Mortgage debt — the new retirement time bomb

[IIOY]

::sigh:: From WaPo:

How long has it been since you’ve seen one of those mortgage-burning pictures? It was once a big deal, especially with the Greatest Generation.



There was no joy like that last mortgage payment, and our parents prided themselves on burning that paper, hopefully before they retired.



Rodney A. Brooks writes about retirement and personal finance for The Washington Post. Rodney has had a long and distinguished career in financial journalism. He previously worked at USA Today from 1985 until his recent retirement. View Archive

These days, baby boomers increasingly are carrying that debt into retirement.



And while there are pluses to that (the interest rate deduction for some), many financial planners now advise their clients to pay off the mortgage. But they are much more concerned with credit-card, auto-loan and student-loan debt.



The Consumer Financial Protection Bureau says the percentage of homeowners ages 65 and older with mortgage debt increased from 22 percent in 2001 to 30 percent in 2011. Among homeowners 75 and older, the rate more than doubled, from 8.4 to 21.2 percent.


And the median mortgage debt for seniors increased by 82 percent, from about $43,400 to $79,000.



The CFPB said, in a report last year, that rising mortgage debt is “threatening the retirement security of millions of older Americans. In general, older consumers are carrying more debt, including mortgage, credit card and even student loan debt, into their retirement years.”



It’s a trend that distresses financial planners and retirement planners.



“My philosophy with regard to debt is when you retire your debt should be retired,” says Ken Moraif, senior adviser at Money Matters in North Dallas, Tex. “We really adhere to that with our clients. If they have debt, we want to embark on a journey of getting it paid down and maybe working longer to generate the cash flow to accelerate the payments to get it paid off.”



Moraif says one of the dangers of retiring with mortgage debt is that the economy and markets may turn bad.



“The money you thought would be there to service your mortgage is not there,” he says. Now what? I’m sure the bank will not say, ‘I will let you live there for free.’ ”



James Gambaccini, financial adviser at Acorn Financial Services in Reston, notes a stark difference between baby boomers retiring today and their Depression-era parents.





“People who lived through the Depression wouldn’t think about retirement without having all their debt cleared,” he says. “Boomers are not only fine with it, but prior to the crash, they tried to retire with a lot of debt. We had people trying to retire and build that dream home of 15,000 square feet. That is somewhat unique to baby boomers.”



Mark Hebner, president of Index Fund Advisors, says the retirees with the least amount of stress and the most financial freedom are those with the lowest fixed expenses.



“One of the problems with debt is it contributes to your fixed expenses in retirement,” he says. “The more you have, the less room you have for variable expenses, such as entertainment and travel.”



So what can you do if you’re preparing for retirement and believe you have too much debt?



Reduce expenses. “What we like to do is see how we can pay down that debt to their comfort zone,” says Roger Stinnett, managing director of planning at First Foundation Advisors in Los Angeles. “We will create a budget. Where can we reduce other expenses so we have more cash flow to apply toward paying debt?”



Pay off credit cards first. “For sure, you have to pay that off,” Moraif says. “You cannot have $20,000 in credit-card debt and pay that out of your retirement.”



Pay down the mortgage faster. If you’re an avid saver, it may make sense to redirect some of that money you’re putting into your retirement savings to pay down your mortgage earlier.



Delay retirement or work part time to pay off the debt. “I advise clients to keep working to pay off debt,” Moraif says. “Maybe spend another six months or year working. You will spend the rest of your life with no debt. It’s worth it.”



As Stinnett puts it: “We want our clients to sleep well in retirement. If you can sleep well with no debt, then that is the answer.”

[Velar Fricative]

Sept 8, 2015 8:18:03 GMT -5 IIOY said:

“People who lived through the Depression wouldn’t think about retirement without having all their debt cleared,” he says. “Boomers are not only fine with it, but prior to the crash, they tried to retire with a lot of debt. We had people trying to retire and build that dream home of 15,000 square feet. That is somewhat unique to baby boomers.”

Say what? Why??? What is the point of this? I thought it was typical to look forward to the empty-nest years and stay where you are or downsize, not build a gigantic new home that you'll be too old to maintain the way it needs to be maintained.

Geez, this boomer vision of retirement gives me hives.

