Friday, 20 July 2012
Elders' Mortgage/Foreclosure Crisis
When I was writing To Be Old in America 2012, posted here earlier this week, I looked in vain for statistics or reports on underwater mortgages and foreclosures as related to elders.
What little mention there was insisted that older Americans have been left largely untouched by the housing crisis. Common sense tells anyone with half a brain that this can't possibly be so, but it has nevertheless been the general consensus. (You know, all those greedy geezers are rich and don't have financial problems like the rest of Americans.)
As it turns out, I was just a little premature in my interest in hard information on elders and housing during our recession. On Wednesday, AARP's Public Policy Institute published Nightmare on Main Street: Older Americans and the Mortgage Market Crisis.
”This is the first study to measure the progression of the mortgage crisis and its effect on people age 50 and older,” writes the study author Lori Trawinski.[Those of you who fault AARP, don't throw the baby out with the bath water. Their research organization has always been and remains excellent.]
“Based on an analysis of nationwide loan-level data for the years 2007 to 2011, this study examines loan performance based on borrower age, loan type, and borrower demographics.”
The big takeaway from the new report is that more than four years into the recession and housing crisis, the foreclosure rate among elders is soaring and those with the highest rate are minorities and the oldest old, people 75 and up.
Here are some other highlights (well, I suppose one ought to say lowlights) from the study. As of December 2011,
• Approximately 3.5 million loans of people age 50+ were underwater (resulting, of course, in zero equity)
• 600,000 loans of people age 50+ were in foreclosure
• another 625,000 loans were 90 or more days delinquent
• From 2007 to 2011, more than 1.5 million older Americans lost their homes as a result of the mortgage crisis
• More than three million are at risk of losing their homes
The New York Times took the opportunity of the AARP study to put a human face on elder foreclosure. Seventy-nine-year-old Roy Johnson of Mableton, Georgia, no longer able to afford the $1,000 a month payment on the house he had owned since 1963, let it lapse into foreclosure:
”[I]t was painful to watch the house he built 48 years earlier sell for only $33,000 at auction last year,” reports Robbie Brown in the Times.
“Now he lives in what his 55-year-old daughter calls his 'man cave' in her basement. It is an hour away from his old house. Although Mr. Johnson is grateful to have been helped by a relative, he misses having space for all of his belongings and the tree from which he made pear preserves.
“'I planned to die in that house,' he said. 'But I guess it won’t work out that way.'”
Of course, Mr. Johnson is just one example to be multiplied by hundreds of thousands throughout the U.S. and it doesn't help that elders, like younger people too, fall victim to foreclosure scams. According to AARP,
”A recent report by the Lawyers' Committee for Civil Rights found that older Americans accounted for 45 percent of complaints to the committee's loan scam database as of July 2011. Older Americans have reported losses of more than $16 million since 2009 as a result of fees paid to scammers.” [emphasis added]
Although AARP offers a list of policy remedies at the end of their report, there is not the sense of urgency I would like. Our recession and housing crisis is particularly brutal for elders many of whom retired long ago and have not a chance of ever finding a job again.
Not to make light of younger people's burdens, but they at least have some years ahead to try to catch up. Old people do not and their fixed incomes are chipped away at each month from all sides of the economy – pension cuts, medical costs, increasing property taxes, decimated investments and inflation.
Now, in addition to the 1.5 million who have already lost their homes, the 3.5 million with underwater mortgages have no equity to either claim through sale nor with a reverse mortgage to ease the financial crunch in their final years.
The next study I want to see is how many elders have been left homeless from all this.
You can read the AARP report here [pdf].
At The Elder Storytelling Place today, Ned Smith: Broadwalk Blackout