More older Americans are carrying mortgage debt into retirement, according to a new report from the Consumer Financial Protection Bureau.
Back in April, HousingWire published an article about the Source Media mortgage servicing conference noting a rumor going around that the CFPB was creating an "elderly policy."
This would offer special protections for seniors, "one of the most vulnerable segments of society," one panelist said at the conference. The CFPB had no comment.
However, the panelist mentioned that the elderly policy would afford extra protections, similar to what the Servicemembers Civil Relief Act does for the military.
Approximately 80% of the 41.4 million Americans age 65 and older own their home, giving them the highest homeownership rate among all age groups.
But this is not necessarily a good thing.
The number of older homeowners holding a mortgage is increasing, with the percentage of homeowners’ age 65 and older carrying mortgage debt jumping from 22% to 30%, or 3.8 million to 6.1 million, from 2001 to 2011.
Meanwhile, since the recession started in 2007, many older homeowners have begun to struggle paying their mortgage.
From 2007 to 2011, the percentage of older homeowners who were seriously delinquent in paying their mortgage increased five fold.
The serious delinquency rate among mortgage holders age 65 to 74 increased from 0.85% to 4.96%. For those, age 75 and older, the rate was even higher, growing from 1.01% to 5.87%.
Similarly, as delinquency rates started to increase, so did foreclosure rates, revealing the financial fragility of older consumers.
From 2007 to 2011, foreclosure rates increased from .25% to 2.55% for consumers age 65 to 74, and from .33% to 3.19% for consumers age 75 and older.
Additionally, by 2011, the percentage of seriously delinquent older homeowners in foreclosure spiked to over 50%.
“Older homeowners in retirement who live on reduced retirement income are particularly vulnerable to such financial distress. Foreclosure among older homeowners is concerning for many reasons,” the report stated.
“Among other things, older consumers have greater difficulty recovering from foreclosure than their younger counterparts due to their increased incidences of health problems, cognitive impairment, and difficulties returning to the work force,” it continued.
