Should We Foreclose On Grandma?
by Henry Meier
There are two villains behind the financial crisis: one is banking institutions, which abdicated their responsibility to underwrite loans and then ran to Congress to advocate for a $1 trillion bailout in the name of preserving capitalism, and the other is the American consumer, who, despite what their advocates and the CFPB like to think, knowingly took on debt they could not afford. The most frustrating thing about the aftermath of this crisis has been continuing banker hubris in failing to acknowledge that they need to change their ways and political timidity in telling the American public that it needs to hold itself responsible for the part it played in the meltdown.
The latest nominee for a solution in search of a problem comes from the New York Times with help from the American Association of Retired People (AARP). According to a front-page article in yesterday’s times:
In the latest chapter of the foreclosure crisis, homeowners over 50 are falling into foreclosure at the fastest pace of any age group, according to nationwide data, in part because women are outliving their spouses and are unable to cope with cuts in their pensions, ballooning medical costs — and the fine print on their mortgages.
So what is this fine print which is ensnaring Golden Girls all across America? According to the Times, “[t]o stay in the home, the surviving spouse needs to take over the mortgage. But to do that, most banks require that the borrower assuming the mortgage be up-to-date on payments. Housing advocates say that their clients, especially if one spouse experienced a prolonged illness, often find they are already thousands of dollars behind.” The fine print to which the Times is referring seems to be that nettlesome detail of who signed the mortgage note and whether the surviving spouse can actually pay off the remaining debt.