Interesting article from American Banker which describes how regional banks are seeing older Americans struggle to repay their loans as the recession scrambles once-optimistic plans for retirement.
Specifically, the article points out that senior citizens are finding it difficult to pay off their mortgage on retirement properties because they haven’t been able to sell their primary homes.
"Real estate has remained under pressure … . Do these borrowers ultimately sell their house and move to the mountains of North Carolina? Maybe. Maybe not," said Jeff Davis, an analyst at First Horizon National Corp.’s FTN Equity Capital markets. "There are a lot of latent real estate issues out there that aren’t going away."
Albert Savastano, an analyst at Fox-Pitt Kelton Cochran Caronia Waller USA LLC, said the housing markets in popular retirement destinations like Florida and Arizona have been punished for more than a year due to an overstock of vacant second homes. But now the trend is extending itself to less high-profile retirement spots like the Carolinas, upstate New York and Georgia.
"The second-home markets have had this issue. It is now spreading into second-tier markets," he said. "It’s not a shock, given where the economy is and the job losses, etcetera."
There has got to be a way for the HECM for purchase to help play a role in this situation, any ideas?