Nov. 25, 2008 - The "housing crisis has kept
thousands of older Americans who need support and care from moving into
retirement communities or assisted-living centers, effectively stranding
them in their own homes," the
New York Times reports. Unable to sell their homes in the declining
market, many elderly U.S. residents cannot afford to buy into retirement
homes that require a $100,000 to $500,000 up front payment to move in.
Purchase Reverse Mortgage Program allows seniors to
purchase a new home, never make a mortgage payment for as long as they
live in the home, may require sizable down payment
According to the
National Investment Center for the Seniors Housing and Care Industry,
occupancy rates for independent and assisted living facilities decreased
by 2% during the year ending in mid-2008, although facilities in some
"hard-hit areas" such as Florida have vacancy rates as high as 20% or
30%.
Facilities, seeing depopulated waiting lists and
rising vacancy rates, have hired real estate agents to assist
prospective residents in selling their homes. Others have developed
programs with banks to "provide bridge loans to homeowners, or are
discounting apartments and offering low-interest loans," according to
the Times.
Minnix said, "It remains to be seen whether we have
a short-term stress, or whether we're facing a crisis," adding, "We're
into brand new territory here. It is deeper and potentially broader."
(Healy, New York Times, 11/22)
People Choose Between Medical, Home Payments
The
Wall Street Journal on Tuesday examined how the U.S. "housing
market's collapse is forcing a growing number of Americans sitting on
large medical bills to choose between paying the mortgage and paying the
doctor."
According to the Journal, "People have long
resorted to borrowing against their homes to pay for medical care in
times of illness or after an accident," but with "home values plummeting
and interest rates on adjustable mortgages ratcheting higher, some
indebted patients are at risk of losing their homes in order to pay for"
costly medical procedures, while others "are forgoing health care in
order to keep from losing their homes."
According to the Journal, it is difficult to
determine how many people are being forced to choose between making
medical payments or mortgage payments. However,
Freddie Mac says medical issues seem to be an increasingly common
reason some of its 12 million mortgage holders are falling behind on
payments.
Illness was the cause of 15% of Freddie Mac's
delinquencies in the first half of 2008. According to the Journal,
although the percentage of delinquencies due to illness is down, the
overall number is up because a larger number of people are late on their
mortgage payments.
Consumer advocates urge patients not to refinance a
mortgage or use home-equity loans to pay outstanding medical bills
because of the risk of foreclosure, according to the Journal. In order
to put on a lien on a patient's home, medical providers typically must
obtain a court order, and generally they do not get paid until after the
home has been refinanced or sold.
Still, hospitals often are reluctant to use
strategies to obtain payments that could force patients from their
homes, in part because of the fear of bad publicity, according to Chi
Chi Wu, a staff attorney at the
National Consumer Law Center (Rubenstein, Wall Street Journal,
11/25).
