Nightmare on Main Street: Older Americans and the Mortgage Market Crisis
EXECUTIVE SUMMARY
This is the first study to measure the progression of the mortgage crisis and its effect on people age 50 and older. Based on an analysis of nationwide loan-level data provided by CoreLogic for the years 2007 through 2011, this study examines loan performance based on borrower age, loan type, and borrower demographics. The study shows that no age group, race, or ethnicity has been spared from the effects of declining home values and the financial difficulties caused by the Great Recession and continuing economic weakness.
Despite the perception that older Americans are more housing secure than younger people, millions of older Americans are carrying more mortgage debt than ever before, and more than three million are at risk of losing their homes. Although the serious delinquency rate of the under-50 population is higher than that of the over-50 population, the increase in the rate of serious delinquency of older Americans has outpaced that of younger homeowners from 2007 to 2011. 1 As the mortgage crisis continues, millions of older Americans are struggling to maintain their financial security.
As of December 2011, approximately 3.5 million loans of people age 50+ were underwater—meaning homeowners owe more than their home is worth, so they have no equity;; 600,000 loans of people age 50+ were in foreclosure, and 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.
To date, public policy programs designed to stem the progression of the foreclosure crisis have been inadequate, and programs that focus on the needs of older Americans are needed.
Key Findings
- Among people age 50+, the percentage of loans that are seriously delinquent increased 456 percent during the five-year period, from 1.1 percent in 2007 to 6.0 percent in 2011. As of December 2011, 16 percent of loans of the 50+ population were underwater.
- Serious delinquency rates of borrowers age 50–64 and 75+ are higher than those of the 65–74 age group. People in the 75+ age group are facing increasing mortgage and property tax expenditures and decreasing average incomes. Serious delinquency rates of the <50 population are higher than those of the 50+ population.
- Of mortgage borrowers age 50+, middle-income borrowers have borne the brunt of the foreclosure crisis. Borrowers with incomes ranging from $50,000 to $124,999 accounted for 53 percent of foreclosures of the 50+ population in 2011. Borrowers with incomes below $50,000 accounted for 32 percent.
- The foreclosure rate on prime loans of the 50+ population increased to 2.3 percent in 2011, 23 times higher than the rate of 0.1 percent in 2007. The foreclosure rate on subprime loans of the 50+ population increased from 2.3 percent in 2007 to 12.9 percent in 2011, a nearly sixfold increase over the five-year period.
- African American and Hispanic borrowers age 50+ had foreclosure rates of 3.5 percent and 3.9 percent, respectively, on prime loans in 2011, double the foreclosure rate of 1.9 percent for white borrowers in 2011.
- Since 2008, Hispanics have had the highest foreclosure rate on subprime loans among the 50+ population—14.1 percent in 2011. African Americans age 50+ had the highest foreclosure rate in 2007. White borrowers age 50+ had the lowest subprime foreclosure rate until 2010, when their rate was slightly higher than that of African Americans and remained higher in 2011.
- One-quarter of subprime loans of borrowers age 50+ were seriously delinquent as of December 2011.
- More policy solutions are needed to assist all homeowners, particularly older Americans. Policy solutions that should be considered include: principal reduction loan modifications; mediation programs; more access to housing counseling and legal assistance programs; and development of short-term financial assistance programs.
Full report below…
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4closureFraud.org
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Nightmare on Main Street: Older Americans and the Mortgage Market Crisis
Senior homeowners are at additional risk, because they often have sizeable equity in their homes, having bought them years ago, and paid into their mortgages for years. The FDIC HAMP guideline, in somewhat cryptic language, mandates that homeowners with substantial equity be excluded. Specifically HAMP mandates that the cash flow from a loan modification must be better (for the investor in the mortgage, not the homeowner), than the cash flow from foreclosure. The cash flow foreclosing on a homeowner with equity is great, since the banks can tap into that equity, assess all sorts of fees and penalties, and end up with a tidy profit!
This was not the case, under similar circumstances in the 1930’s, when the government’s Home Owners Loan Corporation included those with equity, and, as one would expect, those with equity were the least likely to re-default.
Can you please send this to the rolling stone!!!! and 60 minutes. they have scammed all of us
we were the ones who were in our house 10-20 years. either refied or moved. we stimulated the economy by moving and builging new houses. only to find out we were duped into these loans and into foreclosure. we were give stated income loans although we were working?????, induced into default , dual tracked into foreclosure by losing our paper work for modifications and losing our files. Appraisal fraud was rampant. how could they do this to this group of hard working individuals and then take away all our jobs when you have to work to eat and drive a car. with no jobs now 1 in 7 americans are on food stamps. when will someone come to our rescue and stop thes fraudulent foreclosures and give us back our jobs. its is very demeaning for my husband a 53 yr old man who has worked in manufacturing since 23 not to beable to find work. unemployed for 1 year!! it seems no one will hire him and train him. its seems every one wants the person already with the experience. but with hundreds of different manufacting plants in american how do you have all the experience a company wants. no one willing to train anymore. please pass this report on. we are the generation that needs help desparately. our children need stability as they enter high school and college.