Homeowners over 50 at risk
It seems that homeowners over the age of 50 are not immune from the foreclosure crisis.
A
study released yesterday by the AARP, an organization that lobbies for people in that demographic, found homeowners age 50 and over represented about 28 percent of all delinquencies and foreclosures in the last half of 2007. There were 684,000 homeowners over 50 who were in trouble with their mortgage, and of that figure about 50,000 had already lost their home or were in the foreclosure process.
The study also found that older Americans who had subprime loans were about 17 times more likely to be in foreclosure.
Apparently it was thought folks in this demographic would not be as likely to fall behind on payments or lose their homes because they would have enough equity at this stage of life to protect them. However, that was before the market started to turn and home values began to sink.
Another recent study by the Center for Retirement Research at Boston College found that during the recent housing boom older households accessed their home equity more aggressively than younger homeowners, which has left them in worse shape for retirement. It found that people approaching retirement age (50 to 62) have discovered their net worth is 14 percent lower than it would have been without the housing boom. That’s because they tapped their home equity and spent much of the cash -– perhaps on expenses such as home improvement or college tuition for a kid.
This puts homeowners over 50 in a real jam at a time when they should be shoring up their retirement nest egg.
So what do you do if you’re nearing retirement, or already retired and living on a fixed income, and have to try to save your house? And what about people who have parents or grandparents in this situation? Are you worried about helping them keep their homes, on top of trying to pay your own mortgage?
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So much for age leading to wisdom.
My gfs mother may well end up in that position. If she doesn't, it won't be for lack of trying on her part.
What to do? Wait till its over. Any early money given will just be swallowed up by useless consumption or the banks. When people have proven they are children when it comes to money, giving it to them is silly. Paying necessary bills directly is the way to go.
I think seeing the government wants to bail everyone (but our own) out, why not allow reverse mortgages for people starting at age 50.
Baby boomers sucking up every cent because they always believe everything will work out fine. At least the cycles have produced a younger generation more likely to guard their wealth. Of course, they'll have to use it to bail out their elders, and their children who they will raise to believe everything will always be alright.
I can't helped but have little sympathy. My spouse and I have been finacially spanked repeatly. Didn't get to cash in on those dot.com bonus stocks, before they fell. No getting ahead there. Had to buy a dump in the middle of nowhere at a significant mark up, then its value fell when we needed to move. Bought again because we needed to live somewhere, now that value is falling too. Just hope this is where we stay so eventually we will have equity. No, I don't have sympathy for folks who have had the opportunity to maintain wealth and blew their chances. Always save pennies for a rainy day! Or buy rvs and suvs, go on vacation, add 3000 sq ft to you house, and have nothing when that day comes.
Argh
One would hope that most people over 50 would have enough savings to cover the house payments until prices stabilize. I'm not usually one to scold, but I mean good lord. At 50 or 60 the kids are gone and you know you're nearing the end of working life. If you haven't got some dough in the bank...well I don't know what to say. Most people would have some savings I would think, so they cover their bills until things recover a bit. For the ones facing foreclosure, I guess rent. Terrible situation.
I have an aunt, single, 60, almost nothing in the bank. She likes to spend on jewelry and presents for my kids. I beg her not to. Several of us have had serious talks with her about saving and investing, and we're poo poo'd. I went from concerned to really angry. Who does she think is going to take care of her when she can't work anymore? Who will give her somewhere to live? Her foolishness is putting a future burden on me. Boils my blood I'm telling you.
It's hard to tell people who have never experienced anything but exponential stock market growth and, more recently, explosive gains in the value of their real estate portfolios that these things are cyclical and the market cannot maintain such stunning growth indefinitely. It stinks to think that there are so many older folks who will be suffering as a result of this market crash - because unlike the younger generation living through this, they don't have the luxury of time to rebuild their portfolios. This is just hard on everyone, and as much as a lot of people saw a large real estate market correction coming, I don't think anyone saw the grave impact it has had on the larger market.
