ELDER PROSE: The Old Grandfather and the Grandson

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.

“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.”
[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.]

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.

Foreclosure Rate

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


If Mr. Johnson had lived in the house since 1963, why hadn't he paid it off? There's got to be more to it.

Florence asked the same question I had. My guess is he did what I know some of my friends did-- refinanced to get extra money all along the way and sometimes with variable interest rates which meant what looked okay one year for payments might have been a disaster a few years later when the rates and payments went up. It didn't help with taxes rising with those supposed increased values (don't seem to go down now, do they?)

A lot were encouraged to take what they considered their 'gains' in the home values rising to buy nice things, take trips, help out their kids, or maybe just to live if they couldn't get work.

The reason generally elders didn't have to worry about losing their homes was they had paid them off (and likely saw their values rise and fall many times during those years). With that encouragement to refinance (ads were on TV all the time) and take the money for other needs, probably a lot less ended up with paid off mortgages. I don't, of course, know that is what happened to him but it seems the only possible explanation if he bought it that many years earlier.

I fully agree with the 2 previous comments to your post. In addition, I have been amazed recently to learn of more than a few acquaintances who at age 75+ were still paying mortgages! That totally surprises me. And yes, as Rain points out, some used "gains" in home values to enjoy life & help the kids. I guess not only the young & very young make bad choices & ignore consequences. Dee

This a timely post for me.

I just was offered the opportunity to buy my own home via a government-funded
program and, out of curiosity, I attended and 'graduated' (their word)from the program -- mostly out of curiosity. It sounds good on paper but I remain skeptical as another scam on poor people. This post is definitely food for thought.

I'll let you know what their doing when I find out more. I'll be meeting with someone soon so and I'll know more.

I'm interested in readers' willingness to assume something negative about Mr. Johnson not having paid off his mortgage.

Of course, we have no way of knowing - the story does not tell us - but dozens of reasons come to my mind. Perhaps he refinanced one or more times since 1964 due to:

Expensive family medical bills not covered by insurance?

To help a child or children who were in financial trouble?

Perhaps a business failure?

Maybe long-term unemployment that ate up savings?

Could there have been a natural disaster that insurance did not entirely cover?

A fire?

I could go on. And what if he did refinance for reasons you don't approve? Does that mean losing his home is any less a tragedy?

As reporters often do to help explain events, this one interviewed Mr. Johnson to put a human face on a terrible problem.

To assume and publicly speculate that the man must have done something wrong is how reputations are ruined based on nothing but ungenerous people's rush to judgment in the face no facts whatsoever.

The San Diego UT ran a report on this yesterday.

Homeless elders. I personally know one, a lawyer who lost her job, lost her home of 30 some years, and just now moved in with her sister.

I agree Ronni. My first thought was that he could have taken money out to pay for general house upkeep that he didn't have the savings for (a new roof for example, can easily cost over $10,000, a new furnace...$4,000, etc). And, what if it wasn't for expenses, who cares? One of the privileges of owning a home is having access to the equity if you need it.

Also, many well known financial experts (Ric Edelman in the DC area) keep telling everyone to never pay off your mortgage! While I usually agree with what Ric advises, I fully intend to pay off my mortgage in the next 5 years (I'm 52 years old), through lots of scrimping and saving to put extra money every month into my usual mortgage payment.

I see the other side of the coin because I know of folks who did just as you suggested Ronni, but many others did not. I don't think we "disapprove" of Mr. Johnson's situation & blame him, but from a practical point of view, I see elders doing some really questionable things with their money. I guess I'm just more cautious because of my personal situation. I have a nice chunk of change that I'd like very much to use for especially my kids, but I know that chances are very good that eventually it will go for long term care & I'm not sure that medicaid will be there for us when the time comes & I definately do not want my kids saddled with parents who cannot pay for themselves in their old age. Dee

Personal concern about one's own finances is not an acceptable reason to attack another based on an uninformed guess.

