Foreclosure rate for homeowners over 50 up fivefold

Baby Boomers at risk of foreclosure

In a new report¹ from the AARP Public Policy Institute (PPI), American homeowners over 50 that are in foreclosure has risen in recent years. Analyzing data from CoreLogic, the PPI measured the progression of the mortgage crisis and its effect on homeowners over 50 by looking at national loan-level data from 2007 through 2011.

The organization’s analysis found that over 1.5 million Americans over 50 have lost their homes since 2007, also uncovering that the percentage of seriously delinquent loans rose from 1.1 percent in 2007 to 6.0 percent in December 2011.

“The collapse of the housing market has been especially painful for older homeowners,” said Debra Whitman, AARP Executive Vice President for Policy.

AARP says millions more at risk

AARP reports that millions of Americans over 50 remain at risk of foreclosure, noting that as of December 2011, fully 600,000 loans were in foreclosure, while 625,000 were over 90 days delinquent. Additionally, 3.5 million homeowners over 50 are underwater as of December 2011.

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“Older homeowners often rely on their home equity to finance their needs in retirement – things like health care, home maintenance and other unexpected needs. The fact that so many older Americans have no equity at all is troubling,” Whitman said in a statement.

More older Americans carrying mortgage debt than in the past

The PPI said that “While the serious delinquency rates are lower for those aged 50 and older than for those under age 50, serious delinquencies went up faster for the older population over the past five years. The study also finds that people age 75 and older have a higher foreclosure rate (3.2 percent) than those age 50 to 64 (3.0 percent) or age 65 to 74 (2.6 percent).”

“More older Americans are carrying mortgage debt than in the past, and the amount of that debt is also increasing,” Whitman continued. “Because before-tax income has decreased on average for people age 75 plus, while spending for mortgage interest, property taxes, utilities, and health care have increased, their economic situation is worsening.”

Subprime loans performed more poorly

The report cites that foreclosure rates of Hispanic and African American borrowers over 50 were 3.9 percent and 3.5 percent, nearly double that of Caucasian borrowers at 1.9 percent.

Foreclosure rates on subprime loans taken out by Hispanic homeowners over 50 had the highest foreclosure rate at 14.1 percent, followed by Asians at 13.9 percent, Caucasians at 12.8 percent, and African Americans at 11.5 percent.

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“Looking ahead, the study shows that this crisis is far from over. Many loans remain in danger of falling into foreclosure, even as large numbers of loans are already in foreclosure.” Whitman concluded.

¹ AARP PPI Report