The real estate market in this country has suffered the worst period of deflation since the Great Depression of the 1930s and millions are underwater on their mortgages, many by hundreds of thousands of dollars.
Now, the Association for the Advancement of Retired Persons (AARP) reports that households with owners age 50 and older experienced an 873 percent increase in foreclosures since 2007. For younger homeowners, the rate is 729 percent, but there is a significant difference for those two demographics.
For older homeowners, the problem of being underwater on your mortgage is that you do not have decades for your home's value to recover. You may have been thinking of retiring, but if the dot.com bust and the banking crises of 2008 decimated your investments, you may not have enough investment income to fund your retirement.
Your home, which 10 years ago may have looked as if its value could only go up, now may look like an albatross. If you need to sell with an underwater mortgage, you could be forced to obtain a short sale or payoff the difference between the sale price and the outstanding balance on your mortgage. This only decreases the amount of retirement funds available to you.
AARP also reports that about half of seniors between the ages of 65 and 74 have no money in savings, and for those 75 and older, the rate climbs to 67 percent.
Help Is Available
For many seniors, help is available through the Department of Housing and Urban Development (HUD) or a bankruptcy lawyer. Avoid "counseling" services that charge a large fee and provide little in return.
Source: Reuters, "Time not on the side of older Americans in housing slump," Mark Miller, July 26, 2012.
Our law firm helps individuals and homeowners with debt relief issues including debt discharge, asset protection and prevention of foreclosure.