Foreclosure: Trials of Retired Senior Citizens

In time past, older citizens were certain of financial security in their futures. As soon as they retired, the government paid pensions and social security worked for them. Once their 30-year mortgages were settled off; the remainder of their days were spent in comfort and essential luxury.

Sadly, however, economic recession and market crashes have adversely affected the once- certain and peaceful world of senior retirement security. Millions of seniors in the United States are now burdened with debt more than what it used to be. It has been estimated that around 1.5 million Americans have been victims of foreclosure between the years 2007 and 2011, losing their homes in the process.

Another estimated 3 million seniors are said to be at risk of foreclosure, and some 3.5 million mortgages are higher than the property’s value; they are underwater. This has created a bad situation where seniors are at risk of loss if selling their property becomes a necessity, and there may be no equity left if a compelling need comes up. It is sad to say that so many seniors are facing financial horror in their retirement, as opposed to the intended security they were supposed to enjoy.

Causing Factors

The rapidly increasing number in mortgage foreclosure can be attributed to several reasons. These include loss in value of the property, reduction in the pension amount, and an increase in living and medical costs. When these are considered, there is little or no extra money that could go into savings. Over the years, the final consequence is that up to half of all seniors have no substantial savings as a retirement plan. Owning a home is gradually falling from its status as a thing of pride.

The losses that can be incurred by mortgages are rather scary and dim the excitement of owning homes. Homes are no longer seen as assets but can well be liabilities. Accumulated equity in the past had tremendous value, but in recent times, accumulated equity has decreased, and appreciation in the value of a property is relatively low. The initial concrete sense of financial security for older citizens has weakened. Owning a home is almost now a guaranteed way to lose money, and ultimately, the home in question.

The Negative Effects on Health

All the outlined problems are now having a direct negative consequence on the health of citizens. Most of the victims are the elderly; they are vulnerable and are not as energetic as they were when younger. Research to study the link between the crises and the general health of the affected community has been conducted. Experts found out that areas with higher cases of foreclosure and general mortgage crisis recorded higher visits to health centers and an increase in the use of stress-relieving drugs.

Some of the reasons for hospital visits were found to be stress, agitation, and even worse, attempted suicides. In general, the areas had higher occurrences of physical ailments arising from mental stress. It is easy for people in serious debt to overthink and lead themselves into depression, and many elderly adults have ended up dying when the stress becomes too much to handle.

Negative Effects on the Economy

While the adverse effects of foreclosure on the homeowner’s health have been outlined, it turns out that the economy also takes a hit from these effects. A staggering 4.4 million foreclosures have been recorded between 2008 and 2013. This figure equals a total cost of about $2 trillion in the value of the property. This amount of money lost has affected the economy at different levels from local to state and the nation. Not only does it negatively affect homeowners themselves, but a loss in value of the property and reduction in the nation’s revenue is also prevalent consequences of large-scale foreclosure.

Another way by which foreclosure affects the economy comes from the homeowners themselves. With a foreclosure, many homeowners usually lower or completely stop purchasing other services. The economy thrives on large scale purchases and expenditures made by its citizens. As millions of homeowners reduce their spending, a good fraction of the whole nation’s economy is slowed. This effect can be particularly adverse in states that contain a large majority of the nation’s total foreclosures.

The homeowners who are victims of foreclosure are usually not granted new loans until after at least two years, automatically reducing the number of possible buyers in the real estate market. Another significant effect is that foreclosures are infectious; in the same area, a foreclosure on one property would cause a reduction in the value of the surrounding homes by giving the area a ‘bad’ look. This can, in turn, lead to further foreclosures.

Attempted Solutions

In an attempt to fix the situation, the US government has spent billions since the year 2008.  Prevent Foreclosures and Keep Families in Their Homes is an initiative that involves guiding homeowners on how to ensure they are up to date on their mortgage payment requirements. If a foreclosure is imminent, advocates and counselors also try to revisit payment agreements set in place between lenders and homeowners.

They usually try to extend the payment time over more extended periods, effectively reducing the expected monthly payments to values the homeowners can afford to pay. Another possibility is to discuss allowing the homeowners to keep residing in the property, with a future hope of reclaiming the property’s ownership. There are still many considerations ongoing to determine which homeowners facing foreclosures can be helped by the government and the amount that should be provided.

In most cases, however, the homeowners signed up for reverse mortgages when they didn’t have a full grasp of its implications. They were cajoled and wooed in by greedy lenders who only stated its benefits; no taxes. They also made sure it appeared like their homes faced no risk of foreclosure at all. Homeowners who can sustain their nation 21 loans payments and those who live in homes they clearly can’t afford are recognized as not needing help from the government.

The main objectives are to bring stability to affected neighborhoods and provide help to enable homeowners to recover. So far, the government has helped in the following ways:

• By providing support with new housing for victims who have lost their homes to foreclosure.
• Aiding in necessities like food, clothes and electricity.
• By providing legal help with the mortgage.
• By giving aid in school tuition fees for children of affected homeowners
• By providing medical help for physically and mentally affected homeowners.

The effects of foreclosure are drastic but are not absolute. There is still hope for people who face foreclosure threats. However, it is better to avoid the possibility altogether; foreclosures are mortgage failures. Before signing any mortgage arrangement, make sure you fully understand what you are getting into, what it entails, and the worst-case scenarios.

However, it has been pointed out that solving the foreclosure problems and their effects on people do not require coming up with new services but instead improving on the existing areas. Funds have been released to help assist people who are about to or have foreclosure problems. The ARRA was a fund of $1.5 billion passed to help assist such people and saved many from ending up homeless. Retirement should be a time to relish in one’s comfort and financial security, not to start worrying all over again. The seniors deserve better!