[IIOY]

Sept 8, 2015 8:23:24 GMT -5 Velar Fricative said:

Sept 8, 2015 8:18:03 GMT -5 IIOY said:

“People who lived through the Depression wouldn’t think about retirement without having all their debt cleared,” he says. “Boomers are not only fine with it, but prior to the crash, they tried to retire with a lot of debt. We had people trying to retire and build that dream home of 15,000 square feet. That is somewhat unique to baby boomers.”

Say what? Why??? What is the point of this? I thought it was typical to look forward to the empty-nest years and stay where you are or downsize, not build a gigantic new home that you'll be too old to maintain the way it needs to be maintained.

Geez, this boomer vision of retirement gives me hives.

My parents' neighborhood is filled with people who basically did this. Many of the homes are amazing and fabulous and ridiculously expensive (many of these people lived abroad at one point and modeled their homes after styles found in the countries in which they lived), and almost all of these people are mortgaged to the hilt. They all talk openly about this because they discuss tax treatment, refinancing, etc..

[eponinepontmercy]

Sept 8, 2015 8:23:24 GMT -5 Velar Fricative said:

Sept 8, 2015 8:18:03 GMT -5 IIOY said:

“People who lived through the Depression wouldn’t think about retirement without having all their debt cleared,” he says. “Boomers are not only fine with it, but prior to the crash, they tried to retire with a lot of debt. We had people trying to retire and build that dream home of 15,000 square feet. That is somewhat unique to baby boomers.”

Say what? Why??? What is the point of this? I thought it was typical to look forward to the empty-nest years and stay where you are or downsize, not build a gigantic new home that you'll be too old to maintain the way it needs to be maintained.

Geez, this boomer vision of retirement gives me hives.

There's a commercial for some real estate site that has a woman with a small child helping her mom find a new house.  She ends up with a huge house on a lake and everyone is so excited.  Every time I see it, I wonder how excited everyone will be when the mom can't handle the lake house anymore and they have to drive up every weekend to help her instead of swim.

[pescalita]

This was one big plus to starting our mortgage at age 26 and something we consider carefully when we think about refi. I've felt crazy cakes because retirement calculators always assume I'll still have my mortgage expense.

[jillboston]

I find it interesting that they didn't include reverse mortgages as an option for people with some mortgage debt at retirement. The mortgage can't be huge but if it is less than 50% of the value of the home it could be paid off in full and the only requirement for the homeowner is to pay the real estate taxes and homeowner's insurance. I've got my fingers crossed that they'll still be around when I'm 62 - and not because we plan to have mortgage debt then but rather for the cash we can extract for extras etc. (but DH and I don't have kids and no one we feel compelled to leave money to when we die -so there's that)

[pixy0stix]

Sept 8, 2015 8:23:24 GMT -5 Velar Fricative said:

Sept 8, 2015 8:18:03 GMT -5 IIOY said:

Say what? Why??? What is the point of this? I thought it was typical to look forward to the empty-nest years and stay where you are or downsize, not build a gigantic new home that you'll be too old to maintain the way it needs to be maintained.

Geez, this boomer vision of retirement gives me hives.

MIL can't afford the house she's in now. It's too big, too expensive. Yet she doesn't want to give it up. We've talked to her about getting a 2 bd condo or something. Nope, wants a house.

[nomad100]

My MIL is talking about doubling her mortgage amount and she is retiring this year. She wants to "live on some water." :/

This is going to sound harsh but DH said, go for it but remember, you can't live with us when it all goes wrong. (She has said in the past that we are her retirement plan and has a history of being really horrible with money. So DH has to remind her regularly that we will not finance her retirement.)

[pamela]

Sept 8, 2015 8:58:49 GMT -5 @vicmo said:

I'm kind of torn on the blanket "pay it off" advice at a time of super super low interest rates. High interest debt, sure, but working an extra year or two or taking money out of the market to pay off a 3-4% mortgage seems crazy to me.

I guess it depends on the overall financial picture, imo. If you have 5 more years with a manageable payment, that's different from taking out a brand new 30 year mortgage on some retirement monstrosity.

There is extra benefit and security in knowing that if the market downturns once you are in retirement and relying on withdrawals that you don't have to pull extra to cover your mortgage. You can just temporarily scale back discretionary spending. If you still carry a mortgage, you have to pull that money out, even at the bottom and lock in the losses.

And keeping it for the tax deduction as the article mentions is dumb. If you have to carry one, the deduction helps. But paying interest to reduce your taxes by a fraction of the total amount paid makes no sense, even if it is the only thing you have left.

