September 22nd, 2008
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:
Americans 50 and over hold about 41% of all first mortgages. As definied in the database purchased by AARP from Experian, these loans may include residential, vacation homes and investment properties
By 2007 53% of all owners with a head of household age 50 or older had a mortgage - up from 34% just two decades ago.
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.
Having a subprime loan is associated with higher delinquency and foreclosure for all ages, but the impact of subprime lending appears to fall disproportionally on older (50+) Americans.
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 mortgages.
“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.”
To read the whole report go to: A First Look at Older Americans and the Mortgage Crisis
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