Photo: Flickr via ronniegavelin
While the mortgage crisis seems to have fallen out of the news, seniors in particular are still reeling from its effects.Caught in a cycle of decreasing income but increasing expenses, seniors have proven especially vulnerable to foreclosures.
From 2007 to 2011, more than 1.5 million older Americans lost their homes as a result of the mortgage crisis, and millions more were underwater (meaning they owe more than their home is worth), according to the AARP.
“I have seen a consistently high rate of serious mortgage delinquency and foreclosure filings for clients 60 and older,” says Berbeth Foster, an attorney who has worked in the Senior Citizen Law Project of Coast to Coast Legal Aid of South Florida since 2010.
AARP DOCUMENTS EPIDEMIC
According to report released by AARP in July, “millions of older Americans are carrying more mortgage debt than ever before, and more than three million are at risk of losing their homes.”
Key facts (as of December 2011) from the AARP report include:
- 3.5 million loans of people age 50+ were underwater
- 600,000 loans of people age 50+ were in foreclosure
- 625,000 loans were delinquent by 90 or more days
Seniors who are older and in the middle- and lower-income brackets have been the hardest hit.. Homeowners who are 75 and older have some of the highest serious delinquency rates, and borrowers with incomes below $124,000 account for 85 per cent of foreclosures for homeowners aged 50 and over, according to the report.
SENIORS MORE VULNERABLE
There are many reasons why seniors might find themselves in foreclosure trouble, says Foster. “Primarily, we see elderly clients refinancing their homes to get cash out in order to pay credit card debt, medical bills and/or to give money to their children and grandchildren,” she explains. “Older Americans need to understand that it is a bad idea to take out more debt on their homes at the stage in their lives where their incomes are decreasing.”
Non-payment of property taxes, homeowners’ insurance premiums and condo/homeowner association dues can lead to liens on a property and, ultimately, to foreclosure, Foster says. Taking out a reverse mortgage does not absolve homeowners of those responsibilities. Retiring, loss of a job and death of a spouse can also decrease seniors’ incomes, making foreclosure more likely.To make matters worse, seniors are often easy targets for mortgage and foreclosure rescue scams. Ones to look out for, according to Foster, include:
- Companies that promise to help seniors get caught up on their mortgage payments, but the senior winds up signing title to their property and all their equity away
- Companies that promise to obtain loan modifications for delinquent homeowners, requiring seniors to pay hundreds, sometimes thousands of dollars, forcing them even further behind on their mortgages
- Companies that tell seniors there are laws created to keep mortgage companies from foreclosing on them because they are senior citizens, which is not true
The key is seniors “should not pay a company that promises to get them a loan modification,” Foster insists.
WHAT CAN SENIORS DO?
Even programs created by the federal government have proved unhelpful to this group of vulnerable citizens.
For instance, the Home Affordable Refinance Program (HARP), launched by President Obama to help stabilise the U.S. housing market, has strict guidelines requiring homeowners to be current on their payments.”To date, public policy programs designed to stem the progression of the foreclosure crisis have been inadequate, and programs that focus on the unique needs of older Americans are needed,” noted the AARP in its report.
“It is not a program created to assist homeowners who are already at risk of losing their home,” Foster says. “The time to look into applying for HARP is well before one is in danger of falling behind on their mortgage payments.”
Seniors who feel they are in danger of falling behind (as well as those already behind) can, however, seek free housing counseling and loan modification assistance from a local non-profit, HUD-approved agency. And you don’t have to wait until you’re behind on mortgage payments or in foreclosure to seek help, says Foster.
In addition to local programs like Foster’s, check out the National Foreclosure Mitigation Counseling Program, launched by NeighborWorks America in December 2007.