Helping seniors keep a roof over their heads

By 2030, California’s over-65 population is expected to be 87 percent higher than it was in 2012 – an increase of more than four million people.  According to a 2014 AARP survey, nearly 90 percent of senior households say they would like to stay in their current residences and communities for as long as possible.

But this can be especially difficult for African Americans, who nationally lost a whopping 53 percent of their household wealth – and Black and Latino families bore the lion’s share of home foreclosures in California, according to a story published by New American Media.

The homestead exemption has not been adequately adjusted, resulting in seniors being forced out of their homes and no funds for alternative housing.

Many seniors that own a home have diligently paid their mortgage with the notion their equity will serve as a cushion for retirement.  Unfortunately, due to exorbitant medical bills or other unplanned emergencies, bankruptcy may be the only option for many seniors facing crippling debt. Under current bankruptcy law, seniors are not only required to pay off their debts, but are also forced to hand over their entire nest egg and move out of their communities.

California lawmakers are considering a bill, SB 308 by Senator Bob Wieckowski (D-Fremont), that would remedy this by providing seniors the ability to keep their homes and remain in their communities.

First, SB 308 is a direct response to the rising housing and living costs, especially for seniors, including more than 10 percent of the Inland Empire population.  For decades the law recognized the basic fairness of allowing a consumer to preserve a portion of their home equity, known as the homestead exemption, in order to give them the foundation for a fresh start after bankruptcy.  Until 1975, the homestead exemption covered the median price of a home in California, allowing a consumer to pay out creditors for debt owed and either remain in their home or find alternative housing.

The homestead exemption has not been adequately adjusted, resulting in seniors being forced out of their homes and no funds for alternative housing.  Relying on home equity is important, especially if a senior requires assisted living, which can cost nearly  $30,000 more than the fulltime of support of a home health aide. These costs provide a large incentive to keep seniors in their homes so they can maintain their equity they and provide for future expenses.

SB 308 reflects the higher value of homes today providing an increase to the homestead exemption to $300,000 for seniors.  This adjustment will provide seniors the ability to remain in their homes or possess the financial cushion to find alternative housing.

SB 308 also corrects an obscure court ruling that gives significant leverage to banks and prevents bankrupt seniors and families from preserving home assets necessary for reinvesting in a new residence.

Preventing seniors from reinvesting their homestead exemptions in new homes is not practical. A senior should not be forced to enter into a new 30-year mortgage instead of using that equity to rent an apartment or enter an assisted living facility.  SB 308 removes the reinvestment requirement to allow a senior to keep a portion of the equity she or he has built up for future needs, including adequate housing.

According to the Homelessness Research Institute, the number of homeless seniors in the United States will rise from 44,000 in 2010 to nearly 59,000 in 2020 if shelter and poverty rates remain constant. This is unacceptable and California lawmakers should be working to guarantee California seniors are not just another statistic.  SB 308 is a step in the right direction and can make the difference for seniors between living in fear of homelessness and living in financial security knowing they will be able to maintain the ability to meet their basic needs.
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Ed’s Note: Gary Passmore is vice president of the California Congress of Seniors.