José Sajiún Soto, an 82-year-old man who considers himself “Dominican”, remembers the television advertisement in which Gilbertito Santa Rosa offered “mortgages without payments.”
In 2013, don José signed an inverted mortgage or reverse for his property in Las Monjas, a three-story building divided into four houses that he built little by little with his own hands in the 1980s, when the neighborhoods of Hato Rey were victims of expropriations to give he passed to what is now known as the Golden Mile. He has been in the Las Monjas community for more than 40 years, since he moved from the Dominican Republic.
Like many who have seen the propaganda that refers to these mortgages as "federal loans", don José understood that it was "an aid" from the United States Government for older people, who would receive money without paying anything.
He thought it was good business.
"I signed like 400 or 500 papers, "he told reco around the day the mortgage closed reverse at a branch of Moneyhouse, a financial institution with offices in San Juan.
His daughter, Ramona Soto, interrupts him to ask if he read the documents before signing .
“That is a letrilla that, if one starts reading that in 2013, we reach [año] 3000 and we are not finished. There is no one to read that, "replied Don José. “Then they gave me my check for $ 66,594.50. I still have it by heart. I even wrote it down in my notebook, the same day they gave me the check, which was May 13, 2013. ”
Far from being a help from the federal government, mortgages reverse are a Financial instrument more sophisticated than the mortgage or common loan, and that allows people over 62 years of age to borrow money against the value (or equity ) of their homes.
In recent years , reverse foreclosures for noncompliance with technical requirements are at their highest level in the United States . Puerto Rico is one of the places where this problem occurs the most, almost twice the US average, found an investigation by USA Today and the Center for Investigative Journalism (CPI), in collaboration with Grand Valley University State and with the support of the McGraw Center for Business Journalism and the Economic Hardship Reporting Project .
Ramona, furious with Her father because, according to her, he mortgaged the property unnecessarily, reported that they had let him sign without reading, without fully understanding what it was, without being accompanied by a relative. Since then, she has been helping her to keep up with insurance payments and paperwork so she doesn't lose her home. At times he has sought the help of the Legal Clinic of the Inter-American University of Puerto Rico.
"If they told you all things as they are, I would not have gotten involved," lamented Don José.
Between 2014 and 2018, one in four people whose mortgages reverse were foreclosed on in Puerto Rico lost their home for technical reasons, such as failure to pay property taxes or insurance, according to a report from the US Office of the Comptroller (GAO). Commonly, these mortgages are terminated or foreclosed when the owner dies.
The problem worsened in 2019: three out of four foreclosures reverse were due to technical problems, according to data from the Office of the Commissioner of Financial Institutions (OCIF).
At the United States level, the figure during this period was one in seven.
To remain in technical compliance, reverse mortgages require that the person resides at all times on the property, which must be kept in good condition, with current property taxes and insurance. They do not have to make monthly payments, as they are promoted.
Last year alone, 1,255 of a total of 1,617 of these mortgages, were foreclosed on in Puerto Rico for technical reasons and not because of the owner's death.
Moneyhouse led the business
Although he admits that it is not an instrument for all Puerto Ricans, David R. Levis, president and chief executive officer of Moneyhouse, defended mortgages reverse as a "gift from God" for those people seniors who lack sufficient income during retirement to cover their expenses.
Since 2007, Moneyhouse has dominated the mortgage market reverse in Puerto Rico with 40% of these products. It is followed by Senior Mortgage Bankers, with 20% of the market. The president of this company, Joseph Levis, is a cousin of David R. Levis of Moneyhouse. Both are family (son and nephew, respectively) of Salomón Levis, former chief executive of the defunct Doral Financial.
With Gilbertito Santa Rosa as spokesperson for his advertising campaign, the financial institution has been aggressively marketing this instrument on the island.
From 2007 to 2019, almost 10,800 mortgages reverse were closed in Puerto Rico. Of this total, some 4,300 correspond to Moneyhouse. Another 2,300 were made by Senior Mortgage Bankers.
Even Gilbertito's father acquired a mortgage reverse according to the artist in one of the commercials.
In reaction to According to the research findings, Santa Rosa told the CPI that his role as Moneyhouse's image has been "to exhort people to ask, inform and validate" if it is convenient for them to carry out this type of mortgage.
"However , I sympathize with the people who are losing their homes in these troubled times, a situation to which none of us are exempt, and which in the last 10 years has increased dramatically due to all the factors that we are facing as a country. There must be action and an option to preserve a safe home, "he added in written statements.
The CPI asked about his father's experience with the mortgage reverse but Santa Rosa did not answer.
Initially, in the midst boom of this product ten years ago, Moneyhouse charged its clients service fees related to the administration of these loans that were significantly higher than what was charged in the United States, according to data from the federal Department of Housing (HUD).
