San Joaquin Valley seniors face foreclosures

August 28, 2012

By Clare Noonan
California Health Report

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 owner’s age, according to Sean O’Toole, president of ForeclosureRadar, which provides subscribers with foreclosure figures and statistics.
However, a recent study by AARP, the grimly titled Nightmare on Main Street, said that as of December 2011, 600,000 loans for homeowners ages 50-plus 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 that 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.”

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 5-7 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 paying on her house for many years. She was “scammed,” Morales says, by an individual who convinced 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 says.

Morales believes that 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 13.35 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 says. “They tend to stress out more about the situation.”

That can take the form of not opening mail from mortgage lenders, says 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 worked “all her life” but 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 may not have access to the Internet or may lack understanding of what can be complicated financial options. Sometimes, says Valdez, “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,” says Valdez.

“When a person comes to me with a modification I need to read very slowly, be real careful,” says 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,” says 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, who ultimately forgave $85,000 in debt. The man’s new loan balance was $32,000. “We worked over one year with Wells Fargo,” she says

“Seek out help with trusted advisors, with family members, too,” Neil advises. In Fresno alone, three agencies provide foreclosure-prevention services, she says.

“A lot of times they couldn’t do it without us.”

NOTE: AARP’s complete tip sheet on what to do when you are struggling with mortgage payments can be found online.

This story is the first in a three-part series looking at how California seniors have been affected by foreclosures.

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