neighbor are two of those who were disqualified and had to come up with the money on short notice.
"You reapply every April by filling out the form, and the 2011 form asked if you had a reverse mortgage," Goebel said. "I had never been asked that before, and I called to ask why it was pertinent."
Goebel was told that the situation was in flux at that time but she would be notified when a decision was made.
"My neighbor and I were notified in September that we no longer qualified and would have to pay our property taxes," Goebel said. "If my son hadn't helped me, I don't know what I would have done."
That was the dilemma facing not only seniors but other low-income and disabled people across the state, and one of the problems with the program is that there are not good statistics on who is in it, according to Jody Wiser of Tax Fairness Oregon.
"There is very little data, and we are recommending that the Legislature do a study - otherwise it's all guesswork," Wiser said. "There should have been more questions on the form that was sent out."
Wiser is part of a committee made up of representatives from such organizations as Elders in Action, Impact NW, the Oregon Advocacy Coalition for Seniors and Persons with Disabilities, Oregon Homeowners United, the Oregon State Council of Retired Citizens, and United Seniors of Oregon that is working for revisions to be made to the program.
The coalition of senior advocates Dec. 16 issued a statement urging changes in Oregon's Senior and Disabled Property Tax Deferral program during the 2012 legislative session.
"The group is calling for the immediate and full reinstatement of all former program participants who were disqualified because they had reverse mortgages… " said David Raphael, acting chairman of the Southeast District Senior Advisory Council (SEDSAC), in a prepared statement. "This was particularly hurtful because the state was, in effect, breaking its longstanding promise to help those low-income homeowners with their property taxes.
"Many seniors depend on both reverse mortgages and property tax deferrals to stay in their homes. They have no other options and enrolled in the tax deferral program with the clear understanding that reverse mortgage holders were eligible."
The coalition is recommending that former program participants be reinstated if they were disqualified only because they have reverse mortgages. It also is urging the Legislature to commit itself to a broader reform of the program during the 2013 session.
A reverse mortgage is a type of mortgage by which homeowners borrow money against the value in their homes with no repayment required until they die or the home is sold.
"Some people get a lump sum, and others get a line of credit," Wiser said.
The tax deferral program started in 1963, and in November 2010 it ran short of funds due to the state's loss of revenue over the past several years. Since 2006, repayments have dropped by almost 30 percent from nearly $20 million to just over $15 million, creating a shortfall in funds available for the state to pay participants' taxes, according to information released by the coalition.
Many seniors with reverse mortgages who were in the tax deferral program have enough equity in their homes for their property taxes to be paid in the future, coalition members said.
"Equity in the house is what protects the state - not money elsewhere," Wiser said. "Some people have half a million dollars in a Charles Schwab account or have their taxes deferred on a half-a-million-dollar house, and they could afford to pay their taxes, yet they have been eligible for the tax deferral program.
"We are looking for ways for lower-income people to stay in their homes."
The coalition of seniors and senior advocates "would like to see those who are in financial need of tax assistance remain in the program while those of ample means are disqualified," the coalition said.
Its goal is to provide a property tax deferral option for seniors and disabled people of limited means who have owned and lived in their present homes for five or more years and have adequate equity to protect the state's loans.
The Legislature's House Revenue Committee will hold a hearing on the deferred tax program Friday, Jan. 20, from 1 to 5 p.m. at the Capitol, and people affected by the 2011 legislative changes are encouraged to attend and testify.