Available data shows that until at least 2011, Moneyhouse and other mortgage institutions in Puerto Rico still collected these fees. A Moneyhouse spokesperson indicated that these charges have been discontinued, but did not specify since when.
In the past five years, HUD has imposed corrective actions and limits on the amount of money older people can borrow with these mortgages. Under the new federal guidelines, residents of Puerto Rico can only receive up to a maximum of $ 15,000 for a property priced at $ 100,000.
HUD also now requires that, from the money the person receives, they set aside an amount to cover unforeseen future expenses , such as property taxes or insurance payments, avoiding technical defaults leading to foreclosure.
These changes have detracted from interest in this instrument.
Moneyhouse, which closed on average from 50 to 60 mortgages reverse monthly, and peaked at 120 at its peak, only making four in the first quarter of 2020.
Company president Levis criticized HUD's corrective actions on the understanding that the changes affect to a greater extent the market in Puerto Rico.
“The changes they made were massive, but the issues we face in Puerto Rico are very different from the d in California, and very different from those in Philadelphia, "said the banker, who maintained that the cost of living and the value of property is lower on the island.
They are not made for Puerto Rico
Due to their financing costs and the high risk of losing property, mortgages reverse are not the best option for older adults on the island , according to Rogelio Cardona, professor of accounting at the University of Puerto Rico at Río Piedras.
Along with Karen Castro González, Cardona published in 2014 a study on the mortgage market reverse in Puerto Rico. Both recommend other alternatives, such as refinancing the property at a lower interest rate, or selling and moving to a smaller, cheaper space.
“Any older person who decides to get a mortgage reverse has to read all the documents, or have a trusted family member, friend or lawyer do it, and ask many questions, "Cardona warned.
Some of the challenges that older people in Puerto Rico have faced with mortgages reverse include ignorance of how they work, legal action against them (and the legal fees that this entails) and, in the worst case, the loss of property.
Many times problems start when the The local mortgage institution sells the loan in the secondary market to another company in the United States, which in turn can sell it to another company or uses administrators (“ servicers ” in English) who also operate outside of Puerto Rico.
In the case of José Sajíún Soto, for example, the loan he bought is no longer in the hands of Moneyhouse, but is administered by Celink, a Michigan company. Don José never knew that this would happen.
“They [Celink] have sent about 20 times [una carta de] that something was not paid and I send back evidence that it was paid and a copy of the check. It is sent to him by e-mail and it is sent by mail, "said his daughter, Ramona, who regretted that the company does not have offices in Puerto Rico to attend to these problems.
Celink did not respond to a request for reaction.  Rafael Rodríguez Roselló, attorney for Legal Services of Puerto Rico said that in all the cases that he attends to mortgages reverse the loans are no longer in the hands of the financial institution that the originated locally.
“Everything is sold. Neither Popular Mortgage, nor the cooperatives, nor Senior Mortgage, nor VIG Mortgage are going to keep that loan. They are going to sell it to a company in the United States. And that's when the communication, language, lack of documents and evidence problems begin, "said the lawyer.
Sometimes, some of these outside companies are unaware of local aspects, such as exemptions from the payment of taxes that apply to many of the properties on the island with mortgages reverse .
Obstacles in communicating with these companies, ranging from mail service problems to calls that their service departments never answer, to They often end with letters in English threatening to foreclose on alleged breaches. Upon reaching the courts, some of these lawsuits are filed in the federal forum, where the processes are more expensive and faster than in the courts of Puerto Rico.
Currently, there are around 680 cases of foreclosure reverse of which more than 100 are in the federal forum, according to OCIF data.
In 2009, Luis Nieves, 80, and AdaGuzmán, 75, obtained a mortgage reverse for your Carolina home. Since then, the couple has had to clarify on more than one occasion that their home is exempt from contributions. Therefore, you do not have to pay contributions to be in compliance, contrary to what the administrator of your loan, James B. Nutter, a Kansas City company claimed.
Even so, Nieves and Guzmán could not avoid reaching the courts. Without knowing it, his insurer stopped sending evidence of the insurance policy to James B. Nutter. The financial institution indicated default for lack of insurance and in 2014 filed the foreclosure lawsuit in federal court.
The couple was able to present evidence that they had the required insurance policy, but not the payment receipts. required by the financial institution. James B. Nutter did not answer questions for this report.
"I cried," Nieves said. "I couldn't sleep thinking about this, that we would have to move." Resigned to losing their property, the couple paid $ 1,000 as a deposit for a house they would rent.
In the midst of these procedures, Hurricane Maria arrived. The property they were going to rent was destroyed and its owner kept half the deposit. Nieves and Guzmán decided to fight the lawsuit against James B. Nutter. Its legal representation was in charge of Lcdo. Rodríguez Roselló, from Servicios Legales, who after five years in court, managed to stop the execution of the property.
