American Seniors Struggle with Foreclosure
Many of today’s American senior citizens grew up under the American ideal that real estate would always flourish and appreciate in value. Today, more seniors than ever before are now struggling to make mortgage payments and being threatened with foreclosure.
Last month, the nation got its first solid evidence of how the real estate bust is affecting its senior citizens in an AARP report aptly named “Nightmare on Main Street: Older Americans and the Mortgage Market Crisis.”
Despite older homeowners having lower foreclosure and mortgage delinquency rates than people under age 50, these numbers are still rising for senior citizens. Some of AARP’s troubling findings are as follows:
While only 0.58 percent of homeowners over the age of 65 were in foreclosure in 2007, the number jumped to 5.7 percent in 2011. In the same age bracket, more than 5 percent of homeowners are 90 days or more late on mortgage payments as of 2011, which is up from 1.28 percent in 2007. 25 percent of subprime loans of borrowers age 50 or older were also 90 days or more late on mortgage payments or already in foreclosure as of 2011.
While homeownership is usually seen as the safety net for seniors in retirement, these older Americans were not immune to the real estate craze and its ultimate crash. In hopes to cash in on the boom, many older homeowners sold their homes at top dollar and purchased investment properties that ended up flopping. As of December 2011, 3.5 million loans for people age 50 and older were struggling with no equity. In the same age bracket, 600,000 loans were already in foreclosure.
There were even cases in which senior citizens were taken advantage of during the real estate boom. In one instance, an 86 year-old man received a call in 2005 offering him a risk free way to make money on real estate. The mortgage broker, who ended up being unlicensed, had the World War II veteran take out a mortgage on his property that he already owned in order to buy additional investment properties. Now the properties are in foreclosure and his own home in Delray Beach is struggling.
“To face losing your home at a certain age, there’s no time to recover from that,” said Susan Reinhard, senior vice president of AARP’s public policy institute. “If they can’t sell their home, they can’t go to assisted living. That’s a problem.”
Reinhard also stated that AARP plans to release mortgage and foreclosure data that is specific to Florida by the end of the year. While no one knows for sure, the data is expected to reflect what we have already been seeing on the national scale.
For more information, check out the article “Housing Bust Sinks Seniors” in the July 26, 2012 issue of The Palm Beach Post.
Brian F. LaBovick, Esq.
Esther Uria LaBovick, Esq.
Marcie Dodson, J.D.
Rafael M. Diaz, Esq.
Mark R. Hanson, Esq.
Joseph R. Fields Jr., Esq.
Tara L. Kopp, Esq.
Warren Q. Peebles, Esq.
Joseph T. Zebrowski, J.D.