subject: Elders are Paying the Highest Price for the Foreclosure Crisis [print this page] Elders are Paying the Highest Price for the Foreclosure Crisis
It is the elders and the seniors who have no future before them, who are paying the highest price for this foreclosure crisis. Florida, Nevada and California have always been favourite destinations for these retirees. Today these states are the worst hit by the housing crisis.
Many who had planned to move into retirement neighbourhoods after selling their houses have had to shelve their plans because of the loss such moves involve. Many of the seniors were so confident that they would always be able to rely on increasing equity of their property that they did the gross mistake of not saving for a rainy day. Today in the twilight of their lives they have no cushion on which to fall back upon. 36% of the workers aged above 55 say that the value of their savings and investments (not including the worth of their primary home and specific benefit plans) is below $25,000 as per the findings of Employee Benefit Research Institute.
Dean Wegner is an official credit counselor and specializes in mortgages in Phoenix. He commented that the situation is terrible. He elaborated, "I've got a lot of seniors who have just been nailed. They don't have retirement savings, and they've exhausted their equity. They're upside down (owing more on their mortgage than their homes are worth), they can't refinance and they're on a fixed income. They're scared to death. You can hear it in their voices. It's a sad situation."
30% of all the borrowers who are delinquent on their mortgages or are in foreclosure are over 50 years as per the findings of AARP. It noted that of the 684,000 above 50 borrowers who were facing trouble with their mortgages 50,000 were already in foreclosure.
Seniors have had to bear a disproportionate share of the sub-prime mortgages. Loans were forced on many with dubitable credit scores. The elderly are 17 times more likely to be holding sub-prime mortgages that have led them into foreclosure than other Americans holding prime loans. For those borrowers who were below 50 the comparable multiple is nearly 13.
Most of these seniors who do not have any savings except for the house they live in had entirely banked on the idea that the price of property could not fall but would go on increasing. Dean Baker from Center for Economic Policy and Research said that the elders "have saved up very little outside of their home and banked on home prices rising. No one talked about them falling, so they were heavily leveraged. This whole group is going to be hugely dependent on Social Security, and people don't fully appreciate the magnitude of the problem."
