Elder Care Faces a Foreclosure Crisis
Richard Miller had been living in his second-floor San Francisco apartment for 23 years when, one day in 2010, he fell down the stairs. His doctor recommended he move into a residential care facility for the elderly, where residents have meals provided and, if needed, get help with dressing, eating and bathing. Miller wasn’t eager to make the move, and three years later, he has had plenty of reasons to regret it.
Miller, who is now 77, suffers from several health problems. He has sleep apnea and congestive heart failure, which causes him to get winded easily and pause every 10 or so steps to catch his breath. A large man with a thick swatch of white hair and a booming tenor voice, he calls his cane a “kind of a security blanket” because he’s had two knee operations, and one of his legs sometimes gives out.
Miller’s fall and subsequent move led him to two different elder care facilities — both of which, he discovered later, were in foreclosure. He now lives in a third facility called Morning Glory Care Home, a four-bedroom elder care house on a cul-de-sac in Vallejo, a city of roughly 117,000 that’s 35 minutes northeast of San Francisco. But only a few months after moving in, he noticed some unusual visitors passing through the home. “Two women came through with clipboards and were kind of looking around,” he said. “When you’re 76 years old and it’s your third place, you get a little bit scared.”
His fears turned out to be justified. He asked the home’s administrator about the women and was told they were relatives. But Miller didn’t believe him. As more strangers floated in and out, he felt an uneasy sense of foreboding. “So I Googled the property,” he said, “and was blown away to find that it had been in foreclosure since December 2010.”
Most disturbing to Miller was the lack of warning that his home was foreclosed. Despite a law put into force in January 2012 that expressly requires the people operating the homes to inform residents about the change, those in charge did not tell him that Morning Glory was in foreclosure. Nor had he been given any warning about his previous two residences. “The first home was bank-owned and being put up for auction,” he said. “The second one — there was a notice on the door — and [the owner] yanked it off so we couldn’t see it.”
Miller’s experience of moving to three different facilities in just over a year’s time — and the possibility that he’ll have to move to a fourth — may be extreme. But the elderly having to shuffle from home to home is certainly not a rarity in boom-and-bust California, where about 170,000 individuals live in residential care facilities that in some areas face alarming foreclosure rates. A state law requiring owners and administrators of these homes to inform authorities and residents if they miss a mortgage payment seems little more than words on paper. In many cases, the authorities are as much in the dark about a home’s financial troubles as the residents and their families.
The state Department of Social Services only has the personnel to check up on 30 percent of these homes each year, according to the California Health and Human Services Agency. Those serving as long-term care ombudsmen, who visit the homes regularly, are many times similarly uninformed about a home’s status change.
“We often don’t know that a place is closed until we knock on the door,” said John Lord, a long-term care ombudsman in Vallejo.
When it comes to health and quality of life, experts are inclined to agree that moving often and abruptly is a bad idea for the elderly, especially for those who are frail or suffering from conditions such as dementia. “The trauma for them becomes being in a new setting where nothing is familiar, and they don’t know how to adjust,” said Ruth Gay, director of public policy and advocacy for the Alzheimer’s Association of Northern California and Nevada. “It manifests in things like agitation, aggression, fear, withdrawal, and people start to decline … They are at risk for falling, not eating well, and all of those things can be a vicious cycle downward.”
In retrospect, Miller says there were warning signs at each facility he called home. A former restaurant manager, he says that at his first home, the initial hint of trouble brewing was the menu: Cheerios for breakfast and hot dogs for dinner, day after day. At his second home, the owner began asking for monthly payments before the first of the month. There, too, the meals were bare bones. “She must have gotten a coupon on beans, because we had baked bean sandwiches in the morning,” he said. Lynn Soria, the former owner of Miller’s first home, Shady Pines II, declined to comment for this article. Resurreccion Samaniego, the former owner of his second home, House of Mercy, did not return calls seeking comment.
Miller is not suspicious by nature. But at the Morning Glory Care Home, he felt something wasn’t right. Repeated calls from bill collectors made him wonder if he was going to have to move again. “You can tell, because there’s caller ID on the television screen,” he said, noting that he also saw a utility company’s 48-hour turn-off notice in the mail. Another sign: the chill he felt during the winter months. It can get cold in Vallejo, yet there were times the heat seemed to be completely off. He decided to complain about the cold but not the substandard meals, “because I’m only paying $1,000 a month for [board and care] and three meals a day,” he said. Earlier last year, several residents left, adding to the facility’s budget pressures.
Fear about having to move from a familiar place — and in some cases, fear of retaliation — have kept the issue of elder care home foreclosures from getting much attention. When a state licensing agency representative visited Morning Glory a year ago, she asked Miller if he’d been informed that it was in foreclosure. Miller answered yes. “I didn’t want them [the administrators and caregivers] to have any problems,” Miller said, though he did report the foreclosure to the local ombudsman. Since the day he Googled and learned that Morning Glory was in foreclosure, he has vacillated between frustration with those in charge and fear that speaking out could bring him harm.
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The financial woes of Miller’s various care facilities are part of a larger story about the city he now calls home. The city of Vallejo declared bankruptcy in May 2008, and came out of bankruptcy — at least officially — in November 2011. However, signs of economic malaise are everywhere, from the ubiquitous array of wanderers asking for money downtown to the many commercial spaces that sit vacant.
