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Your mom needs to move to an assisted living facility but you're having difficulty selling her house in a down market. If your family doesn't have the ready cash to pay for her stay until the house sells, Elderlife Financial Services may be able to help. The Washington, D.C.-based company specializes in providing bridge loans to cash-strapped families that temporarily can't afford a move to an assisted living facility, nursing home or other senior living community.
Elderlife, which launched in 2000 and went national in 2007, has issued more than $60 million in loans over the past two years. Unlike banks, which typically loan to one individual, Elderlife prefers to work with families and will allow up to six family members to co-sign a loan. The loaned funds are wired directly to the senior living facility, which must be among the 2,700 communities that Elderlife currently works with in the 48 contiguous states.
"This keeps the entire family feeling like this is a structured program for a specific purpose," Elderlife's founder and CEO Elias Papasavvas, told ElderLawAnswers. "A bank is going to give loan documents to one of the adult children and it's up to that child to be honest and send the funds like he's supposed to every month." If the senior living facility a family has chosen is not part of its network, Elderlife will try to persuade it to join.
The fact that Elderlife only offers loans for senior living means that the company can more accurately counsel families about how large a loan they will need and for how long. "We frequently know more about what they're about to go through than they do," Papasavvas said.
Lines of credit, underwritten either by Elderlife or a variety of banks around the country, can be up to $50,000 and rates range from 8.25 to 12 percent. (The company is working on a home equity-secured option that will carry slightly lower rates.)
Elderlife also offers a separate loan program for those who want to move to a Continuing Care Retirement Community (CCRC) but who can't sell their home or liquidate other assets yet. The Elderlife Capital Access Program can bridge the financial gap, funding all or part of the CCRC entrance fee. Papasavvas said loan amounts for this program have ranged from $48,000 to $1.2 million, with interest rates from 3.25 to 6.5 percent.
Borrowers don't necessarily have to be elderly to take advantage of Elderlife's loans; they just have to intend to move to one of the communities Elderlife works with. Papasavvas said that a number of communities are now covering between $500 and $2,000 of Elderlife's interest charge.
A March 2009 article in SmartMoney describes a family that needed to financially help their 91-year-old mother so she could remain in her retirement home. Because much of the family's wealth was tied up in the depressed real estate market, the family borrowed $20,000 from ElderLife. SmartMoney states that "[t]he loan terms are better than a bank could offer, and the family hopes to pay it down when the real estate market rebounds . . . "
"You can think of it as the inverse of a student loan, where Mom and Dad helped me get a student loan," said Papasavvas. "Now we're helping Mom get some credit while working on selling her house or waiting for VA benefits to arrive or spending down for Medicaid benefits. The kids are telling each other, 'Mom took care of all of us, so why should I be the only one shouldering the load?' " Papasavvas noted that Elderlife welcomes the involvement of the family's elder law attorney in the process.
For more about ElderLife's services, including a calculator to estimate loan charges, click here.