Mortgage Meltdown Stressing Many Seniors

1/19/2009

posted by N. Sioris

Stumble It!

According to an Associated Press analysis of 2007 Census Bureau data, senior citizens are one of the population groups hard hit by unaffordable mortgages. Among seniors that carry a mortgage, nearly 3 in 10 spend at least 38 percent of their income on housing.

The stress is most severe in nine states: California, Washington, D.C., Florida, Massachusetts, Nevada, New Jersey, New York, Rhode Island and Vermont.
According to the survey, "inequality in America has traditionally followed familiar patterns of race, age and education. Those long-standing gaps have been magnified by the real estate boom and now the historic bust."

AARP Addresses The Same Issue

It was reported last week that due to the growing concern among middle age and older Americans about their ability to make mortgage payments, AARP has put helping people facing foreclosure near the top of its agenda for the 111th Congress.

AARP's vice president for government relations and advocacy, Elaine Ryan, said during a recent 3 month period, more than 700,000 older Americans faced foreclosure. Some of the proposals set forth by AARP for its 2009 Legislative Priorities are:

• Modifying Primary Debt: Enact legislation that would allow bankruptcy judges the discretion to modify primary mortgage debt;

• Giving a Time Out: Provide homeowners facing foreclosure with a temporary “time out,” which would allow them to negotiate a new loan using the Hope for Homeowners program or other refinancing option;

• Accessing Equity: Raise the home value limit to $625,500 for the FHA’s Home Equity Conversion Mortgage (HECM) reverse mortgage program, which provides older homeowners the option of tapping the equity in their homes to pay off mortgages that have become too costly;

• Holding Banks Accountable: Require banks receiving assistance from the Treasury Department to modify loans before foreclosing on struggling homeowners; and

• Stop Taxing Borrowers: Remove disincentives in the current tax code for struggling homeowners who renegotiate their home mortgage loans.


Ever since the housing bubble started to burst we have been blogging about the fact that many senior homeowners have saved their homes from foreclosure with the use of a reverse mortgage. Many have taken advantage of this financial tool. Unfortunately many that did not, may no longer have the opportunity to do so if their home value has declined sharply. It is even worse for those that might have a negatively amortizing loan and now they owe more on a home that is worth less. Read more here from a previous post.

If you are in danger of losing your home and want to find out if a reverse mortgage might be the salvation you are looking for, request a free reverse mortgage evaluation today.