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CFPB Releases Senior Mortgage Debt Report

A growing number of seniors are in debt, and it’s not a pretty picture as they head into retirement, according to a new “snapshot report” released by the Consumer Financial Protection Bureau on Wednesday. 

Older Americans are facing challenges that include more mortgage debt, less affordable housing, and greater risk of foreclosure, reveals the report, which does not include reverse mortgages.

The CFPB also issued a consumer advisory reminding older consumers approaching retirement to figure out their mortgage pay-off date and consider their retirement income and expenses. 

“A home can be a place of security for older Americans in their retirement years – a roof over their heads as well as a valuable asset,” said CFPB Director Richard Cordray in a statement. “But as more seniors carry significant mortgages into retirement, they put themselves at risk of losing their nest eggs and their homes.”

Around 80% of the 41 million Americans age 65 and older are homeowners—the highest homeownership rate among all age groups. While their rate of homeownership has remained constant in the last 10 years, the CFPB says, the percentage of older homeowners who still have mortgage debt has increased. 

Reasons for that include the “refinancing boom” of the 2000s and a general trend among Americans to buy their first home later in life—often with small down payments—along with borrowing against home equity for various reasons. 

The CFPB’s Snapshot of Older Consumers and Mortgage Debt report was generated with data gathered and analyzed from the Census Bureau, Federal Reserve, and consumer complaints submitted to the CFPB, among other sources.

Highlights of the report include the number of older homeowners carrying more mortgage debt into retirement climbing from 22% in 2001 to 30% in 2011. The rate more than doubled during that time period to 21.2% for homeowners age 75 and older.

The amount of mortgage debt has also increased. Median mortgage debt for seniors increased by 82% between 2001 and 2011, from about $43,300 to $79,000. At the same time, many senior homeowners accrued less home equity than their age group did a decade ago.

“This decline in home equity may have an outsize impact on older Americans, for whom home equity is frequently their primary or even only asset,” says the CFPB. “The result is less financial security and greater financial risk.”

While the CFPB cautions against “dipping into” home equity, the snapshot report on senior mortgage debt does not include reverse mortgages or home equity lines of credit.

Access the report here and the Consumer Advisory here.

Written by Alyssa Gerace

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