NY Times Editorial About Foreclosures Impacting Older Americans

image Over the weekend, New York Times columnist Bob Herbert wrote about how foreclosures are impacting older Americans. Herbert cites a recent AARP Public Policy research report that breaks new ground in quantifying mortgage delinquencies by age group. The study concludes that Americans over age 50 represented 28 percent of all mortgage delinquencies and foreclosures at the end of 2007.

Herbert writes about one Rocky Mount, N.C. woman who is waiting on a hearing next month which if goes against her will lose her home to foreclosure.  The woman was talked into a mortgage that was impossible to pay off with her fixed income.  According to her current attorney, Carlene McNulty of Raleigh, N.C., the figures that would have made it obvious that she couldn’t afford the mortgage were deliberately concealed.

Right now her attorney is trying to forestall the foreclosure, while at the same time trying to locate those who, in her view, defrauded her client. Her attempt to hold anyone accountable has been maddeningly difficult. As she explained, the original deal “was securitized into one of these now infamous trusts.”

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During the mortgage boom packaging loans into securities and selling them to investors took off.  Many of these were put into trusts with little documentation of ownership or proper loan assignments, so finding out who controls the note is much less clear.  There are times when this confusion works in favor of the borrower in foreclosure, the NY Times wrote about one example here.

Climbing Down The Ladder (NY Times)

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  • Sad to say with the NY Times, it is never news until they report it.

    Too many seniors are caught in the “amount due greater than the value of the home” squeeze. In that scenario, the reverse mortgage will not work.

    We have found some debt that can be subordinated in such cases but the work to determine it and get that done is horrendous. This works where the value is still greater the total amounts due from debts and liens. Usually with most mortgages, they have been sold to investors with the covenant that the underlying debt will not be subordinated.

    Sometimes lenders will take the net proceeds from a reverse mortgage as payment in full but that is rare. Sometimes the homeowners have the cash needed to pay down the debt enough to where that amount of cash plus the net proceeds from a reverse mortgage are sufficient for the lender to wipe the remaining debt off of the books of the existing lender.

    Both exercises are extremely rewarding but are quite difficult and time consuming. Working with another individual who can charge for the time it takes to get the cooperation of the existing lender can be financially rewarding as well.

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