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The pinnacle of the American Dream was becoming a homeowner. However, that dream went bust for many after the subprime bubble crumbled in 2008. At first, minorities and the middle class were the hardest hit by the market implosion; besides these folks, we had no data on how the depression affected the 50+ segment — well, not until now.

AARP Public Policy Institute recently published a study called Nightmare on Main Street: Older Americans and the Mortgage. This is the first study focused on the 50+ population and how they have been affected by the mortgage crisis. The results are worrisome, to say the least; it shows that more than three million Americans reaching retirement age or already retired are at risk of losing their homes.

The highlights of the report are the following:

  • Seriously delinquent mortgages have increased 456 percent, from 1.1 percent in 2007 to 6 percent in 2011, among people 50+.
  • By the end of 2011, 16 percent of the loans for the same group were underwater, meaning that their debt was greater than the total value of their home.
  • For homeowners holding prime loans, the foreclosure rate has climbed 23 times higher since 2007, growing from 0.1 percent to 2.3 percent in 2011.
  • For people with subprime loans, the foreclosure rate went from 2.3 percent in 2007 to 12.9 percent in 2011.
  • Hispanics are the hardest hit with the highest foreclosures rates both on prime and subprime loans among the 50+ population.

“More policy solutions are needed to assist all homeowners, particularly older Americans. Policy solutions that should be considered include: principal reduction loan modifications; mediation programs; more access to housing counseling and legal assistance programs; and development of short-term financial assistance programs,” the study concludes.

AARP calls for bolder actions from lawmakers to address these climbing trends. The study shows that minorities are the ones suffering the worst from the mortgage crisis and there should be a legal and organized way to rescue them from this debacle.

Read a copy of the report by clicking here. (PDF)

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