Though I was certain too that many elder mortgages were under water I am surprised to the see how many actually are. I would have thought many would have been able to clear their house payments by the time they reach the retirement age of 65 but clearly this is an illusion I've had

Thanks Ronni for this info.

I have a friend whose mortgage is underwater and the payment leaves her with no money for extras. She refinanced because her son (who was employed but had no insurance and had been out of work previously for a 1 1/2 years wiping out his savings) developed a life threatening medical condition that he couldn't get treated without forking over big money. He had no sick leave either so was unpaid for two months while he recovered. His employer did keep his job for him. By next year he should have medical coverage but has still large unpaid bills. I don't think I could keep my resources if one of my children's lives were at stake.

My friend the Rev. Gloria Del Castillo thought she had made good provision for herself -- she approached retirement with a pension and a mortgage she believed she could pay. But she's not some kind of financial whiz; she's a hard working immigrant from Peru who toiled all her life and had good credit.

When she loses her house to Wells Fargo, I'm sure the community she has nurtured will take her in. But there is something desperately wrong with an economic system that let's a few people win and lose bets of millions of dollars with the livelihoods of good solid people who thought there was something more important than making lots of money.

Ronni, my feeling is that some would feel more comfortable thinking Mr. Johnson must have done something questionable to be in his present position.
It's less hurtful and also assuring to some that it can't happen to them.

I find his situation very sad and also scary.

Anyone who thinks Mr. Johnson is as fault for losing his home please go read the story janinsanfran links to in her comment above and please reconsider before condemning anyone about whom you know nothing.

Ugh! Wells Fargo! They are now paying settlements to low-income and minorities whom they led into variable rate loans in numbers disproportionate to others. The fact is that people who previously may have been level-headed and cautious about their finances were led astray during the sub-prime debacle. Many of them were likely seniors or aged into that status after entering into one of these crummy loans. It was a set up, from which companies like Wells Fargo knew they would end up profiting hugely. They deserve much more than the penalties now being assessed. They raised ripping off people to an art form, enriching themselves at others' expense, then were rewarded by the government bail out money. This token gesture of accountability hardly begins to compensate for the damage they and others have done.

There is something about my age group (55-65), thinking we have a world of time to "make up loss". I have two brothers- one who lost his home (and family) in the bust, and another who refinanced his home slightly before the crash.
My homeless brother lives in my sister's winter house. My other brother slugs through every month trying to meet the bills. It is SO hard to watch. Both men were/ are very hard working. They had huge incomes before the crash---leveraging---as all financial advisors used to tell us to do.
I believe we have not seen the end of homeless, formerly middle class elderly---but are only seeing the tip of the ice burg!
Thank you for bringing this issue to the surface.

No one was attacking him that I read nor was I. Simply it's looking for why and I have several good friends, who I also did not attack, but they did exactly that-- refinanced and refinanced. Not everyone old makes good decisions and to blame his situation on the culture, economy or someone else is equally jumping to conclusions. I stated clearly I do not know why he hadn't paid off a home that he had bought almost 50 years ago. But it does make a person wonder especially if they had friends who used that refinance with variable interest for new furniture, trips, etc. I stated he might've needed it because he lost a job. To put me down though for suggesting possible reasons makes me think posting a comment here might not be something I want to do in the future unless I totally agree with the blog!

My son is a classic example of what is happening to elders. He bought a house 30 years ago after having rented it for 5 years. He had a nice equity built up when his wife had emergency surgery and no health insurance. He had to refinance and when the housing bubble burst he found himself with no equity and owing almost double the value of the house. He loves the house and has been struggling to keep paying the high mortgage payments.

He lost an additional $1,000 when he fell for a scam. A lawyer convinced him that he could sue the bank because they no longer held the mortgage. After giving the lawyer an additional $1,000 he found out that the California Attorney General was suing the lawyer for fraud.

Mark has continued paying his mortgage off and trying to work with the bank. The bank supposedly loses papers, etc. and stalls. He is still trying to save his house by getting the bank to lower the mortgage adjusted to today's value.