In Vallejo and the rest of Solano County, an astonishing 41 of the 148 residential care homes for the elderly — more than one in four — have been in some stage of foreclosure since 2008, according to RealtyTrac, a real estate tracking site. That’s even higher than the 21 percent of elder care homes that last year fell into trouble in Riverside, the California county with the highest foreclosure rates. There are anecdotal reports of similarly high foreclosure rates among residential care facilities in other states, such as Nevada, but no single entity tracks elder care home foreclosures nationally.
Miller’s first elder care home, Shady Pines II, went into foreclosure while he was living there and was repossessed by the Bank of New York, Mellon in November 2011. Yet when he visited the home with a reporter in April 2012, Miller found that two of his fellow residents still lived there. As of August 2012, the state’s licensing agency still listed Shady Pines as a licensed care facility on its website. The facility even lives on in an advertisement aimed at seniors searching for a “more intimate” situation. In a small setting such as Shady Pines II, the ad notes, the residents and caregivers are “calling on each other by first name.”
Just last month, a review of files from Community Care Licensing, the agency charged with monitoring elder care homes in California, revealed no indication that the agency knew Shady Pines II was in foreclosure and is now owned by the bank. In fact, paperwork filed four days after Miller’s April 2012 visit has an “OK” next to the pertinent item: “Control of Property – lease expiration date? Copy of Grant Deed?” It says “N/A” next to the item that reads: “Any Outstanding Issues: Pending Legal Action; Pending Application for Change of Ownership, etc.”
When asked how Shady Pines II still had patients and was operating even though it was bank-owned, Luisa Datuin, an administrator, said only, “I think they were trying to deal with the bank.” When pressed on why residents weren’t told that the place was in foreclosure, Datuin ventured, “She [Soria, the former owner] was trying to modify [the loan].”
Community Care Licensing did not respond to a request seeking comment.
Shady Pines’ uncertain status is of little surprise to Cynthia Kroll, executive director for staff research at the Fisher Center for Real Estate and Urban Economics at the Haas School of Business. “It costs money to move these properties along,” Kroll said. “And if you’re talking about a property owned by a bank on the other side of the country, it can fall through the cracks. Or they’ll wait deliberately and see if the housing market is going to pick up.”
John Lord, who is both a realtor and a volunteer long-term care ombudsman for Solano County, said the area has become a magnet for people seeking less expensive elder care homes. As an ombudsman for the past four years, he said he has witnessed the impact of the economic downturn on these homes.
In May 2012, Lord visited six residential care facilities around the county and said he found problems at all of them. “Two were closed, and out of the four I did get inside of, every one had vacancies,” he said. “At one time, any one of these people would have had a waiting list, and now they have empty beds.”
Among the facilities that both he and other volunteers checked during routine visits in the county that month, at least 15 had closed down. Data from RealtyTrac shows that at least 12 residential care facilities for the elderly, including Miller’s current home, were in active foreclosure in Solano County last year, accounting for as many as 70 elderly residents.
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In June 2012, the Solano County Superior Court in Vallejo heard the case of Morning Glory Care Home, which is now owned by Fannie Mae. Documents filed with the court showed that the home’s financial troubles began when the on-site manager’s parents, both of whom were living there, died. “Their passing, [and] the recession which began soon after, resulted in 4 vacancies for months and months,” wrote Lina Villenas, the facility’s advocate. Eventually, the home’s managers, who had leased the property from the owner, couldn’t keep up with their monthly payments, and neither could the owner.
Judge Pro Tem Terrye Davis had to rule on an amended lease agreement between the managers who were running the home and the former owner. If the court ruled that the document was valid, the managers and all of the residents would be allowed to stay until the lease expired, in January 2015.
In late September 2012, the judge ruled that they would not have to move. But that hardly provided Miller with peace of mind. What if Fannie Mae appeals? What if the managers can’t keep the facility financially afloat? His worries were only exacerbated in March, when the property was put up for sale again, possibly bringing another legal battle or another move.
In April, a new problem and concern arose: Morning Glory’s on-site manager died, and Miller was not sure who would run the home.
According to Community Care Licensing records, Morning Glory did not report the death in a timely manner. Records show that an inspector who asked about the manager “was told by two persons that the manager was ill and could not talk.” The notes went on to say that he only “learned later that administrator had passed away.”
Villenas insists that the inspector had already known about the death of the manager, and claims that Miller had announced to the staff that the inspector would be visiting the home in light of the death.
But Community Care Licensing records show that a “false claims” citation was issued against the home for failing to provide “timely and accurate” information to the agency. For a series of infractions — including operating without a qualified manager in April and May, failing to adequately heat residents’ rooms during the winter and keeping a resident who required more intensive skilled nursing care — the agency is now seeking to revoke the facility’s license.
Just last month, Miller said he found an online listing that says the home is “under contract.” The self-appointed protector of his fellow residents is still waiting to see how things will unfold.
Laurie Udesky is a San Francisco based investigative reporter and editor specializing in health, public policy and social welfare issues. Her work has appeared in The New York Times, the Dallas Morning News, salon.com, among other outlets.
Co-published with Huffington Post.