Retirees hit hard by foreclosures
The real estate and mortgage crisis has not left the retiree population out of its wake. According to a report by the AARP, comparing mortgage data from 2007 through 2011, the over age 75 population has in fact been one of the most effected demographics by the foreclosure epidemic. More than 1.5 million Americans over age 50 lost their homes between 2007 and 2011 and the rate of foreclosures for this group has increased over the last couple years. In 2011 the 75+ age group had the highest foreclosure rate. To show the drastic change, in 2007 the rate of foreclosures for homeowners over 50 was 0.3% and in 2011 the rate was up to 2.9%. The reason for this rise in defaults on mortgages amongst the aging population is one, the bigger debt loads, older Americans increased their mortgage debt load significantly during the 20 years leading up to the real estate market dive in 2008. According to the AARP report, “This increase partly reflects increased borrowing that was spurred by historically low interest rates and high home values prior to the housing market collapse,” and went on to say, “It may indicate that the oldest borrowers have tapped their home equity to finance their needs in retirement.” This tactic has caused the “great recession” to be quite detrimental for many retirees and older Americans. Another big issue for many aging Americans is that their ATM accounts are empty and tapping into home equity is no longer a resolution for many as over 16% of borrowers over age 50 are underwater. Even though logic would be that the older population would have accrued more equity than younger people, 3.5 million homeowners age 50+ have zero equity. The delinquency rate for the aging borrowers has increased from around 1% in 2007 to 6% in 2011. Debra Whitman, executive vice president for policy at the AARP said, “America’s oldest homeowners have been struggling to maintain their financial security as their incomes are falling, and as mortgage payments, property taxes and health-care costs are increasing.” This is recipe for catastrophe in retirement and instead of enjoying their “golden years” many Americans will be struggling throughout their lives as retirement is becoming more and more out of reach for a large part of the population.
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To read the entire article on the state of foreclosures for retirees, click here.