By Charles Hallman
Over three million Americans age 50 and over are at risk of losing their homes, according to a recent AARP report. Since 2007, the rate of this population in serious mortgage delinquency because they are more than 90 days behind in their payments has outpaced younger homeowners.
Foreclosure rates across all ethnic groups and ages were very low in 2007. However, the rates for Blacks and Latinos age 50 and over began to rise in 2008 until, at the end of 2011, 3.5 percent of older Blacks were in foreclosure, a rate less than Latinos’ (3.9 percent) but nearly twice that of Whites (1.9 percent).
“I’m a person of color, an African American woman. I lost my job in July 2011,” said Rose McGee, who has lived in her Golden Valley home nearly 20 years and spent the last year fighting to keep it. “After I became unemployed, I started calling CitiMortgage to let them know about my dilemma and [ask] was there any program that they have that I could apply for.”
McGee, who said she previously obtained a mortgage loan modification in 2008, was told by her mortgage company that she wouldn’t qualify for another, “but [I] could apply for hardship if I’d like.”
However, McGee said she wasn’t able to make her mortgage payments “because I didn’t have income,” adding that once she secured “contractual work” last November, she informed her mortgage company. “They told me to get back to them in January,” she recalled.
After the first of the year, McGee’s contract work became “more substantial…and I began feeling confident in being able to work with [her mortgage company],” she said. “They were telling me that I wasn’t eligible for any kind of modification because [the loan] was modified once before. Meanwhile, they said ‘worst case scenario’ they would want to receive back payment…and I said it was impossible for me to pay all of that back.
“So then they alluded to a percentage of that amount to be paid, and the balance perhaps to be tacked onto the principal. That’s what I thought would be the ‘worst case scenario.’”
However, all the time McGee thought her mortgage company was working with her to get back on track with her monthly payments, her longtime home was in fact being put up for sale. “Sometime at the end of January and the beginning of February is when I started getting the sheriff’s notice that the house was going to go to a sheriff’s sale,” she said.
This is commonly called “dual tracking” a procedure that banks and mortgage companies often use with homeowners who fall behind in their mortgage payments, says Anthony Newby, a Neighborhoods Organizing for Change (NOC) community organizer. “Dual tracking is when a borrower is told one thing by the lender while at the same time they’re doing a sheriff’s sale or auction sale,” he explains.
“The argument today is are they doing it intentionally, or is it that the bank is so big that you have one division doing the sheriff’s sale and another division working on the modification, and they don’t talk to each other. And the borrower is stuck in the middle.
“Or the other thing that is equally plausible,” Newby adds, “is that they do know [the home] will get sold and they are just stringing the borrower along.”
Newby says that at least half of NOC clients are persons age 50 and older. This population was hit hard by the economic downturn, “and those workers get up in age and are the first to be let go,” Newby notes.
“They told me, ‘Don’t worry about any notices you may get or any phone calls, because that’s just robocalls,’” said McGee, who kept calling bank officials for several months for updates. “Somebody will get back to you next week,” she was always assured.
McGee recalled one of those phone calls to the bank in early June: “This woman says to me, ‘Are you aware that your house has been sold? It was sold on May 18.’ It was June 4, and no one sent me a letter or anything. I was in total shock.” She later learned that the bank had bought her home.
Foreclosed homeowners such as McGee usually are allowed six months to live in their homes after a foreclosure sale has taken place, says Newby. “There are too many older people being disproportionately impacted.” He also says banks and mortgage companies should work more closely in helping homeowners, including putting an end to their dual tracking practices.
Since this past March, two local organizations, the Northside Community Reinvestment Coalition and Jewish Community Action, have joined forces on McGee’s behalf to oppose the foreclosure. “They are working with me,” McGee confirmed.
The AARP report notes that the homeowner can get out of foreclosure in one of several ways, including becoming current on their mortgage loan, obtaining a loan modification that would lower their payments, or obtaining a reduction in the amount of principal owed.
Other ways include selling the home in a “short sale” in which the lender agrees to the sale for an amount less than what is owed; entering into a “deed-in-lieu” agreement with the lender during the pre-foreclosure period; selling the home to a third party; or the lender taking ownership of the home by buying it back at a public auction — which is what occurred in McGee’s case.
Additional key report findings include:
Sixteen percent of loans of persons 50+ were “underwater,” meaning homeowners owe more than their home is worth.
Serious delinquency rates — mortgages that are 90 days or more delinquent and loans in foreclosure — are higher among persons age 50-64 and over 75 than those of the 65-74 age group.
Borrowers with incomes ranging from $50,000 to $124,999 account for 53 percent of foreclosures among the 50 and older population in 2011; those with incomes below $50,000 accounted for 32 percent.
The foreclosure rate on prime loans of persons age 50 and over is 23 times higher (2.3 percent) in 2011 than the 0.1 percent rate in 2007.
Older people face more difficult challenges recovering from a foreclosure, including having fewer working years remaining, facing longer periods of unemployment after they’ve lost their jobs, and often accepting new jobs at a lower salary than their previous ones.
McGee is continuing her fight. “I want to remain in my home. I don’t want to just let it go,” she said. “I would appreciate a way in which I could figure out how to manage this. That is what I want to do.”
Charles Hallman welcomes reader responses to firstname.lastname@example.org.