From 2007 to 2011, more than 1.5 million older Americans lost their homes as a result of the mortgage crisis of 2007-2008 and more than 3 million more are at risk, according to a study conducted by AARP’s Public Policy Institute.
“Nightmare on Main Street: Older Americans and the Mortgage Market Crisis,” released July 19, is the first study about the effects of the mortgage crisis on people 50 and over, according to the organization. The study purports that foreclosure is impacting more and more seniors, particularly those over age 75.
Between 2007 and 2011 the foreclosure rate on prime loans rose 23 times from 0.1 percent to 2.3 percent, according to the report. And though the foreclosure rate among seniors was less than that of people younger than 50, the rate of growth among older borrowers was faster.
“More older Americans are carrying mortgage debt than in the past, and the amount of that debt is also increasing … leading to their worsening situation,” said Debra Whitman, AARP executive vice president for policy. “It’s one thing if your housing value goes down in your 50s. It’s another thing if you’re 75. For some people, it’s not like you can go back to work.”
As of December 2011 the situation worsened: 3.5 million older mortgage holders owed more than their homes were worth; 625,000 were 90 or more days delinquent on their loans and another 600,000 were in foreclosure.
Among seniors of color, the situation is dire. African American and Hispanic borrowers of prime loans in 2011 had foreclosure rates of 3.5 percent and 3.9 percent, respectively, double the foreclosure rate of 1.9 percent for White borrowers.
And with respect to subprime loans, while African Americans had the highest foreclosure rate in 2007, since 2008, Hispanic seniors have led in that category—14.1 percent in 2011. White borrowers age 50+ had the lowest subprime foreclosure rate until 2010, when their rate edged past that of Black seniors.
The strain of higher costs of living on fixed incomes may be to blame for the foreclosure trend, among other reasons, the report indicates. And the loss of equity—traditionally a source of security for older Americans—will, sadly, make things worse.
“You may have been working for years toward paying your mortgage, and the security you thought you’d have isn’t there," Whitman stated. "Not only that, the downturn in the market meant savings fell flat. Pensions are going away. It's really this huge storm of things hitting people right now."