Older Americans
Legal-aid advocates are noting that elder Americans are being left out of the mortgage loan modification program due to their low-income status. An unprecedented number of elder citizens are facing foreclosure because they were sold loans they could never afford. Many times, they were sold these loans fraudulently and with intentional misinformation.
A few years ago, homeowner Carol Couts, a retired 66-year old woman, was cajoled into taking out a mortgage with payments well over her income. Her story began in 2005 when her husband passed away. She decided to take out a reverse-mortgage, in which she sold her home to the bank, and then received monthly living-expense payments. The deal worked well for her, on her $913-a-month social security income. Unfortunately, it was a shifty mortgage broker named Daniel Lewis who told her that banks were “cancelling reverse mortgages because they were unprofitable.” He claimed that her only option was to refinance or lose the home. This was not true but the fear of losing her home made the decision seem like a good one.
The red-flags soon started flashing when Couts reviewed documents she’d already signed. She noted her income was entered as $5,075 monthly. She also noted that all other information that pointed out her income and assets were left blank. Contacting Lewis proved no help, since he told her that there was nothing he could now change. Now, four years later, Couts has no way of making her payments and faces losing her home of 25 years.
Unscrupulous lending
Many elderly homeowners are finding themselves in Couts’ position. Most lived for decades, mortgage free, in their homes and had a good amount of equity invested in the properties. The critical dividing factor was that they had low-incomes, a large sector living on social security payments alone. These borrowers rarely qualify for mortgage loan modification programs because there is no feasible way to get payments low enough for them to afford, said Tara Twomey, an attorney with the National Consumer Law Center.
The only solution to this problem is to allow elder Americans to keep their homes, while lenders agree to abolish the fraudulent loans, or minimize the principal. Unfortunately most lenders are unwilling to do this, seeing the loss as too great in the midst of a recession. The push in legislation for this law has stopped due to its controversial nature.
What is being done?
Unfortunately due to the recession and other “priority” mortgage packages, elder Americans are finding themselves in difficult situations. When fraud played a part in getting the loan, there is still a very gray area for help. In fact, most defrauded homeowners get no help because many don’t even know they were defrauded. Law enforcement steps in to investigate when lenders are victims of fraud, not borrowers. There are a growing number of legal-aid offices that are taking fraud cases for borrowers, but the cases can be drawn out to well after homeowners pass away.
Hope for the future
Legislators are working hard to clean up the mortgage mess. They are trying to revamp the mortgage loan modifications program to aid as many homeowners as possible. Though the elder American is in a difficult position, there are a growing number of agencies becoming aware of the issue and stepping in to aid.
