Elfriede’s real estate
In 2004, Elfriede Lippa sold her house on Jedburgh Road in View Royal for $275,000. She bought a 1,000-square-foot condo at 924 Cook St. for $169,000 and put almost $100,000 in the bank. She had no mortgage.
Cash, not credit
Elfriede needed cash for her gambling excursions.
The View Royal Casino has several ATMs, all off the gaming floor and accompanied by responsible gambling messaging.
Withdrawal limits are up to a customer’s financial institution. Credit cards are accepted at the ATMs, but not at the slot machines.
When players leave a slot machine, they get vouchers from the machine that they can exchange for cash at a ticket redemption terminal or a cash cage, or insert them into another machine.
“Under federal law, casinos track and record any transaction over $10,000. BCLC is required to report large-cash transactions over $10,000, foreign exchanges over $3,000 and all suspicious transactions to Financial Transactions and Reporting Analysis Centre of Canada,” B.C. Lottery Corp. said. (The centre’s primary function is dealing with money laundering and terrorism-related transactions, not seniors at slot machines.)
TD Bank
Elfriede Lippa was 85 in 2009, when the TD Bank issued a $170,000 conventional mortgage on a condo that she owned outright.
“We knew your mother had money issues, we were just trying to help her out,” a branch manager told Tom Lippa when he asked for answers. Jeff Meerman, a spokesman for TD Bank Group, said he was unable to disclose details about Elfriede’s finances for privacy reasons, but said the bank would look into the matter and get back to the family directly.
Two weeks later, a TD representative told Elfriede’s son and daughter that he will need more time to figure out what he’s dealing with.
TD Bank did not lose money on its deal with Elfriede Lippa; its loan was paid off when Elfriede obtained a reverse mortgage from HomEquity Bank.
Conventional vs. reverse vs. second
Elfriede’s TD mortgage was a conventional one: A loan for no more than 80 per cent of the appraised value or purchase price of the property.
Her next mortgage was a reverse mortgage, which is designed for homeowners 55 years of age and older, and gives them access to cash without having to sell their home. No regular payments are required, because the interest owed accumulates; the size of the mortgage increases over time. The mortgage must be paid off when the house is sold.
HomEquity Bank, which provides reverse mortgages in Canada, will lend 50 per cent of the home’s value to people who are paying an existing mortgage and can obtain an additional source of funds.
Along with the reverse mortgage, Elfriede obtained a second mortgage, which is a second loan with a different lender. A second mortgage is riskier for lenders, so interest rates on them are higher than on first mortgages.
The condo appraiser
When Elfriede applied for the reverse mortgage in 2010, she had to have her condo appraised.
Royal Oak real estate appraiser Darlene Fritz valued it at $295,000, an amount her family contends was too generous.
“Mom’s still has the pink carpets and pink and blue wallpaper. It is all about late ’70s,” says daughter Sue Yakubowich.
In June, an updated condo the same size as Elfriede’s sold for $223,000.
Fritz said in an email that she is not able to comment on specific client matters for professional and privacy reasons.
“I do note that market values and comparables do fluctuate over the years,” she said.
The higher the assessed value, the more Elfriede could borrow. Even with an assessment of $295,000, however, Elfriede could not get a reverse mortgage large enough to cover her TD mortgage.
HomEquity Bank
Elfriede paid off her TD mortgage with the help of a reverse mortgage of almost $140,000 from HomEquity Bank.
Her daughter, Sue Yakubowich of Oak Bay, has written a letter of complaint to HomEquity about Elfriede’s financial situation.
“My mother should have never qualified for the reverse mortgage and is now in the process of going bankrupt,” Yakubowich wrote.
“She is now 91, owes more then her condo is worth and cannot make payments. Instead of being able to sell her condo and paying her bills, she is on government assistance,” she told the bank.
The bank’s director of portfolio management has formally responded to Yakabowich’s complaint.
“As part of our mortgage application process we ask every applicant for the purpose of funds,” Corinna Milevski wrote. “The purpose of funds for your mother’s reverse mortgage was to pay off an existing mortgage with a monthly debt service payment of $850.”
She said a “significant portion” of HomEquity customers use all or part of their reverse mortgage to pay off existing debt in the form of mortgages or home equity lines of credit.
“I appreciate this is a difficult time for you and your family. I can assure you that HomEquity Bank’s practices and guidelines are compliant with applicable regulations,” she said.
“If there is anything else that we can help you with as you continue dealing with your mother’s affairs please do let us know.”
The HomEquity Bank mortgage stipulates that signers acknowledge private mortgages are not part of reverse mortgages.
The second mortgage
HomEquity Bank would not lend Lippa the full amount of her TD Bank mortgage because it exceeded the limit of 50 per cent of the current value of the property.
Tom Lippa said HomEquity had a solution for his mother: “They found her a second lender so she qualified.”
Elfriede obtained a second mortgage for $35,000 at 11 per cent interest and a $2,000 lending fee. The lender was a businessman in Sidney.
Her daughter, Sue Yakubowich, has complained to HomEquity Bank about the second mortgage, since the bank had required it as a condition of granting the reverse mortgage, and said it had called the lender to “make this transaction work.”
