When Retirement Gets Zapped Because of Foreclosure: What is Happening to Lots of Florida Seniors – the new AARP Report
Posted By Larry Tolchinsky on September 18, 2012
The American Association of Retired Persons (AARP) has just issued what it believes to be the first research study in the United States to report on how the Foreclosure Fraud housing crisis has impacted Americans who are 50 years old or older. You can read the complete report online here.
New Report – Nightmare on Main Street: Older Americans and the Mortgage Market Crisis
According to their findings, there are over 3,000,000 Americans who are 50+ years old who are at risk of foreclosure and losing their homes. From the AARP report, entitled “Nightmare on Main Street,” the following facts exist:
- approximately 3.5 million loans of people age 50+ are underwater and without equity
- 600,000 loans of people age 50+ were in foreclosure
- 625,000 loans were 90 or more days delinquent.
- 2007 – 2011, more than 1.5 million Americans age 50+ lost their homes.
Here are the Key Findings from the AARP research report:
- Among people age 50+, the percentage of loans that are seriously delinquent increased 456 percent during the five-year period, from 1.1 percent in 2007 to 6.0 percent in 2011. As of December 2011, 16 percent of loans of the 50+ population were underwater.
- Serious delinquency rates of borrowers age 50–64 and 75+ are higher than those of the 65–74 age group. People in the 75+ age group are facing increasing mortgage and property tax expenditures and decreasing average incomes. Serious delinquency rates of the <50 population are higher than those of the 50+ population.
- Of mortgage borrowers age 50+, middle-income borrowers have borne the brunt of the foreclosure crisis. Borrowers with incomes ranging from $50,000 to $124,999 accounted for 53 percent of foreclosures of the 50+ population in 2011. Borrowers with incomes below $50,000 accounted for 32 percent.
- The foreclosure rate on prime loans of the 50+ population increased to 2.3 percent in 2011, 23 times higher than the rate of 0.1 percent in 2007. The foreclosure rate on subprime loans of the 50+ population increased from 2.3 percent in 2007 to 12.9 percent in 2011, a nearly sixfold increase over the five-year period.
- African American and Hispanic borrowers age 50+ had foreclosure rates of 3.5 percent and 3.9 percent, respectively, on prime loans in 2011, double the foreclosure rate of 1.9 percent for white borrowers in 2011.
- Since 2008, Hispanics have had the highest foreclosure rate on subprime loans among the 50+ population—14.1 percent in 2011. African Americans age 50+ had the highest foreclosure rate in 2007. White borrowers age 50+ had the lowest subprime foreclosure rate until 2010, when their rate was slightly higher than that of African Americans and remained higher in 2011.
- One-quarter of subprime loans of borrowers age 50+ were seriously delinquent as of December 2011.
- More policy solutions are needed to assist all homeowners, particularly older Americans. Policy solutions that should be considered include: principal reduction loan modifications; mediation programs; more access to housing counseling and legal assistance programs; and development of short-term financial assistance programs.
Larry Tolchinsky’s Tip:
Older Americans, particularly those over the age of 65 have different concerns than younger Americans in fighting a foreclosure defense: for one thing, many of these older Floridians have a set, established monthly income: it’s a fixed retirement pension, a set monthly amount that isn’t going to go up or down much. Consider these unique concerns:
These folk aren’t able to go and get a second job to try and bring more money into their foreclosure mortgage fight.
Additionally, the absence of equity when a home is underwater means that end of life planning and things like planning for long term care needs take on a different strategy. The days of assuming that the equity in your home protects you in your golden years is over for many Floridians.
Florida home owners with underwater mortgages also need to consider the ramifications of a short sale on their future: will they have to pay a deficiency judgment? Will the Internal Revenue Service consider the deficiency amount in the short sale as income?
It’s a terrible time for Florida right now, and it’s smart for Florida home owners to get legal advice both on their estate planning as well as their real estate mortgage defense. Many law firms, like ours, understand the financial pressures that exist today and are willing to be flexible in fee structures and things. Lawyers can help, but only if you ask them.
Do you have questions or comments? Then please feel free to Chat with Larry in the comments below, at firstname.lastname@example.org, or (954) 458-8655. If you have a specific situation, please call or email Larry because he can’t answer specific fact questions in general comments. He’s happy to take your call.