Mark has put so much of himself in that house and has lived in it most of his adult life. Mark is 61 years old and is now working with a government agency hoping to get the mortgage reduced.

Mark is thrifty and has never taken expensive trips or bought expensive furniture or personal items. I find it offensive that the victims are being blamed instead of the banks who got us in this mess.

Ronni, I was most certainly not condemning Mr. Johnson! I felt there had to be more to the story and there was.

it is so sad for so many. I was hit financially by the real estate buble as many of us were, but I still have my own home and I will be able to retire at 65.

When I hear these stories my heart weeps. And it was all because for some people there is never enough money. And, I might add far too little integrity.

I agree that no one attacked Mr. Johnson or any of the others in such dire circumstances. But can we agree that this sad situation can be seen from a variety of perspectives? I'd also add that there are many here suffering from circumstances (other than financial) that we had never dreamed would happen to us. So we can & do relate to others. Dee

Predatory lenders preyed and continue to prey on elders, low-income people and people of color. They also can take advantage of the functional mentally ill. That is how a friend of mine managed to refinance her home for more than it was worth; she was a charming bipolar with mental issues since childhood and kind of a hoarder who funneled her compulsive buying into fixing up her house. Yes, she made the choices, but they weren't "sane" for someone with her income and fragmented work history that showed she was seldom able to keep a job for more than a year.

On the other hand, my sane, well-paid and hardworking but financially unsophisticated brother bought his Oregon home in 2006, put all the equity ($120,000) realized from his Idaho home sale into his current $270,000 home that now is appraised at $136,000. His mortgage interest originally was more than 10 percent. I would have to say he was not well-served by either his Realtor or lender, but then I know how stubborn and debt-averse he is. He now says he will rent his home from Wells Fargo until he dies -- unless his company goes under as has happened with the four other companies he's worked for in the past 7 years.

This is how it is in the U.S. now. Game over. And if you want to get more details on why, read this: americawhatwentwrong.org.

I agree with you, Ronnie. We all know how ASSUME can be defined. I always cringe when people make assumptions without knowing facts.

It's the ruined pear preserves that are getting me--a simple sweet effort by the man to make a gift for others, a symbol of what greed can take away from us all. Who cares what he may or may not have 'done right' to this point? He and all of us blighted by big banks and corps do not deserve to have our humanity and dignity ripped away.

Bravo Ronni! While I seldom agree with many of the bloggers or with you--you hit the nail on the head with your criticism of others without knowledge of or simply disapproving of actions taken.
As a lifelong Democrat I was taken aback by 'someone' last week saying "I hate Republicans' Life is way too short to 'hate' others because they believe or think differently than you. We need
Ethical politicians who mean what that say and intend to do their best to put it into practice. So far the field is woefully lacking!

Somewhere in my organized and well planned life - I mixed it up and am currently $3000.00 short on my 2012 tax bill. The reverse mortgage has been great but the money is all gone and we could go into foreclosure if we don't pay that amount before the 2013 taxes are due. I offered to work for nothing to pay it off to the city but they don't do that for its residents. We have lived in this house for 40 years and please if anyone knows where I could get that amount of money - loan-please advise. I know payday loans might help but the interest rates would be verbotten. Ronni and friends - maybe you know?

I am not asking for money just advice....very interesting article - I feel for Mr.Johnson and anyone of our elders in these tough situations.

I am disturbed by critical comments made by readers who do not have the whole story. Blaming the victim may bring reassurance to the blamer in the short run but it will be cold comfort when it becomes their turn. I would like to repost this sad cautionary tale on my blog. Many of us are facing this dark picture, I know I am. And I been advised (by an article in AARP's magazine) that reverse mortgages can be a path to bancruptcy, as well. Meanwhile seniors are being encouraged to share their homes as one solution to the problem. I am doing that with wonderful results. Unfortunately, it is completely illegal in the town I live in. Oh well. One can but try.

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