You might think that middle aged homeowners would live in paid-off homes. Not so. They kept buying up. They kept taking on more mortgage debt. Then they borrowed against their equity.
We now face a new situation. They are defaulting.
Homeowners more than 50 yearsold are falling into foreclosure faster than any other age group, particularly widows whose husbands held the mortgage, said the New York Times.
Foreclosures among homeowners over 50 increased by 23% over the past five years, resulting in 1.5 million foreclosures.
The main reason for the rise in foreclosures is due to women outliving their spouses and not being able to cop with ballooning, medical costs, mortgage and pension cuts. . . .
About 6% of loans held by persons over 50 were delinquent in 2011, up from 1% in 2007, according to a study by AARP.
One of the problems is older Americans are saving less and borrowing more, said executive vice president for policy Debra Whitman of AARP.
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This is not going to get better. It is going to get worse. The number of widows will continue to rise. They will be strapped for income. They are not ready to re-enter the work force. The economy is bad. Unemployment is high. Wages are low.
If they bought large term life insurance policies on their husbands’ lives, they would have hope. They could collect $250,000 to $500,000 at the death of their husbands. The premiums are low. But they stick with the “whole life” policies their husbands bought years ago. No one warns them.