By Sally Beauvais
Texans have one of the highest property tax burdens in the nation.
This past legislative session, state lawmakers adopted reform to slow the growth of property tax hikes in the future, but many Texans are struggling to pay what they already owe.
In the popular West Texas tourist town of Marfa, homeowners have felt this strain more acutely in recent years. After the state found out local tax authorities were not appraising homes within the required percentage of their rising market values, residents saw a townwide increase in their annual property taxes. The appraisal district also placed a special premium on adobe, a historic building material that’s recently come into vogue.
County officials are in discussion about how to shift the current tax burden off of long-time property owners. But for one elderly Marfa resident who’s fallen behind, it might be too late.
For Maria Benavides, navigating the system has turned into the worst case scenario. Now, she’s fighting a lending company to keep the house she’s lived in for more than two decades.
This story is a part of our series Tipping Point, examining tourism-driven change for better or for worse in West Texas.
When Benavides gives directions to her house on the west side of Marfa, she says it’s easy to find. On a block with sparkly Airbnbs, and modest but kept-up adobes, she’s worried it stands out.
“As you can see, my house needs a lot of work,” Benavides says. “I just don’t have the money.”
She’s never been able to afford a coat of paint for the raw plaster exterior. The house needs new doors and windows, a new roof, and her bedroom ceiling is falling in. But she’s low on cash right now.
Benavides moved into her house in the 90s, after what she says was a rough separation from her physically abusive ex-husband.
“This was my house that I bought with my money,” she says. “And he had nothing to do with it. And so I put it under my maiden name.”
Over the years, it’s became home to all the people she’s cared for. Benavides has to stop and count on her fingers to remember which family members are currently living with her. She takes care of her 92-year-old mother and a rotating cast of her teenage grandkids, and supports everyone with the job she’s had for decades, working as a home health caretaker. She makes $8 an hour.
Benavides wants to keep a nice house for her family, but it’s complicated. If she saves enough money to fix it up, she’s worried her property taxes will increase even more.
“I don’t ever think about myself,” she says. “Families always comes first, no matter what. So my main concern right now is this house.”
And whether she’s going to lose it.
Benavides started falling behind on her property taxes in 2009. By 2016, she owed Presidio County over $5,000. But that year, she got a flyer in the mail from a property tax lending company that seemed to offer a solution.
“When she called them, and they told her about the product and asked how old she was, she said 65,” explains Julie Balovich, an attorney with Texas RioGrand Legal Aid who’s now representing Benavides in her fight to keep the house. “And they told her, ‘well, you’re not eligible for this loan.'”
Balovich says the lenders were right about what they told Benavides, but they left out a crucial detail; in Texas, elderly and disabled homeowners aren’t allowed to take out property tax loans. That’s because they’re eligible for deferrals, meaning they actually have the option to stop paying their property taxes, and the county won’t repossess their home.
“And so what they did was an end-run around these restrictions,” Balovich says. “They came up with a solution where if she gave her property to someone who was eligible, that person could take out the tax loan. Not telling her she didn’t need to do that at all.”
But Benavides took the lenders’ advice, and transferred her property to her daughters so that they could take the loan out for her. Now, after several years of fees and high interest, the initial $5,000 she owed is up to over $13,000 and counting.
Benavides’ daughters defaulted on the loan almost immediately, and last year, the company brought a foreclosure suit against them.
“They were able to in fact extend a loan to a person who was not legally able to take out this loan—because she shouldn’t,” Balovich says. “The state wants to protect elderly people from losing their home to property taxes. And that is probably the most egregious fact here.”
Now, Benavides is in a situation the law was designed to prevent. She also lost her homestead exemption when she transferred the house to her daughters, and as a result, their tax bill rose even higher.
In the foreclosure suit, Balovich is arguing the lending company used deceptive trade practices and fraud to close on the loan.
Paul Halstead, Chief Compliance Officer for Ovation Services—the tax lending company bringing the lawsuit—characterizes it this way:
“The law requires us to discriminate against someone over 65,” he argues.
While they’re eligible for deferral, he says some elderly homeowners don’t want that. If their kids are eventually going to inherit their home, they might not want to saddle them with years of back taxes when they die.
But that wasn’t Benavides’ situation. And it turns out, she had other options.
In Texas, counties are required to offer repayment plans for homeowners struggling to pay their property taxes. Presidio County Tax Assessor Natalia Williams says they have even more accommodating plans for seniors, who can sign up to pay their taxes in installments without interest or penalties.
Over 20% of accounts in the county are delinquent on their 2018 property taxes, according to Williams.
“I try to tell people, you know, just make an effort to make some kind of a payment,” she says. “I know times are tough and it’s hard. But we, you know, try to work with you.”
But counties don’t advertise their services as widely as property tax lenders do. In Texas, the industry has been criticized for preying on some of the state’s most vulnerable residents. While foreclosure is rare, around 14,000 Texans take out these kinds of loans per year, according to data on the Office of Consumer Credit Commissioner’s website.
Halstead with Ovation Services argues that tax lending companies provide an important service. He says their plans offer more forgiveness and flexibility than counties can.
To clarify, Halstead says he doesn’t know whether Benavides was aware of all of her options when she signed over her property to take out the loan. Because Ovation — the company he’s with — didn’t actually initiate it. Another tax lender — Alamo Home Finance — did, and Ovation bought the loan from them.
“We discontinued our relationship with them when we learned about some business practices of theirs that we did not think were right for the consumer,” Halstead says.
As of early this year, Alamo is out of business. Halstead says knowing what they know now might change things with the foreclosure suit against Benavides.
“I can’t say that for certain right now. But we’re doing everything we can to work out a solution where we don’t do that,” Halstead says.
But as it stands, Benavides and her daughters will be in court with Ovation Services next year. Until then, she’s trying to stay open to all possible outcomes.
“I’m in God’s hands,” she says. “And, you know, I talk to him and I tell him, ‘if it’s your will that I get this house back, okay, fine, give me a sign. If it’s your will that I’m going to lose it, okay fine. Just give me time to see what I can do.'”
She’s trying to look for other housing options just in case, but she’s not having a lot of luck. Marfa’s housing market is much more expensive than it was when she first bought the house — for $18,500.