According to a new report from the Consumer Financial Protection Bureau (CFPB), older Americans (65 and up) tend to have more mortgage debt than their cohort did in the past. Because they often live on fixed incomes, in times of economic stress older Americans can fall behind on payments, lose their houses in foreclosure, or file bankruptcy. Unsurprisingly, the CFPB is so concerned that it characterized rising mortgage debts as “threatening the retirement security of millions of older Americans.” Here are some facts from the report:
(1) Although homeownership is no more common among older Americans than before, the same isn’t true for mortgage debt. In 2001, roughly 10 percent of householders 75 and older had mortgage debt. By 2010 that figure had roughly doubled.
(2) More than half of the 4.4 million retired homeowners with mortgage debt spend 30 percent or more of their household income on mortgage payments. Experts claim housing affordability becomes problematic at this level.
(3) In 2001 the median mortgage balance for older American homeowners was $43,400. In 2011, it had risen to $79,000. Debt-to-value ratios had increased as well.
(4) The recession beginning in 2007 hit older homeowners hard. Serious delinquencies grew from about 1 percent to 5 percent by 2011. Foreclosures reached about 3 percent. The CFPB noted that older homeowners have greater difficulty dealing with foreclosure because of “increased incidences of health problems, cognitive impairments, and difficulty returning to the labor force.”
(5) One-third of older Americans’ complaints to the CFPB relate to their mortgage servicers.
The full text of the report can be found here.
Elderly homeowners encountering difficulties paying significant mortgage debts might benefit from filing bankruptcy. For instance, the automatic stay can prevent a foreclosure in time to allow homeowners to explore their options. Substantial mortgage debt by the elderly can also raise issues for their children, such as inheriting an underwater house, discussed here. Because of the limited options older, indebted homeowners have handling these kinds cases requires an experienced New York bankruptcy lawyer.
For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced fair debt collection practices act Bruce Weiner for a free initial consultation.
