AARP Finds Mortgage Crisis Impacting Older Americans

image AARP recently published a “first-of-its-kind” analysis of data on the mortgage crisis which shows the credit crunch is having a significant impact on older Americans.  To date, there haven’t been any studies on how Americans age 50 and over have fared during the housing and mortgage market crises.  The typical sources of information on subprime lending such as as the HMDA database, or mortgage delinquencies, such as the national delinquency survey conducted by the Mortgage Bankers Association, do not have information on borrowers age.

AARP’s survey was conducted from data purchased from Experian, one of the nations largest credit bureaus.  The survey consists of 2.5 million people who were randomly sampled pulled from their database on December 31, 2007.  Below are some key findings from the study:

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  • Americans age 50 and over represent about 28 percent of all delinquencies (30 to 180 days late) and foreclosures in the current crisis.
  • Over 684,000 older Americans were either delinquent or in foreclosure at the end of 2007.  Of these, nearly 50,000 were in foreclosure or had already lost their homes. 
  • Older Americans with subprime first mortgage loans are nearly 17 times more likely to be in foreclosure than Americans of the same age with prime loans.  They are over 8 times more likely to be delinquent than Americans age 50 and over with prime loans.

“The public perception is that older Americans are financially secure in their homes,” said Susan C. Reinhard, Senior Vice President for Public Policy at AARP. “But the reality is that while many are in fact secure, hundreds of thousands of others are not and face unsettling uncertainty over their futures as homeowners.”

“Older Americans depend on their homes both for shelter and as a retirement asset,” Reinhard added. “Losing a home jeopardizes long-term financial security, for older Americans it also leaves them with limited time to recover.”

A First Look at Older Americans and the Mortgage Crisis

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  • I hate to rain on AARP’s parade, but seniors 50+ and 62+ actually have a much lower incidence of delinquency and foreclosure than the headlines here indicate. The proof is actually in AARP’s report.

    Older Americans are responsible for just 28% of delinquencies and foreclosures in the country according to the study’s first bullet point under findings, but according to the last bullet point hold 41% of all mortgages in the country.

    A table buried on page 4 is even more clear: the delinquency/foreclosure rate for people <50 is 0.50% while it’s just 0.24% for those 50+ and 0.20% for those 62+. Doesn’t make for a catchy headline, but the real story is that seniors are less proportionately affected, which is a good thing for seniors.

    There are some interesting breakdowns in the race/ethnicity tables that show even among seniors there are similarly higher rates of foreclosure for non whites vs. caucasians.

    Moral of the story is to always make sure you look at the numbers behind the headline…

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