[Velar Fricative]

Sept 8, 2015 9:04:10 GMT -5 pixy0stix said:

Sept 8, 2015 8:23:24 GMT -5 Velar Fricative said:

Say what? Why??? What is the point of this? I thought it was typical to look forward to the empty-nest years and stay where you are or downsize, not build a gigantic new home that you'll be too old to maintain the way it needs to be maintained.

Geez, this boomer vision of retirement gives me hives.

MIL can't afford the house she's in now. It's too big, too expensive. Yet she doesn't want to give it up. We've talked to her about getting a 2 bd condo or something. Nope, wants a house.

I've been in this house for less than a year. It's not even a big house; it's attached so there is minimal maintenance on the exterior, plus the front lawn isn't really much of lawn. Yet I can't stand the time involved to maintain the house, and I can't stomach the costs to outsource general maintenance, so it falls on us. I'm only 33 and the chances of me loving this kind of work in 30-40 years, let alone being healthy enough to do it, are lower than the chances of pigs flying. Before this, I spent my whole life in apartments where you called the super to get things done. I miss that. Apartment living is one of the things I'm looking forward to most in retirement.

I do think my ILs will be (are) similar to your MIL. After their 5 kids moved out about 10 years ago (with some occasional boomeranging), they sold their house on Long Island (house wasn't terribly expensive but the property taxes definitely were) and bought...an even bigger house in Brooklyn lol. Granted, the house was in horrible condition so they've already quadrupled the value of the house with all the work that was done, but they're retiring next year and MIL is adamant about staying in the house while FIL is keen on taking that profit and downsizing. Figures the one adamant about staying is the one who didn't/doesn't do much in the way of maintenance and repairs.

[MixedBerryJam]

Sept 8, 2015 8:23:24 GMT -5 Velar Fricative said:

Sept 8, 2015 8:18:03 GMT -5 IIOY said:

“People who lived through the Depression wouldn’t think about retirement without having all their debt cleared,” he says. “Boomers are not only fine with it, but prior to the crash, they tried to retire with a lot of debt. We had people trying to retire and build that dream home of 15,000 square feet. That is somewhat unique to baby boomers.”

Say what? Why??? What is the point of this? I thought it was typical to look forward to the empty-nest years and stay where you are or downsize, not build a gigantic new home that you'll be too old to maintain the way it needs to be maintained.

Geez, this boomer vision of retirement gives me hives.

I have a friend doing this right now. Kids are in hs and college (oldest is 19) and they're building a lake house with bedrooms for their still non-existent grandchildren to stay in. They're in a mcmansion now and cant wait to ... upsize, I guess. I think they're insane. Come to think of it, another friend couple bought a tiny bungalow in a prime site when their kids were in middle school, planning to expand while living there. All their kids are launched now, and they do have grandchildren, and only just in the last year or so razed the old house and build new, at least 3x as big. I think they're insane, too.

[Cicero]

Who in their right mind would underwrite a brand new mortgage for someone who is 65? Are these 30 fixed?

[tacosforlife]

Sept 8, 2015 8:58:49 GMT -5 @vicmo said:

I guess it depends on the overall financial picture, imo. If you have 5 more years with a manageable payment, that's different from taking out a brand new 30 year mortgage on some retirement monstrosity.

I know my mom still has a mortgage despite having retired twice. I am not worried about it because I know that a) she has saved for retirement carefully, b) I'm pretty sure she accelerated some of her mortgage payments so she is less than 5 years away from paying it off (a 30-year taken out in 1994), and c) her value has greatly increased because she lives in a good school district, her city has had an influx of good jobs, and it's basically built out. I think they plan to stay in their house as long as they can - my mom loves gardening and DIY projects and staying active keeps her healthy and young - but if they had to, they could list it tomorrow without changing a thing, be under contract within 2 weeks, and walk away with enough money to buy a condo in cash.

But I think that's the difference between someone who saves and plans for retirement and simply buys a modest house somewhat later in life (she was in her 40s when she bought it) and someone who decides to upgrade to a mansion at age 60.

[eclaires]

Thank god this is one area my parents aren't complete idiots about.

