More Elderly Homeowners at Risk of Foreclosure

August 15, 2012

The scourge of the foreclosure crisis has affected millions of middle-aged Americans, but little has been reported on the most vulnerable homeowners; elderly Americans. According to a recent report by the American Association of Retired Persons (AARP) millions of older homeowners are at risk. Among the report's findings, nearly than 600,000 people age 50 and older are facing foreclosure, and an estimated 625,000 are at least three months behind on their mortgage payments. The proportion of delinquent loans held by older Americans has increased by 450 percent over the last five years.

The report also analyzed the fleecing of equity in most homes. 3.5 million older homeowners are now "underwater" in their mortgages; meaning that they now owe more on their mortgage than the property is worth. This is largely a confluence of calamities; homeowners taking out home equity loans to pay for medical treatments, job losses that prevent repayment, and other family obligations that drain a homeowner's own resources.

For those struggling to make payments, there is little relief. Many live on fixed incomes, and have little savings to offset increasing obligations. They also have fewer working years left to build back what they may have lost. Moreover, an increasing number of older Americans are forced to re-enter the workforce, only to be paid much less than they did in the past. These factors lead to AARP officials to believe that the foreclosure climate will get worse before it gets better.

These issues exemplify the need for elderly homeowners in Louisiana to understand how foreclosures work. Louisiana law only allows judicial foreclosures; meaning that foreclosures may only proceed if granted through a court order. Two types of judicial foreclosure proceedings are recognized in Louisiana:
- Ordinary foreclosure - where the lender files a lawsuit to foreclose on the mortgage, and the procedures for an ordinary lawsuit are followed. The borrower is the defendant in the suit, and may lose his or her home to foreclosure if the lender prevails.
- Executory foreclosure - An accelerated foreclosure process where the lender files suit in court, and attaches the original note and a certified copy of the mortgage that include a number of acknowledgements made by the borrower about his or her obligations under the mortgage.

A number of lenders follow the executory process because it is easier for them to take back a home. After the original note and mortgage have been provided, the court will issue an order allowing for the foreclosure proceedings to begin. Once the borrower has been served with a demand for delinquent payments, he or she has three days to provide them or the court will order a writ of seizure and sale, allowing the local sheriff will seize the property. Once the property is seized, it may be sold. Bankruptcy may be an option in order to save a home. If you have questions about your rights and options, contact an experienced bankruptcy attorney.

Article provided by Derren S. Johnson & Associates
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