Over 1.5 million older Americans have already gone through foreclosure in the US. And, there are still more at risk nationwide due to the US housing crisis. According to a recent AARP report, the crisis has taken a major toll on older Americans. And, older Hispanics and African Americans are the ones taking the biggest hits.
One homeowner, Jewel, is 57 years old, working in a school as cook. Her husband makes very little money after being laid off from the farmer’s market. She says that her salary isn’t enough to make the mortgage payments on their home in Washington. They’ve been making late payments for an entire year now. But, they didn’t begin to panic until recently when the bank sent them a foreclosure letter.
Like most older Americans, they’ve been living their lives a certain way all these years. All it really takes is one big issue to arise. This one thing can cause their entire lives to spiral out of control. Jewel is not a big spender. She’s still driving the same car she purchased back in 1991. But, now that they’re trying to survive on just one income, they’re facing foreclosure every day.
The AARP Report Statistics
Here are some of the statistics from the AARP report:
- Of all Americans over 50 years old, around 600,000 of them are currently in foreclosure.
- Of those in that same group, around 625,000 are behind on their mortgage payments by three months or more.
- About 16 percent of those in that age group are underwater. In other words, around 3.5 million older Americans owe more on their homes than what they’re currently worth.
According to AARP, within the last five years, the loan proportion of older Americans that are extremely delinquent on their mortgages has increased by over 450 percent. Homeowners below the age of 50 have higher delinquency rates than older Americans. However, the number of older Americans becoming delinquent on their mortgages is increasing at a faster rate. This is according to an analysis of over 17 million mortgages by AARP.
Americans over 50 are having a harder time recovering from the housing market crash that began in 2006. The housing market declined ever more when the 2007 recession began. Eight out of every ten own their own homes. But, most of them are living on fixed incomes. They also have very little savings and have already used up most of their retirement funds. This is a group that doesn’t have many working years left. Therefore, it’s impossible to build their cash flow and savings back up to what it was before the recession.
Older Minority Americans
The foreclosure rate of older minority homeowners is just about double that of white homeowners in the same age group. This trend is also the same in other age groups. By December 2011, 3.5 percent of all older African Americans in the US were in foreclosure.
This was the case with Willie B. who had to file bankruptcy at the beginning of 2012 in order to save her home. At 78 years old, this was the last thing she expected to have to do after just retiring from a job she’d worked at since 1968 for health reasons. She purchased her home in Compton, California in 1969. It should have been paid off by 1999. But, over the years, she’d taken out a couple of loans: one to open a business, and one because of a family emergency. Now, her fixed income is barely enough to make her mortgage payments.
This has become a dire issue in one Maryland district. Rep. Elijah Cummings felt the need to assign one of his staffers to work on the struggling homeowners issue full-time. He’s also set up foreclosure prevention workshops, held by his office regularly. In the meantime, he urges the federal government to continue to promote loan modification and principle reduction programs.
Cummings says that these are a group of Americans who, up until recently, had never missed one mortgage payment in over 20 years. Now, he’s seeing grown men cry over the idea of losing their homes to foreclosure.
Older American Housing Crisis
According to the AARP report, of all the older American homeowners, the ones over the age of 75 are being affected by the foreclosure crisis the most. Back in 2007, only one out of 300 of these homeowners was in foreclosure. Today, five years later, that number has increased drastically to one out of every 30.
Many of these homeowners have also suffered financial crisis. Some have been forced to retire early or been laid off. They lost incomes they’d been counting on, like their deceased spouse’s benefits or retirement funds that didn’t pay off. And, throughout all of this, their mortgage payments still needed to be paid.
AARP officials predict that this situation may continue to get worse before getting better. This is because the housing market recovery process is moving along so slowly. The housing crisis isn’t even close to being over yet. But, now that we have this information, it’s important that more solutions are created to help solve these problems.