They currently have a mortgage of like $400 per month (on a house they could put on the market and sell for $375k) with like 3 years left. They plan to sell in the near future because they want to downsize, but have already bought - with cash - an older home they are currently renting out and will eventually tear down and build a patio home/duplex and rent out the other side. They also plan to watch for other houses on this street to buy (it's a nice area, but older with small homes in a LCOL area) to maybe do the same thing and have a few other similar patio home/duplexes they rent out. My dad owns his own construction business so he will build them, and that's why their timeline for this is in the next 2-3 years so he can still do that - he plans to retire eventually.

Generally their retirement makes me nervous because of health care costs and retirement savings. My ILs have retirement, pensions, a zillion investments and outright own their $500k house. I never worry about them, beyond worrying that they won't downsize soon enough and I'll somehow end up stuck dealing with all the crap they have in their full basement. Their house is always clean and organized, but they fully use all the closets and basement storage for so.much.stuff. My hope is they downsize before it becomes my problem.

[mlt]

I'm afraid my parents will be like this. Now that they have their kids out of the house and college is over for my sibling, my mom wants to sell their very modest house and buy something bigger and new. They are less than ten years from retirement. It makes no sense financially but I know that she feels like she has never had a "dream" house. She sees all her friends in larger and more updated homes and she's jealous. I don't care much about houses but she always has. She always thought she'd have a nicer house and she's looking at her life and wants it now so she can enjoy it.

[tacosforlife]

Sept 8, 2015 9:22:03 GMT -5 eclaires said:

beyond worrying that they won't downsize soon enough and I'll somehow end up stuck dealing with all the crap they have in their full basement. Their house is always clean and organized, but they fully use all the closets and basement storage for so.much.stuff. My hope is they downsize before it becomes my problem.

OMG. This is going to be TERRIBLE when my ILs die. My MIL has collected so.much.stuff. They have a 3-bedroom house for the two of them, and there is just stuff EVERYWHERE. Because MIL has some fairly significant health problems, I suspect she will die before FIL despite being 5 years younger. I imagine FIL will just leave everything in the house as is, and then when he dies, we will have to deal with everything. H is an only child and a sentimental bastard. He will want to keep everything. I am going to be tempted to "accidentally" knock a candle over near something flammable.

#stonecoldbitch

[laurenpetro]

Sept 8, 2015 9:20:08 GMT -5 Cicero said:

Who in their right mind would underwrite a brand new mortgage for someone who is 65? Are these 30 fixed?

i want the name of the idiot that did the underwriting on my mother's 30 year fixed when she was nearly 62.  she died (unexpectedly, but whatever) 3 MONTHS LATER.

now my sister and i have an underwater condo that we can't dump if we tried. 

[electricmayhem]

Sept 8, 2015 8:23:24 GMT -5 Velar Fricative said:

Sept 8, 2015 8:18:03 GMT -5 IIOY said:

“People who lived through the Depression wouldn’t think about retirement without having all their debt cleared,” he says. “Boomers are not only fine with it, but prior to the crash, they tried to retire with a lot of debt. We had people trying to retire and build that dream home of 15,000 square feet. That is somewhat unique to baby boomers.”

Say what? Why??? What is the point of this? I thought it was typical to look forward to the empty-nest years and stay where you are or downsize, not build a gigantic new home that you'll be too old to maintain the way it needs to be maintained.

Geez, this boomer vision of retirement gives me hives.

My IL's did this.  Granted, the house is paid for, but last year at 67 they moved from a very manageable one level 1500sf house in a centrally located town where DH grew up with tons of family nearby to a 3500+ 3-level "dream house" on a hill in a remote mountain area 1.5 hours from an airport where they don't know a soul.  It makes no sense.  MIL is already complaining that she thought their retirement was going to be branching out into the community and just doing house maintenance, while FIL bought an SUV and spends his days outside with a chain saw trying to clear some of their three acres of trees by hand or completely landscape, seed and plant the back yard (the most he did at the old house was rake??) We're all waiting to see how long they can keep this up.

Eta: DH is one of three children and none of us are closer than 8 hours away by car.  And FIL is seriously perplexed that we're not banging down their door to visit several times a year.

[tacosforlife]

I would be thrilled if my parents decided to downsize to a two-bedroom condo. Oh, what's that? The entire family can't visit at the holidays? Only one child and his or her family at a time? You mean the whole family would never again be able to stay under one roof? Oh, what a shame. /sarcasm

[eclaires]

Sept 8, 2015 9:26:04 GMT -5 tacosforlife said:

Sept 8, 2015 9:22:03 GMT -5 eclaires said:

beyond worrying that they won't downsize soon enough and I'll somehow end up stuck dealing with all the crap they have in their full basement. Their house is always clean and organized, but they fully use all the closets and basement storage for so.much.stuff. My hope is they downsize before it becomes my problem.

