The afternoon phone call jolted Laird Jackson: Her 82-year-old father had just been evicted from the Huntington Beach board-and-care home where he had lived for several years.
"I couldn't believe it," she said. "There was no notice until a marshal showed up at the door with a foreclosure notice."
Jackson's experience in January, unfortunately, is becoming commonplace in California, with incidents reported at board-and-care homes in Los Angeles, Orange, Riverside, Contra Costa, Alameda, San Mateo, Napa, Yolo and Placer counties.
"California's foreclosure crisis has severely impacted some of the most vulnerable tenants in our state — seniors who live in residential-care facilities," says state Sen. Mark Leno (D-San Francisco). "These residents had no warning that they were about to lose their homes, and their families and caretakers were left in a panic to find immediate emergency housing."
The situation is all the worse because of the health issues faced by many of those evicted. "Being uprooted like that is a horrifying situation for older adults, many of whom are frail and confused," says Shelley Woolery, who has been involved in two cases in her role as ombudsman program coordinator with the Council on Aging in Orange County.
Bankruptcies, foreclosures and other financial difficulties are inflicting new worries on residents and their families who thought they had secured their futures in a retirement community or other form of senior housing, ranging from "55+" developments to nursing homes.
The problems confront older Americans at every income level.
One of the first red flags in the crisis emerged from the top end of the spectrum in 2009: bankruptcies at continuing-care retirement communities, known as CCRCs. These pricey communities, which require entrance fees averaging $250,000 (some are close to $1 million), offer upscale dining, activities, entertainment and long-term care.
Facilities range from independent-living apartments to skilled nursing facilities, allowing residents to "age in place." People typically move in when they are in good health and active; the promise, and the appeal, is that they won't need to move elsewhere if their health declines.
In addition to the steep buy-in, residents pay monthly maintenance fees. The entrance fee is usually said to be refundable to residents or their heirs if they move or die. But that can change if a facility goes out of business.
When a few facilities declared bankruptcy in recent years, the U.S. Senate Special Committee on Aging got involved and requested a study by the Government Accountability Office. Last summer, the GAO issued a report saying that investing in a continuing-care community involves "considerable risk" and urging state regulators to "be vigilant in their efforts to ensure adequate consumer protections for residents."
The ailing economy has a lot to do with the problems, according to the report: "The CCRC model is particularly vulnerable during economic downturns as stagnant real-estate markets drive down occupancy levels in independent living units, which serve as CCRCs' primary source of profit."
In addition to placing a consumer's investment at risk, the current financial squeeze could cause a resident's monthly dues to spiral upward, the report said.
Another problem with continuing-care retirement communities: Some consumers have found it difficult to retrieve buy-ins after leaving. Elder-law specialists blame the economy: Seniors can't sell their homes, so they don't have the funds to move into the developments; that in turn limits the money the facilities have on hand to pay back those who are moving out.
Thirteen years ago, when Morris and Yetta Weisz bought into Collington Episcopal Life Care Community in Mitchellville, Md., they trusted that their nearly $100,000 entrance fee would be returned if they left.
The couple, retired from U.S. foreign service, enjoyed living at the facility for several years. But then Yetta Weisz died, and shortly thereafter Morris Weisz moved to an assisted-living facility near family in Bethesda, Md.
"We've been trying to get the deposit back for three years," son David Weisz said. "They didn't read the small print, which said their money would be returned when their unit was rented again."
Weisz is now 97 and in danger of outliving his investments, daughter-in-law Diane said. "We've asked repeatedly for the money and had our attorney press for it, but we don't think they're in any hurry to re-rent that unit and repay the money."
Olivia Pugh, Collingwood's interim director, said the facility "is abiding by the laws of the state of Maryland" and referred inquiries to the facility's attorney.
Even without the pressures of a bankruptcy or the economic downturn, big deposits sometimes can be hard to recover.
Patricia O'Brien moved into a continuing-care community north of Los Angeles with her new husband, putting up her life's savings for the entrance fee. When the marriage turned sour, she decided not to stay with him.
Now he has remarried and lives with another woman in the same facility. Even if she wanted to leave, O'Brien, 78, couldn't because her contract doesn't include the return of funds in cases such as hers.
"I have a lot of money sunk in here," she said, "so I'd have to be pretty miserable to leave. And I'm not. I'll be here until I die."
Given current economic uncertainties, experts say consumers who are shopping for retirement housing should carefully analyze the financial risks of their arrangements, regardless of the type of residential arrangement they're seeking.
"Advertising is just window dressing," said Eric Carlson, long-term-care expert with the National Senior Citizens Law Center.
And it's just wishful thinking to believe that making a payment will make you secure for life, he said.
"People want to believe that they don't have to worry anymore, that they'll be taken care of. But the contracts are written by the facility for their benefit, not yours."
Carlson said he generally prefers pay-as-you-go plans and recommends that anyone signing a long-term care agreement show it to an elder-law attorney first. (Search for one at National Academy of Elder Law Attorneys, http://www.naela.org.) He also recommends that refundable deposits be put into escrow accounts.
The situation is more critical for families who need to find housing for Mom or Dad in a hurry.
Carlson advises them to visit facilities, talk with family members of residents, find out how many residents each aide is responsible for and how they deal with the types of problems your loved one suffers from. For instance, you might want to ask, 'If Dad's dementia worsens, what would you do?'"
Board and care
As for the board-and-care foreclosure problem in California, Sen. Leno is backing legislation (SB 897) that would require the facilities to notify residents when their housing security is threatened by events such as foreclosure proceedings, a missed mortgage payment or a utility shut-off.
There are 8,000 board-and-care homes (also called residential-care facilities for the aged) in the state, most housed in single-family dwellings and owned by individuals or families; most have mortgages on the properties.
Most of the homes are small, with six or so residents; when they are licensed by the California Department of Social Services, owners are required to show financial data indicating they have enough resources to cover operating expenses for three months. After that, unless there are complaints, the agency visits only every five years.
"These facilities are not immune to the same problems of property owners; sometimes they get in over their heads," said Tony Chicotel, staff attorney with California Advocates for Nursing Home Reform, which is sponsoring Leno's bill. "The last thing they want to do is have residents move out, so they don't tell them there's a chance they'll lose the home in a foreclosure."
No one keeps track of how many foreclosures have taken place, but Chicotel said he hears of about one a week.
Leno said he wants to avoid some of the foreclosure scenes that have taken place recently: "elderly residents, who are often frail and can suffer irreparable injury when they are required to move, forcibly removed by peace officers."
His bill, he said, would ensure that residents and their loved ones are notified when their home is being threatened and will be able to carefully plan for a possible move.
"The situation as it stands now is grim," Chicotel said. "We really need to have this legislation enacted."
As for Laird Jackson and her dad, things have returned to an even keel. An ombudsman with the Orange County Council on Aging was able to find him a new board-and-care home within hours. Jackson, who lives in New York City, said he seemed in shock for a while after the eviction but has gotten his energy back.