During the current mortgage crisis, Americans who are 50 years or older are facing the same difficulties paying off their home loans like younger people, according to a study from the AARP Public Policy Institute.
As of December 2011, 600,000 mortgage loans that belonged to individuals who are at least 50 years old were in foreclosure. Additionally, 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. Debra Whitman, executive vice president for policy at AARP said the collapse of the housing market has been “painful” for older homeowners.
Over the last five years, the AARP report revealed that the percentage of loans considered to be seriously delinquent increased 456%, from 1.1% in 2007 to 6% through December of last year.
The study also finds that people age 75 and older have a higher foreclosure rate (3.2%) than those age 50 to 64 (3%) or age 65 to 74 (2.6%).
“More older Americans are carrying mortgage debt than in the past, and the amount of that debt is also increasing,” Whitman said. “Because before-tax income has decreased on average for people age 75 plus, while spending for mortgage interest, property taxes, utilities, and health care have increased, their economic situation is worsening.”
According to the report, more than three million older homeowners are at-risk of losing their homes to foreclosure because they are struggling to maintain their financial security.
At the end of last year, 3.5 million loans (16%) belonging to people age 50 were underwater, meaning homeowners owe more than their home is worth, therefore resulting in no equity.
“Older homeowners often rely on their home equity to finance their needs in retirement—things like health care, home maintenance and other unexpected needs,” Whitman added. “The fact that so many older Americans have no equity at all is troubling.”
Of homeowners who are 50 or older, middle-income borrowers have been hit the hardest. Borrowers with incomes ranging from $50,000 to $124,999 accounted for 53% of the foreclosures that were filed in 2011 against older Americans. Meanwhile, borrowers who make less than $50,000 only consisted of 32% of all foreclosures.
AARP and its affiliates are working toward solutions in helping older Americans deal with these problems by conducting more national foreclosure prevention outreach programs. Since 2010, the program has reached nearly half a million Americans age 50 and older who are fighting to save their home from foreclosure with information and resources.
“Looking ahead, the study shows that this crisis is far from over,” Whitman said. “Many loans remain in danger of falling into foreclosure, even as large numbers of loans are already in foreclosure.”
