Older Americans Hit Hard by Falling Income, Mortgage Crisis

Approximately 1.5 million senior citizens lost their homes as a result of the mortgage crisis that plagued the U.S. between 2007 and 2011.

According to a recent American Association of Retired Persons (AARP) study, approximately 3.5 million loans of people aged 50 and above were underwater as of December 2011. This shows that homeowners owe more than what their home is worth.

About 600,000 loans of people age 50+ were in foreclosure and another 625,000 loans were 90 or more days delinquent.

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.

People aged 75 and above are facing increasing mortgage and property tax expenditures and decreasing average incomes. This report debunks the myth the older homeowners are less affected by the housing crisis. It also shows that more than three million homeowners are at risk of losing their homes.

“The Great Recession has been brutal for many older Americans," Debra Whitman, AARP's policy chief told USA Today. "This shows that home ownership doesn't guarantee financial security later in life."

The report also suggests the implementation of more senior citizen-friendly policies to help senior citizens tide over this problem. Policies include principal reduction loan modifications; mediation programs; more access to housing counseling and legal assistance programs; and development of short-term financial assistance programs.

Affordable housing

These uncertain housing conditions have once again highlighted the need for affordable housing. A sizable number of senior citizens will need affordable living options once they retire. Close to 70 percent middle-income Boomers are not confident of having enough money to live comfortably in retirement, a survey by the Insured Retirement Institute showed.

However, the necessary infrastructure is not in place. In the next 40 years the population of over-65 population will double, but the housing stock is declining. Also housing cost burdens are set to increase as homeowners grow old, the Center for Housing Policy’s ‘Housing An Aging Population -- Are We Prepared?’ study showed.