Roy Johnson: ‘Hell, I’m through with it. I’m walking away from the house.’ Photo: New York Times
MABLETON, Georgia: Roy Johnson fell so far behind on his $US1000-per-month mortgage payments that last year he allowed the red brick, three-bedroom ranch he had owned since 1963 to lapse into foreclosure.
”I couldn’t pay it any longer,” he said. ”One day, I woke up and said, ‘Hell, I’m through with it. I’m walking away from the house’.”
That decision swept Mr Johnson, 79, into a rapidly expanding demographic: older Americans who have lost their homes in the great recession. As he hauled his belongings by pick-up truck from this Atlanta suburb and moved into his daughter’s basement, Mr Johnson became one of the 1½ million Americans over the age of 50 who lost their houses to foreclosure between 2007 and 2011. Of those, the highest foreclosure rate was for homeowners over 75.
Once viewed as the most fiscally stable age group, older people are struggling. Last week, the American Association of Retired Persons (AARP), released what it described as the most comprehensive analysis of why the foreclosure crisis struck so many Americans in their retirement years.
The report found that while people under 50 are the group most likely to face foreclosure, the risk of ”serious delinquency” on mortgages has grown fastest for people over 50.
While the study classified even baby boomers as ”older Americans,” its most dire findings were for the oldest group. Among people over 75, the foreclosure rate grew more than eightfold from 2007 to 2011, to 3 per cent of that group of homeowners, the report found.
”Despite the perception that older Americans are more housing secure than younger people, millions of older Americans are carrying more mortgage debt than ever before, and more than 3 million are at risk of losing their homes,” the report found. ”As the mortgage crisis continues, millions of older Americans are struggling to maintain their financial security.”
The report was based on nationwide loan data that covered a five-year span. The profile of those facing foreclosure has changed since 2007. As the average age and wealth of those people rise, their foreclosures are less likely to involve high-interest loans. In fact, most foreclosures are now the result of prime loans rather than subprime ones, according to the Federal Reserve Bank of New York.
Instead, older Americans are losing their homes because of pension cuts, rising medical costs, shrinking stock portfolios and falling property values, according to Debra Whitman, AARP’s executive vice-president for policy.
They are also not saving enough money. Half of households whose head is between 65 and 74 have no money in retirement accounts, according to the Federal Reserve.
Other older foreclosure victims have managed to negotiate with banks to stay in their houses.
Selling houses is also a challenge for many older people. The value of real estate has collapsed, especially in wealthy suburbs of some cities.
For Roy Johnson, it was painful to watch the house he built 48 years earlier sell for only $33,000 at auction last year.
Now he lives in what his 55-year-old daughter calls his ”man cave” in her basement. It is an hour away from his old house. Although Mr Johnson is grateful to have been helped by a relative, he misses having space for all of his belongings and the tree from which he made pear preserves.
”I planned to die in that house,” he said. ”But I guess it won’t work out that way.”