AARP Study Reveals Nearly 700,000 Foreclosures, Delinquencies Involve Homeowners Aged 50 and Over

A first-of-its-kind study by AARP debunks the myth that older homeowners are not vulnerable to the home mortgage crisis.

New research by the AARP Public Policy Institute (PPI) to be released tomorrow shows that for the six month period ending in December, 2007, 684,000 older Americans (aged 50 and over) were either in foreclosure or were delinquent in mortgage payments. That's more than a quarter of all foreclosures or delinquencies (28.1 percent). Delinquency normally refers to mortgage payments at least 30 days in arrears.

The study also showed that older African Americans and Hispanics were hit harder than whites.

These dramatic findings will be discussed tomorrow by Susan Reinhard, Director of AARP's Public Policy Institute, at an AARP Solutions Forum in Washington, D.C., "Foreclosure Crisis and Older Americans." The forum will be held from 9:30 am until 1:30 pm at the Reserve Officers Association, One Constitution Avenue, on Capitol Hill in Washington.

"The public perception is that older Americans are financially secure in their homes," said Reinhard. "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."

Other key highlights of the study:

• African-Americans and Hispanics are disproportionately affected in comparison with whites in their age group. Among mortgage holders aged 50 and over, African American and Hispanic borrowers both have foreclosure rates of 0.51 percent, compared to a rate of 0.19 percent for Caucasians.
• Older Americans are severely impacted by holding subprime loans. Older holders of subprime first mortgages are 17 times more likely to be in foreclosure than are older holders of prime loans.
• While older Americans are clearly vulnerable to the continuing mortgage crisis, the foreclosure rate at the end of last year for people aged 50 and over was 0.24 percent, compared with a total all-age U.S. average of 0.39 percent.

Numerous news reports have indicated that the home mortgage crisis has deepened this year, since the six-month period studied by AARP. That almost certainly means that older homeowners have been even more impacted by the delinquency-foreclosure cycle in recent months.

The report by PPI is based on a random sample totaling 2.5 million mortgage holders, including about one million who are 50 years old or older. The sample is from the database of Experian, a major U.S. credit bureau.

Tomorrow's forum will focus on the PPI study and look at a variety of policy options to address the crisis. Speakers include Representative Barney Frank (D-MA), chairman of the House Committee on Financial Services; David Kittle, Chairman Elect of the Mortgage Bankers Association, and Martin J. Gruenberg, Vice Chairman of the Board of Directors of the Federal Deposit Insurance Corporation.

In the future, using the same data, AARP plans to examine the reasons why older Americans go into delinquency or foreclosure. Differences among states and metropolitan areas also will be pursued.

AARP is a nonprofit, nonpartisan membership organization that helps people 50+ have independence, choice and control in ways that are beneficial and affordable to them and society as a whole. AARP does not endorse candidates for public office or make contributions to either political campaigns or candidates. We produce AARP The Magazine, the definitive voice for 50+ Americans and the world's largest-circulation magazine with over 33 million readers; AARP Bulletin, the go-to news source for AARP's 40 million members and Americans 50+; AARP Segunda Juventud, the only bilingual U.S. publication dedicated exclusively to the 50+ Hispanic community; and our website, AARP.org. AARP Foundation is an affiliated charity that provides security, protection, and empowerment to older persons in need with support from thousands of volunteers, donors, and sponsors. We have staffed offices in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.

SOURCE AARP