Joe Petrowsky, Mortgage Broker NMLS # 6869

“More Seniors Face Housing Challenges”

There are days in this mortgage business, I wish I could do more. Let me share what I mean.

I meet with a couple today regarding refinancing. They are in their late sixties and both still working. Here is their story, in 2007 they had some credit challenges, needed to consolidate a bunch of debt and ended up with a very bad mortgage, very bad.

The original mortgage was 200,000 @8.75% interest for 20 years. Their monthly payment, including taxes and insurance is $1,988 dollars. There was a 5 year prepayment penalty, so they couldn’t refinance out of the mortgage before now. They contacted the mortgage servicer many times during this time period to attempt to modify the mortgage, but was consistently told, that wasn’t possible.  

They still owe $191,000, that’s not the problem, the home is now worth less than the debt. It looked like the property was appraised for about $180,000. I am able to do an FHA mortgage for them, up to 97.75% of the appraised value. They will have to tap some 401K money to pay the difference. I told them that I was going to do their loan for them, without a fee for us, how can you charge these folks anything?

Their new monthly payment is going to be $1,291 per month. Sure that is a big savings, but I wonder if the person that did the previous mortgage knew or cared about the harm that he was doing to these folks?

It felt good that I was able to help them, but his statement to his wife broke my heart. He said, “I’m sorry honey, I have to keep working full time for 4 more years”. His wife of 46 years said, “It doesn’t matter, we still have a good life.”

Seniors Face Housing Challenges

By: Brad Finkelstein

There is considerable emphasis placed on finding solutions to rising health care costs for those 65 and older, but not enough is placed regarding housing and providing adequate support services for this same group, a Center for Housing Policy report states.

As seniors get older, they pay a higher percentage of their income for housing, not just in rent or mortgage payments, but also property taxes, maintenance, and utility costs which all tend to rise over time for both groups. At the same time, income tends to decrease.

"Accumulated savings and home equity can help, but levels of net worth vary dramatically among older adults, and are particularly low among racial and ethnic minorities," the report declares.

There are two policy paths available; one that allows seniors to age in their current homes, while the other calls for expanding housing options.

Regarding that second path, CHP said "By adopting more flexible zoning policies and aggressively enforcing the requirements of the Fair Housing Act and Americans with Disabilities Act, communities can help foster a diverse range of housing types."

But subsidies are needed to ensure these options are available for low and moderate-income seniors, "and at present there are far too few of these to go around."

As for aging in place, reverse mortgages have been held up by many of the products supporters as a way to encourage this option. But what worries CHP about reverse mortgages is that according to a recent study of older adults seeking counseling for these loans, more than two-thirds were considering taking out one as a way to reduce household debt.

The report notes the obvious, that the decline in home values has reduced the amount of money available to seniors in many cases, if they are able to qualify for the reverse mortgage in the first place.

"This raises the concern that some homeowners could deplete their equity too quickly, leading to the loss of their home later in life. Further study is needed to better understand the impacts of this trend." CHP said.

image: akarakingdoms/freedigitalphotos.net