It’s not news to residents of the eight-county San Joaquin Valley that the area has been hard hit economically since 2008, when the housing bubble deflated. Many neighborhoods show signs of neglect as people unable to meet their mortgage obligations lose their homes to foreclosure.
Among those facing this prospect in the central part of the state are a growing number of older homeowners. Exactly how many is hard to pin down. Foreclosure figures typically are not broken down by the owner’s age, according to Sean O’Toole, president of ForeclosureRadar, which provides subscribers with foreclosure figures and statistics.
However, a recent study [PDF] by AARP, the grimly titled "Nightmare on Main Street," said that as of December 2011, 600,000 loans for homeowners ages 50 and older were in foreclosure, while 3.5 million loans for the age group were “underwater,” meaning the home’s value was less than the loan.
AARP spokeswoman Christina Klem says older homeowners face a “double-edged sword” in regard to foreclosure as opposed to younger owners: They don’t have as many years to recoup financial losses and those who are seeking work “are unemployed longer.”
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Seniors also are more likely to end up in trouble because of scams and requests for financial help from family members, according to foreclosure prevention experts.
Safiya Morgan, an attorney with Central California Legal Services, works exclusively with Merced County seniors. In less than two years, 25 percent of 721 cases have been housing related.
When seniors take out a loan on their homes to help a family member, Morgan says, “usually someone else is giving them that idea." Clients say, “ ‘Yeah, I know it wasn’t a good idea,’ ” she notes, “but think they would be selfish if they said no.”
Eduardo Morales is a HUD-certified housing counselor at El Concilio, Council for the Spanish Speaking, in Modesto. He estimates that 5 to 7 percent of the 1,500 people he’s advised in five years have been 65 or older.
He tells of a client, 62, who had been making payments on her house for many years. She was “scammed,” Morales says, by an individual who persuaded her to change her loan. While payments were lower initially, they rose to an amount she couldn’t afford.
“We could not help her return to her old loan,” he says, and eventually, the client lost the house and moved in with a neighbor.
Sonia Neal of the Community Housing Council of Fresno has seen many such examples of what she calls “predatory financing.” From January to August of this year, her agency has helped 73 people ages 62 and older with foreclosure prevention.
“The only person cashing out was the lender,” Neal said.
Morales believes his older Hispanic clients have been hard hit in part because of how scammers approach them. “Somebody comes as a friend – ‘Hi, how are you?’ – then you think everything is great.”
Attorney Morgan says there is a generational difference between seniors and younger homeowners facing foreclosure. “They really believe in paying their obligations,” she says, whereas those who are younger are more likely to say, “ ‘OK, I give up; I tried.’ ”
Maria Rodriguez is a HUD-approved counselor at ClearPoint Credit Counseling Solutions in Fresno. In 2007, 4.7 percent of the company’s clients nationwide were 65 and older. By January 2012, that number had grown to 13.4 percent.
She, too, sees a difference in her senior clientele. They place “more value on their word,” so are devastated at the thought of defaulting on a loan, Rodriguez said. “They tend to stress out more about the situation.”
That can take the form of not opening mail from mortgage lenders, said Melissa Valdez. “We call it the ostrich syndrome,” says the credit counselor at Self-Help Enterprises in Visalia.
She is working with a 59-year-old client who became delinquent on her mortgage after her husband lost his license to drive a truck. She hadn’t paid that or other bills or notified her lender.
Valdez ascertained that several loans had been taken out in her client’s name fraudulently, the client believes by a co-worker. After notifying the police, the woman is working with Valdez to convince Freddie Mac, a lending agency founded by Congress in 1970, not to foreclose on the loan.
Older homeowners facing foreclosure often don’t have the same resources as do their younger counterparts. They might not have access to the Internet or might lack an understanding of what can be complicated financial options. Sometimes, Valdez said, “they don’t have the energy to do this themselves.”
Mortgage details and information on options can be difficult to understand, even for experts.
“The whole process to apply for a modification (change in mortgage terms) is overwhelming,” Valdez said.
“When a person comes to me with a modification, I need to read very slowly, be real careful,” said Morales, of El Concilio. “Every single modification is different.”
The first step a senior who is having trouble making a mortgage payment should take is to contact a HUD-certified housing counselor or learn about government programs designed to help homeowners, such as Keep Your Home California. Its offerings include unemployment mortgage assistance, mortgage reinstatement assistance and principal reduction.
Such services are free, counselors stress.
“Don’t pay anybody,” said Neal, of the Community Housing Council of Fresno. From January to August of this year, the agency has helped 73 people ages 62 and older with foreclosure prevention. There have been success stories, according to Neal.
A male client on Social Security had defaulted on one loan modification, but the Community Housing Council worked with the lender, which ultimately forgave $85,000 in debt. The man’s new loan balance was $32,000.
“We worked over one year with Wells Fargo,” she said.
“Seek out help with trusted advisers, with family members, too,” Neal advised. In Fresno alone, three agencies provide foreclosure prevention services, she said. “A lot of times, they couldn’t do it without us."
This story is courtesy of HealthyCal.org, a nonprofit journalism group based in Sacramento. The story is the first in a three-part series looking at how California seniors have been affected by foreclosures.