Although they kept their home, this has not been the end of the concerns for this family.
Like 7,100 other reverse mortgage properties on the island, the value of your property has not appreciated as it is supposed to have occurred. The interest and charges accrued on the mortgage already almost exceed the money that the couple can take from the property if it were sold today.
For the mortgage reverse to work, it is crucial that the value of the property increase. The expectation in Puerto Rico, according to OCIF documents, was that these properties appreciated up to 6% each year. However, the value has decreased by around 4%.
This negative gap, where the value of the property exceeds the balance of the mortgage, presents a problem for the heirs who are interested in repaying the loan and maintaining the property when the person dies, because due to the value that has been lost, it would not be good business.
The Federal Housing Administration (FHA) guarantees mortgages reverse so it covers the losses of financial institutions when the The loan balance exceeds the value of the property sold.
Thus, entities that sell mortgages reverse never lose.
Hurricane Maria worsened the situation
While mortgages reverse require the person to reside the property, keep it in good condition and have their taxes and insurance up to date, a natural disaster such as recent earthquakes or Hurricane Maria puts all this in r Risks, according to Tara Twomey, attorney for the National Consumer Law Center.
"The mortgage system reverse is not made to be successful here [en Puerto Rico]," said Twomey, who trains attorneys who defend people against property foreclosures.
According to the lawyer, there were many older people in Puerto Rico who, after María's passing, faced problems, for example, in complying with insurance hazard one of the requirements of these mortgages.
"If the house was not habitable by Maria and the loan requires that it be insured, while the claims for the settlements are pending, who is going to insure you and help you?" Twomey questioned. 19659002] After the hurricane, the FHA declared a moratorium for all those affected by the disaster. After a year and after two extensions, the moratorium expired and the financial institutions retroactively resumed the foreclosure processes reverse that were pending in Puerto Rico.
This was what happened to María Isabel Menéndez Soto, 70 years old and who resides in Villa Ángela, Arecibo. He has lived there for 38 years with two of his children, Phillix, 50, and Richard, 38, in a two-story house he built on land he inherited from his father. Before this he lived in New York.
The foreclosure case against her began in 2016, prior to the hurricane, when Celink and Reverse Mortgage Funding, a New Jersey company, sued her for allegedly being behind in insurance hazard in breach of the mortgage reverse that it acquired in 2012. None of the companies answered questions about this case.
According to the lawsuit, Doña María owed about $ 6,500 of this insurance.
Once The FHA moratorium expired, the lawsuit continued. While this was happening, Menéndez Soto was looking for how to fix the house after the ravages of the hurricane. The Tanamá River flooded the first level of his property, causing a short circuit in the area of laundry . Upstairs, the wind and the rain poured through the windows of the rooms.
“I felt the smell of burning, but I couldn't go down, because of the water. And it is still like this [sin arreglar] because I have to go little by little, "she recalled sitting on her sofa, which is also her bed, since she lost hers in the rain.
It was not until September 2019 that Doña María knew of the lawsuit, when he received a visit from a sheriff with a notice that he had 10 days to leave his home.
“I hid in the room, closed the door, fell to my knees and said, 'God, this is in your hands. I don't know what's going to happen, "he said.
At the beginning of the case, the site was left with one of his sons, Philix, 50, with functional diversity. Her son never said anything about this, which prevented him from learning that she had been sued, much less that she had lost the case without appearing in federal court, according to her account.
María was referred to Legal Services, where Rodríguez Roselló took his case.
“I have to be honest, I was pessimistic because I know the procedure and I know what a letter entails [de desalojo]. I knew that the legal procedure had ended, "admitted the lawyer. “It is already finished, they have already executed [la hipoteca]and the property has been sold at auction. They don't have to help you. Unless something happens … "
" And it happened. So you can see, "answered Doña María.
It turned out that between selling and selling Doña María's loan between financial institutions, Rodríguez Roselló realized that one of these transactions had never occurred. This invalidated any sale of property at auction by banks after foreclosure.
“When I tell them that Finance of America certified in writing that they are not the owners [del préstamo] and therefore both this [la transacción] was false, and that I was going to submit it to the court, is that then they call me. 'Do not do anything. We want to make sure that we are on the same page . We are going to solve, ’” the lawyer recalled.
Doña María paid $ 3,700 and the loan was restored.
I would never have imagined that far from the mishaps that she suffered from the hurricane, it would be a lawsuit for her mortgage reverse that almost took away her property .
There are not many, however, who reach the point where Doña María was without finally losing their homes.
"I continue in the same struggle because this is a struggle: maintaining this house is a struggle" .
This report is published in Metro thanks to an alliance with the CPI . Access the complete note in periodismoinvestigative.com