Take note everyone - this is why you have a rainy day fund and you don't max out your loan obligations at every turn. Hopefully for most this will be a learning experience and not a crippling event.
These people, who have written replies, don't know who they should be blaming. They are all mad at each other and their not the ones to blame. It wasn't the homeowners that made the rules. They should never have lent money to those who could not afford it but then the banks got greedy and relaxed the laws. It's your government, Federal, state and their lobbyist who created a situation that led us here, blame them. We lend money to people who can not afford it, then we bring them to court when they can't pay? Too much to complain about!
poor people who couldn't afford it, rousted out of bed in the middle of the night to sign papers. Why, I bet most of them didn't even know how much the house they were buying cost! Or what their income was!
I blame their elementary school teachers, for failing to teach them elementary math. Lets steal their money and give it to Morgan Stanley.
Here it is. Second mortgages, HELOCs, credit cards. Just because some one offers you credit (BIG POINT HERE) doesn't mean that you should use it.
We just sold our house in three weeks in a really difficult area. Our secret we priced it for what it was really worth. . .not what we HAD to get out of it. We have several neighbors on our block who have been trying to sell. The major difference is that they were asking $120k more than we were.
Think about it. How many people can really and truly afford a house of $500,000+??? How does that really work? Well, for most , it doesn't.
I think we should roast all of those gfs parents alive for squandering their equity on college, weddings, family vacations, and bailing out their gfs children. Yes, certainly many likely spent their equity even less wisely, since financial "accidents", like bad manners, are not the exclusive rights of the younger generations. But now that I have that off my chest, perhaps I should consider a little compassion, and some financial programs, like debt restructuring, etc. so we young-uns don't have to bear their burden. For I would hate al's blood to boil -- his tenants are depending on him.
Responding to II:
I am 55, and my mortgage was paid off more than 6 years ago. I am not wealthy, but I have no debt what so ever.
Why?
Because I bought a house that I could afford, and don't buy things that I can't pay for.
Irresponsibility comes in all age groups, and is not limited to baby boomers.
I wonder what percentage of these over 50s who are defaulting are actually real estate investors. I suspect some people were buying property for speculation and now can't flip it.
It's obvious that bad decisions and bad luck are not age-specific, but remember that if 28% of delinquencie and foreclosures were of those aged 50+ then 72% were of those 49 and under.
What may be more skewed is the employment situation for 50+ workers.
Accidental landlord - I'm not sure what it's like in your family - but for those who have children later - 50 is in the thick of paying for college... have a child at 32, do the math.
I'm 52, lost my $100k down payment on the house I bought to live in. Guess what, I'm keeping the house, I take the loss, not the bank or the tax payers. I keep making my payments. I'll cut expenses, I'll make adjustments, I'll keep keeping on. It's not the end of the world.
Ok, so let's blame the old folks. The boomers, etc. want to have it all and more. They need McMansions, huge SUV's, time-shares, vacations, and expenses be damned. They work hard sure, but they have no grip on reality. My age, I am 70, paid off the mortgage, saved for a rainy day, had the kids get p.t .jobs to put themselves through college ( heaven forbid that todays kids work ...let the foreign born do the low -pay jobs), took care of grannie at her time of life, bought used cars, and vacation meant a day at the beach. No $100 tickets for ball games, $400 purses, etc.
So they elect the people who say you can have it all... the rich Republcans who have created this mess. And now they want to elect an old man ( take it from one
who is his age ...HE IS TO OLD. Put a woman with little education ...5 colleges in
6 years with a degree in journalism, who inherited billions in oli surplus money for Alaska, in his place should he die or become infirm. Then watch her go up against Putin, the Chinese, the Iranians, etc,
The problem with this country is that the majority of people don't think anymore
Logic, ethics, community, what ever happened to those VALUES?
This is a wake up call for everyone. You cannot have it all ( exception Bill Gates and company) . So let's get serious here. Elect people that you can trust , who are not black and white thinkers, and that have not screwed this country over for the last seveal decades.
The elderly are wiser than you think..They at least can make do, and are not out of touch with reality.