Independent legal advice
Anyone who obtains a reverse mortgage from HomEquity Bank is required to hire an independent lawyer to confirm that they appreciate the nature and consequences of agreeing to a reverse mortgage.
Conventional mortgages arranged through a bank do not require consultation with a lawyer.
In 2010, Elfriede went to a lawyer she did not know, rather than a lawyer she had dealt with before and had an office a few blocks from her condo.
Her son, Tom Lippa, said she signed “18 pages of financial gibberish” but he does not believe his mother understood what she was signing.
Encore cards
Elfriede had an Encore loyalty card that gave her free-play rewards, promotions and discounts when she gambled at slot machines. Encore points are earned by playing any slot machine, electronic blackjack, baccarat or roulette game.
A player receives one point for every $1 of slot play, and for every 1,000 points earned, a player can get $5 worth of play for free.
Between June and December of 2015, Elfriede earned 34,872 points over 43 days, said her son Tom Lippa.
That averages more than 5,000 points a month, her pattern being “the last few days of the month followed by the beginning of the month,” which he said coincides with her pension deposits.
More than 138,500 British Columbians have Encore loyalty cards.
The gambling spree ends
Elfriede’s savings are gone.
She owes almost $200,000 to HomEquity for the reverse mortgage, and another $40,000 to the private lender who gave her a second mortgage. That mortgage had a five-year term, and repayment is overdue.
She no longer has enough equity to defer her property taxes.
View Royal Casino and problem gambling
“At Great Canadian Gaming Corporation (View Royal Casino) all matters related to potential problem gambling behaviours of our guests are taken very seriously and addressed appropriately,” said a statement from Chuck Keeling, vice-president of stakeholder relations and responsible gaming.
“We are saddened by the presented situation and circumstances; however, due to the privacy rules by which we are governed, we are unable to provide further details regarding this specific situation.
“I can reassure you that with the robust problem and responsible gambling programs and structure that we have in place at our B.C. operations, resources are available for all who need assistance addressing their play habits.”
B.C. Lottery Corp. and problem gambling
B.C. Lottery Corp. says problem gambling can be a serious issue, and it has many services to encourage responsible gaming. “This is part of our mandate, and we don’t take short cuts,” Angela Koulyras of BCLC media relations said in an email to the Times Colonist.
GameSense advisers, contracted by the province to watch for signs of trouble such as aggression or distress, are on duty at peak times at View Royal Casino, and can offer advice to gamblers.
B.C. spent $5.9 million in 2014-15 to support its Responsible and Problem Gambling program, which offers:
• A 24-7 help line with free information, crisis counselling and referral services in several languages.
• Problem gambling counselling sessions, with 7,500 given at no charge to 1,500 B.C. gamblers and families in 2014-15.
• Conversations about risks, offered by GameSense advisers to about 60,000 individuals in casinos and gambling centres.
• Presentations on responsible gambling, delivered at schools, communities, and online to more than 134,000 people in 2014-15.
Another $3.5 million was budgeted by BCLC for responsible gambling programs, advertising and promotion.
About 9,300 gamblers exercised voluntary self-exclusion from gambling sites in 2015-16.
A 2015 Ministry of Finance report said the problem gambling rate has decreased to 3.3 per cent in 2014 from 4.6 per cent in 2008 — a reduction to 125,000 people in 2014 from 159,000 in 2008.
Seniors and problem gambling
There are no dollar limits or won-lost ratios for how much a person can gamble in a given time period that would trigger staff oversight.
“We respect the privacy of our players in how they choose to manage their discretionary funds,” said Koulyras.
Would an elderly customer coming in with large amounts of cash trigger any warning from staff?
Again: “We respect the privacy of all our players in how they choose to manage their discretionary funds.”
Any particular oversight that pertains to very elderly people who are gambling?
“Gaming staff are trained to respond to players in distress, regardless of age through BCLC’s Appropriate Response Training program, which is mandatory for all gaming-floor staff,” BCLC spokeswoman Angela Koulyras said in an email.
“They wouldn’t necessarily call out a player who is a senior; however we do have training guidelines in place to address types of behaviours that may be of concern, such as visible distress, blaming a machine for a loss, or intoxication.”
She said GameSense advisers receive specialized training in responsible and problem gambling, including education about the specific risks to senior players and best practices to discuss gambling with senior players.
Seniors have more leisure time and their gambling losses can have a greater impact on fixed retirement budgets, she said. Also posing risks are “major life changes that could lead seniors to gamble to escape other problems.”
GameSense Info Centres have information that is specific to senior players, and explains how gambling may affect seniors, she said.
“We also have information tailored to family members of seniors to help spot the signs of a problem and encourage conversation.”
BCLC launched GameSense for Seniors last year to increase awareness of budgeting tools and enable conversations about gambling between seniors and family members. The website can be found at gamesense.bclc.com/your-gamesense/ seniors-and-gambling/intro-to-seniors-and-gambling.html
The bottom line
In fiscal 2014-15, BCLC’s casino and community gaming centres had $1.8 billion in revenue, with $69 million of that recorded by the View Royal Casino.
