A lot has changed since the dark days of 2008, when the housing bubble burst and the economy went over a real fiscal cliff. In the four years since, corporate profits have slowly climbed back to firmer ground, the stock market has almost returned to its pre-crash altitude, shoppers are showering retailers with pre-holiday spending sprees, and the bankers … well, they’re already back in their palatial treasure domes atop the highest peaks.
Of course not everything has changed for the better – some things have just festered. Like the nearly 3 million homes that are in or near foreclosure and the 12 million borrowers who owe $600 billion more than their underwater homes at the bottom of the ravine are worth.
Four years on, and the continued inability of the banks and the government to solve the mortgage miasma by providing real and lasting relief to struggling homeowners weighted down with unmanageable debt, is still stymieing any chance of a truly robust economic recovery.
The More Things Change, the More They Stay the Same
And, of course, some things never change at all. Remember the old Depression-era stereotype of the mean landlord twirling his greasy mustache and heartlessly throwing poor widows and orphans onto the street for not paying the rent? Well, it seems, for the moment anyway, that the orphans are safe. But the widows? Not so lucky.
According to the AARP (formerly the American Association of Retired Persons), the rate of foreclosure among homeowners older than 50 increased by 23 percent from 2007 to 2011, resulting in 1.5 million foreclosures. In 2011, 6 percent of loans held by people older than 50 were delinquent, and a rising number of these individuals who are now threatened with foreclosure and eviction seem to be elderly widows whose husbands’ names are the only ones on the loan documents.
Yes, there was a time, not too long ago, when Mr. handled all the family business and Mrs. tended to the home fires. So some surviving spouses in this generational cohort are now living in homes whose mortgages were not actually signed by them. And because they are not the legal borrower, they are having a particularly hard time trying to get a bank to agree to a loan modification or principal reduction.
And in some cases, they can’t simply assume the mortgage, which would seem to be a logical move that would help make potential negotiations somewhat easier, because most banks require that payments be up to date as a prerequisite for taking over the loan.
Coming Full Circle
But many widows in need of financial help are already behind on their monthly obligations – often due to high medical bills and other expenses. According to the Federal Reserve, Americans aged 65-74 are outpacing all other age groups in the amassing of debt.
The inevitable result of this sub-stratum of the general mortgage nightmare? The dearly departed Mr. keeps getting bills in the mail that Mrs. can’t pay, so Mrs. faces the loss of her home, which may not legally be hers at all, but may still belong to her husband, who is no longer around to protect it from foreclosure.
And we’ve come full circle. The mean landlord twirls the ends of his greasy mustache and heartlessly throws another widow out onto the street after tacking an eviction notice to the door.
Who’s next? Orphans?
Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it seven years ago, helping birth Debt.org into existence as the site’s original “Frugal Man.” Prior to that, he spent more than 30 years covering college and professional sports, which are the fantasy worlds of finance. His work has been published by the Associated Press, New York Times, Washington Post, Chicago Tribune, Sports Illustrated and Sporting News, among others. His interest in sports has waned some, but his interest in never reaching for his wallet is as passionate as ever. Bill can be reached at email@example.com.