I am over 50 and I have seen some of the problems mentioned at a personal level. I bought a home in the suburbs a long time ago. I took money out via re-financing several times to put kids through college and to pay expenses when I started a business.
Rather than sitting around and watching armageddon start I sold the house and downsized which was fine since I live in a condo in an oceanside community and don't have to mow a half acre of lawn.
I am going to be fine. I don't need the AARP to cry for me. Our generation has screwed up big time by being soft as grapes and falling for socialism and big government solutions to everything. The problem with what has happened is that both the borrowers and the lenders were irresponsible because they both thought if it doesn't work someone will take care of me and my plight. And they were right. And the rest of us have to pay for it. None of it would ever have happened if the government stayed out of the mortgage business and had also let companies and people fail when they failed to live up to their agreements.
Look, fiscal irresponsibility crosses recent generations, baby boomers, Gen X and Y, etc... The only ones who did save were the WWII group because they learned lessons through the Depression and the war. One grandmother I knew would rinse, dry and reuse paper towels even though she was relatively wealthy. I don't understand why frugality lessons weren't passed down from generation to generation. And, although I'm not an advocate of a nanny state, since parents are failing at many things, there should be classes taught in school about life skills like credit, investing, etc.... None of these stupid home ec or shop classes. And why are parents paying for college when they have no savings? Maybe loans should be given out only if the borrower can demonstrate that they are sufficiently saving for retirement.
And accidental landlord, I assume your aunt will qualify for SS. I would be very blunt with her and tell her that you will NOT support her in old age since she refuses to save. Fortunately, there are no laws that force you to support relatives.
How's this one!!! 64 years old---forced to retire due to illness --- mortgage paid off -- can't sell house. Property taxes will increase by $3000.00 due to sewer installation in the lovely town of Falmouth. What a reward for working all of my life!!!
No, I cannot get a reverse mortgage---wife isn't 62. Have a nice life!!!
MWest, I know there's some sort of subtle message to me in post 9, but I admit it's beyond me.
Emily, I understand, we're in our 30s and we're in the thick of brutal daycare payments for two kids. We decided not to pay for college out of pocket when that time comes. It's just too much. They can take out loans for school; we can't for retirement. We set up 529s and let family members know that it's an option at birthdays and christmas. I think some people were horrified, but so be it. If we're fortunate enough to be able to help the kids pay those loans back of course we will. That's just the reality of it for us.
But anyway my aunt - the point of my post - is childless.
Lots of sweeping generalizations in this thread.
Just wanted to point out, many people over 50 fall on hard times due to catastrophic medical expenses, as well as age discrimination.
On the other hand, all the boomers who recently bought with 30-year mortgages (when they should be looking at 20-, 15-, or even 10-year terms), assuming that the magic sparkly blue ponies will come take away their mortgage payments when they retire, will deserve all the cat food they can eat.
Many people do fall on hard times due to catastrophic events, no doubt.
But the ones I'm probably going to get stuck with will fall on hard times because they went into debt to buy consumer garbage. Not because they went into debt for college loans, the only defensible thing on MWests list above.
It is truly amazing the amount of people who think "weddings, family vacations, and bailing out their gfs children" is a reasonable reason to go into debt. That's just crazy. Debt to finance investment is one thing. Debt to finance pure consumption is killing your own future, and I really don't have much sympathy for people who go into major debt to finance a PARTY.
And yes, I'm due to get married next fall. There will be a party. And there will be no debt financing, and frankly not that much spent - its the people that make the event, not the centerpieces or other junk foisted on this country by the Wedding-industrial complex. In all frankness, the only thing I've really found hurts a wedding is running out of booze.
No, my gfs mother will not be paying. I will. Just as I will probably end up paying off her school loans. Gfs mothers debt went to finance the Christmas Tree Shoppes (motto - garbage no one needs to own)
What ever happened to the back in the day concept. By the time your
grandparent retired and your parents.... there homes were paid for.......
all they had to do was keep up with the taxes.......Look at us.......Is part of the
problem the lending institutes???????
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