The COVID-19 coronavirus pandemic has negatively affected American seniors both in terms of the more dangerous health effects of the illness itself, as well as the ability of older, traditional mortgage borrowers to make their payments on time. As a result of the pandemic, many older homeowners are at greater risk of losing homes to foreclosure, according to new data released this week by the Consumer Financial Protection Bureau (CFPB).
The CFPB in concert with the U.S. Census Bureau has been tracking the economic impacts of the pandemic on seniors since April 2020, almost since the beginning of its declaration by the World Health Organization on March 11 that year.
“In July 2021, about 682,400 older homeowners were behind on their mortgage payments,” according to the data released by the Bureau. “In addition, 236,000 older homeowners who were current on their mortgage had no confidence they would be able to make their next month’s payment. While the number of older homeowners behind on their mortgage payments appears to be decreasing in recent months, the survey data show large variations over time. Accordingly, the CFPB will continue to monitor emerging data and identify concerning trends.”
The effects on older homeowners also appear to be hitting seniors of color harder than their White counterparts, according to the research.
“In general, 4.4% of older homeowners with a mortgage are behind on their payments. The differences in shares of older homeowners behind on their mortgages are seen most prominently in the breakdown by race/ethnicity and income,” the Bureau explained. “Specifically, the share of older adults behind on their mortgage payments is higher for non-White and older homeowners with income below $25,000 than their counterparts.”
Interestingly, the share of older homeowners behind on their mortgage payments also seems to be hitting those in households of three or more people disproportionately hard, the data indicates.
“[I]n general, older adults who are behind on their mortgage payments live in households of 3 or more people,” the data says. “Furthermore one-third of older adults behind on their mortgage payments live with minor children. Any foreclosure therefore of older homeowners living with 3 or more people will not displace just the older homeowner, but often multiple generations living in the same home.”
The reports of older homeowners who are behind on their mortgage payment also, in many cases, correlate to the reporting of a recent job loss by a member of the household, the data says. As much as 36% of older homeowners fall into this category, indicating to the CFPB and Census Bureau that these peoples’ fortunes are also tied to the broader economic recovery.
While it’s possible that at least some of those affected by these issues may fall into the demographic realm of the reverse mortgage product category, traditional forward lenders have shown increasing resolve to serve seniors with new, traditional mortgages according to pre-pandemic reporting by the Wall Street Journal.
Earlier this year, Bankrate highlighted one instance of a 97-year old borrower getting a new, 30-year forward mortgage. Since the same underwriting guidelines apply to seniors as they do to younger adults, all the client needs is the income and assets to qualify for the loan, the loan officer said.
Read the data release at the CFPB.