As many as 3 million American seniors, arguably the most vulnerable consumers in the country, are on the brink of losing their home, according to a recent AARP study.In its report “Nightmare on Main Street,” the group looked at the mortgage crisis’ effect on the over-50 sect for the first time. As the title suggests, the outlook is far from bright.
Americans over the age of 50 accounted for 3.5 million underwater home loans as of December 2011––about 16 per cent of all loans issued to that age group.
“The homeownership experience has changed from the American dream to the American nightmare for millions of older homeowners,” the report says. “The collapse of the housing market that began in 2006 continues to be reflected in rising numbers of mortgage delinquencies and foreclosures.”
Between 2007 and 2011, 1.5 million older Americans lost their homes to foreclosure during the mortgage crisis, while the foreclosure rate for homeowners over age 50 ballooned from from 0.3 per cent in 2007 to 2.9 per cent in 201. For those with seriously delinquent loans – those in foreclosure or more than 90 days past due, the percentage went from from 1.1 per cent in 2007 to 6.0 per cent in 2011.
And the older the homeowner, the more susceptible to foreclosure they are, the report shows, with the biggest jump in mortgage debt occurring in those over age 75.
“The collapse of the housing market has been especially painful for older homeowners,” said Debra Whitman, AARP Executive Vice President for Policy. “Older homeowners often rely on their home equity to finance their needs in retirement – things like health care, home maintenance and other unexpected needs. The fact that so many older Americans have no equity at all is troubling.”
The group pins most of the blame on public policy programs it says have been “inadequate” in helping older consumers out of unhealthy mortgage situations.
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