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Older homeowners in trouble

By Judy Martel · Bankrate.com
Tuesday, August 7, 2012
Posted: 6 am ET

More Americans older than 50 have mortgages than in the past two decades and for larger amounts, causing a growing number to be at risk for foreclosure.

A report from the AARP says 3.5 million homeowners older than 50 are in danger of losing their homes. Most won't have the time or resources to recover from such a financial setback as they head toward retirement. Since 2007, more than 1.5 million homeowners in this group have already had their homes foreclosed, raising the foreclosure rate from 0.3 percent in 2007 to 2.9 percent in 2011.

Older homeowners were enticed by the same initially low rates on subprime mortgages as everyone else. As the values of their homes decreased and the rates increased, many found they owed more than their homes are worth.

There is help for distressed homeowners. Free advice from a counselor approved by the Department of Housing and Urban Development can steer homeowners toward ways to reduce monthly expenses.  It might be worth it to try to get a loan modification to reduce your monthly mortgage payment or see if you qualify for the government Home Affordable Refinance Program to refinance at a lower rate. Those older than 62 and with equity in their homes could consider a reverse mortgage. As a final option for avoiding foreclosure, a short sale through the Home Affordable Foreclosure Alternatives government program allows the homeowner to walk away from the home and the mortgage debt.

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63 Comments
BRUTUS
August 08, 2012 at 9:58 pm

I am certainly confused about the modification that Ramon spits out. He indicates that his mortgage, after 3 months of modification payments, will go down $36,000+ each year for the first 3 years. That is over $100,000. I live in expensive Washington, D.C. and the value of my house is not worth much more than the 3 payments of $36,000+. So Chase is simply taking $108,000+ right off the top after 3 years. Hell, I should do that. That would pay my mortgage off. My home was worth $440,000 in 2007 but is now worth a paltry $150,000.

Lorry
August 08, 2012 at 9:09 pm

Why blame Obama? This mess started LONG before he was around. The problem is the banks weren't cooperating. They were saying yes, yes, yes in DC while telling Main Street no, no, no. The lost paper work and blah, blah, blah. We are in our 40's, not under water and have paid on time. Just didn't want to spend our savings (small but savings none the less!) on refinancing. Lo and behold, Chase contacted us in July. Lowered our rate over 3.5% AND paid all the costs. Very simple paperwork and they sent a notary to our house to sign the papers. So, I will be there to vote for our President in November because he has had an uphill battle with these banks that were allowed to do as they pleased WAY before anyone knew who Pres. Obama was. I feel for everyone one of you and wish you all the best luck in the world.

nicole
August 08, 2012 at 9:00 pm

wondering if anyone has any link to the predatory loan/lending .i am a victim and live in pa. and it seems noone in my county knows anything from attorney generals office to local attorneys.

Mishelle Myers
August 08, 2012 at 8:08 pm

I need some good old fashioned advice folks----I have extensive health care debt in the last 2 years. I was told even if $5.00 a week we will not go after you or your house. (No health care guys). Well, that is just what they have done, my wages are only 50% after garnishments and taxes. And, getting further in debt every week. Where do I go from here?

Kathy
August 08, 2012 at 7:33 pm

A HUGE reason older homeowners are suffering is because they are usually the first to go when company's downsize. It happened to me and thousands of other baby boomers.

Age discrimination is RAMPANT. It's about phasing out the older workers to hire new ones for less money. Pathetic...

pam
August 08, 2012 at 7:32 pm

good luck to everyone who got a loan modification the way Ramon did!!! Your credit rating is now ruined!! the credit rating you worked so hard all your life for and which was probably great, like mine was! because the mortgage companies dont tell you that those 3 trial months of mortgage that you pay on time ARE NEVER APPLIED TO YOUR CURRENT MORTGAGE SO THEREFORE IT LOOKS TO ALL YOUR CREDITORS AS IF YOU HAVEN'T PAID YOUR MORTGAGE AND ARE 3 MONTHS BEHIND. I KNOW AS IT HAPPENED TO ME AND THERE ISN'T ANYTHING YOU CAN DO ABOUT IT NOW. THANK YOU, PRESIDENT OBAMA, FOR CREATING THIS MESS!!! I WILL CAMPAIGN VERY HARD AGAINST YOU THIS FALL . YOU ARE A MENACE TO THOSE OVER 50!

Ramon
August 08, 2012 at 7:16 pm

I have a loan with Chase, making my payments until my wife passed away in her sleep in 2004. I had to scramble to refinance. Fast forward to 2009. I received a letter from Chase that they wanted me to call and apply for a modification loan. I had been applying for three years and denied several times all the while, the customer service reps kept telling me there was a "new" program for investors and to re-apply. I had moved out of my house and had been renting it. I finally got a "trial" loan modification this past July 2012. My payments have gone down from $1,679.00 to a mere $938.00. I have to make three payments on time (July/Aug/Sep)before they will consider a "permanent" modification. If I am lucky enough to get the permanent modification, they will reduce my principal approx $36,000+ each year for three years upon timely payments. I too was making the payments but was suggested that I get behind a couple of payments. Wish me luck.

VM
August 08, 2012 at 6:46 pm

I have to say I hope Kay things work things out...I am sorry you are having to go through the things that you are. It does not sound as if you have lived outside your means. As far as Tom and Steve, it is so easy to just make people feel like they are not responsible when in fact many people really do want to pay their bills and save for the future. But today in our country we have too much greed going on and unfortunately big business takes away small business and people lose jobs and livelihoods.

GLADYS N
August 08, 2012 at 6:25 pm

i have been trying to get my loan modifiied since 2009 when the progam first came around. i have a letter stating that because I was current they would not help me In july of 2011 I stopped paying the mortgage and applied. i waS ACCEPTED INTO THE PROGRAM AND ROR A WHOLE YEAR KEPT SENDING IN REQUIRED PAPERS CONSTANTLY NO ANSWER... A YEAR LATER I GOT AN OFFER OF MORE MONEY THAN THE ORIGINAL AND DID NOT TAKE IT.. I AM NOW IN FORCLOSURE.BANK OF AMERICA IS THE WORST BANK TO DEAL WITH THEY ARE SO MIXED UP THAT ONE HAND DOES NOT KNOW WHAT THE OTHER HAND DOES TO SAY THE LEAST

Randy
August 08, 2012 at 6:23 pm

Just went through a modification process with Wells Fargo and it was painless, no up front costs and my interest was reduced to 4.1% on a fixed 30 yr note. I am still a little upside down and they would not consider a priciple reduction however at 57 I feel I still have time for the value to come back (i will also pay a little extra towards principle reduction each month), keep the tax write off and stay put. My payment is even more affordable now than it was before hard financial times.