2022-07-02

Foreclosure Crisis Hits Oldest Americans Hardest

As everyone knows, the foreclosure crisis hit Americans of all backgrounds hard. And, regardless of all the talk about our supposed “recovery”, most people are still feeling the lingering effects of the Great Recession. Now, a new report by the American Association of Retired Persons Foundation entitled “Nightmare on Main Street: Older Americans and the Mortgage Market Crisis” reveals two disturbing trends: First, many Americans over 50 are either in foreclosure or in danger of ending up in foreclosure. Second, the foreclosure rate for Americans 75 and older has been higher than for most other groups of people over age 50.

This reverses the trend that had been established over the past decades where the majority of older Americans had paid off their mortgages by the time they reached retirement age and had a measure of security when it came to their homes and their equity. The past 20 years or so saw a reversal of those trends.

The study is the first of its kind, gauging the effects of the mortgage crisis on Americans age 50 and older for the years 2007 through 2011.

Among the report’s major findings:

  • 3.5 Million Americans age 50 and older are “underwater” (16% of loans).
  • 600,000 Americans age 50 and older are in foreclosure.
  • 625,000 Americans age 50 and older are 90 days or more delinquent on their mortgages.
  • 1.5 Million Americans age 50 and older lost their homes to foreclosure between 2007-2011.
  • Serious delinquency rates of borrowers age 50-64 and 75+ are higher than those of the 65-74 age group. People in the 75+ age group in particular are facing increasing mortgage and property tax expenditures and decreasing average incomes.
  • The increase in foreclosure rate was highest for those 75+.
  • Many people deplete their retirement and savings in an attempt to save their home. Older people face more challenges recovering from a foreclosure because they have fewer working years remaining in which to rebuild their finances; moreover, those who have lost their jobs face longer periods of unemployment, and when they do find a job, it is often at a lower salary than the one they had.
  • The presence of homes lost to foreclosure in a given neighborhood is associated with increases in anxiety and suicide attempts, hypertension, and physical complaints that could be stress related.

There are many choices when you fall behind on your mortgage, including:

  • Loan Modification – where the terms of your mortgage are re-negotiated so that your monthly payment becomes more manageable.
  • Short Sale – where the lender agrees to accept less than the full amount owed on your mortgage as full settlement.
  • Forbearance – where a payment arrangement is worked out for the amount of the arrears.
  • Deed in Lieu of Foreclosure – where the lender allows you to deliver a deed to the premises as settlement of your obligations under the mortgage.
  • Bankruptcy.

The one thing you should not do is procrastinate. Time is of the essence. Beware scammers who offer to help for a large up-front fee. Instead, use a government approved agency or a trusted lawyer.

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