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With the safety net having almost vanished the nest is being blown away. This is especially bad new for many retirees who are suffering huge losses because of the foreclosure crisis.
Many senior American citizens have been changing their retirement plans after having lost a good amount on the equity of their houses because of the slump in the housing market and the gloomy overall economy. These elders have to live out their life on fixed income coming from pensions, 401Ks or IRA’s as well as Social Security. The crux of the problem is that considering their advanced age they do not have the time to recover what they have lost.
The house owners who had taken money out from the equity of their houses are suddenly finding that the cow cannot be milked anymore. Many have lost jobs and others their houses. Pensions too have gone after the business of their employers failed. In front of them stretches out a life of uncertainty in the twilight years – sans relaxation and ease.
About 30% of the seniors do not live in mortgaged houses. Thus even though the value of their houses have gone down they need not lose it right now if they are careful. Besides there is always the hope that in the near future equity will be built up again.
In one out of every six mortgages, the borrowers owes more money to the lender than the value of the unit that has been mortgaged, according to the findings of Moody’s economy.com. Most of these had bought their houses in the recent past or refinanced the houses by siphoning off the equity.
Americans have to now wake up the problem, face the reality and try to find out other options. Equity on houses can no longer be relied upon especially for those who have no retirement investments or savings. Among the alternatives are moving to smaller houses, selling off assets, working for more years and taking the option of reverse mortgage. None of the decisions should be taken lightly and quickly – it requires serious thinking, as there are many challenges and risks.
Each case is specific and no general rule is applicable to all. Ken King is now 61. He had planned to retire at the age of 61 but the value of his house has fallen. Together with this his 401K has lost its value and he has no savings to fall back on. The future is grim.
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8 Responses
[...] spaces for parking after dark because more people are staying at home. There is sharp contrast. Foreclosure notices are not jostling with sale signs. Some houses are empty flaunting to-let signs. The [...]
[...] Jack McCabe an analyst said, “They can’t sell them, they can’t mothball them, they can’t bulldoze them Developers rights now are looking for every way not to lose their projects into foreclosure.” [...]
[...] new programme has still miles to go before it will have some impact on the tsunami of foreclosures. Nevertheless the beginning has given rise to hope for better days [...]
[...] foreclosures having the run of the locality the municipalities are having a trying time looking after all the [...]
[...] administration has come up with a new law to provide protection to those who have rented space in foreclosed properties. This will help dwellers in apartments like Sonesta Circle and Sonesta Drive who got eviction [...]
[...] hold out much hope for the sufferers. It has now been stipulated that the borrowers must postpone foreclosures for 90 days in those cases where both the parties have not sat down to try and modify the terms of [...]
[...] is found that more than 55% of all the residential house sales came from the distressed category of foreclosure or short sales. This messes up the median values. But if count is taken only of the houses that [...]
[...] interest rates were allowed to run amok. Mortgages were fashioned to go straight into the arms of foreclosures. Lenders repeatedly showed how callous they were to the interests of their clients. The lenders [...]