OMG. This is going to be TERRIBLE when my ILs die. My MIL has collected so.much.stuff. They have a 3-bedroom house for the two of them, and there is just stuff EVERYWHERE. Because MIL has some fairly significant health problems, I suspect she will die before FIL despite being 5 years younger. I imagine FIL will just leave everything in the house as is, and then when he dies, we will have to deal with everything. H is an only child and a sentimental bastard. He will want to keep everything. I am going to be tempted to "accidentally" knock a candle over near something flammable.

#stonecoldbitch

My MIL's favorite thing in life is finding deals and shopping for them.

See: paddle boat they bought when MH and I had just started dating.  It's still in their garage, wrapped in plastic.  11+ years later.

They have at least 5000 sq ft for two people.  4BR/3 full baths on the 2nd floor, 1 full bath, a den, a tv room, a huge kitchen, laundry room, dining room, large formal living room on the main floor, huge pantry and the basement has an office, tv room, play room, large bedroom, full bath for about half of it.  The other half is unfinished storage.  With Costco style shelves.  We joke about going shopping in the basement.

Did I mention they also have two stand alone freezers (one chest, one upright), and 2 fridge/freezer combos.  BECAUSE THAT'S NECESSARY WITH TWO PEOPLE.  It's mind boggling.  Insanity.

Luckily my husband is fully on board with everything needs to go, lol.  Sheesh.

[tacosforlife]

Sept 8, 2015 9:37:32 GMT -5 1234FIF! said:

All this adulting makes me tired.

Truer words have never been spoken.

I need a nap just thinking about submitting my husband's dental bill to our FSA.

[pamela]

Sept 8, 2015 9:25:32 GMT -5 mlt said:

I'm afraid my parents will be like this. Now that they have their kids out of the house and college is over for my sibling, my mom wants to sell their very modest house and buy something bigger and new. They are less than ten years from retirement. It makes no sense financially but I know that she feels like she has never had a "dream" house. She sees all her friends in larger and more updated homes and she's jealous. I don't care much about houses but she always has. She always thought she'd have a nicer house and she's looking at her life and wants it now so she can enjoy it.

Can you talk her into a smaller but extra luxe home? Still amazing to enjoy every day and amaze friends, but easier to maintain. Provided the cost is reasonable.

[bowies]

Sept 8, 2015 9:12:50 GMT -5 nomad100 said:

This is going to sound harsh but DH said, go for it but remember, you can't live with us when it all goes wrong. (She has said in the past that we are her retirement plan and has a history of being really horrible with money. So DH has to remind her regularly that we will not finance her retirement.)

My MIL has a similar attitude. Our one saving grace is that she is a lifelong renter, so at least when we put her into an ALF we won't have a mortgage to worry about on top of that expense. She does not have a retirement fund.

How crazy is it that I feel lucky that only one out of our four parents is the stereotypical Baby Boomer?

[jeaniebueller]

Sept 8, 2015 8:29:07 GMT -5 eponinepontmercy said:

Sept 8, 2015 8:23:24 GMT -5 Velar Fricative said:

Say what? Why??? What is the point of this? I thought it was typical to look forward to the empty-nest years and stay where you are or downsize, not build a gigantic new home that you'll be too old to maintain the way it needs to be maintained.

Geez, this boomer vision of retirement gives me hives.

There's a commercial for some real estate site that has a woman with a small child helping her mom find a new house.  She ends up with a huge house on a lake and everyone is so excited.  Every time I see it, I wonder how excited everyone will be when the mom can't handle the lake house anymore and they have to drive up every weekend to help her instead of swim.

My MIL and her husband did this, and although I enjoy spending my time there, in the back of my mind, I wonder how long it will be sustainable, given that they moved to a tiny town and their doctors, etc, are at least an hour away, plus the upkeep on the house.

[ESF]

Sept 8, 2015 9:26:04 GMT -5 tacosforlife said:

Sept 8, 2015 9:22:03 GMT -5 eclaires said:

beyond worrying that they won't downsize soon enough and I'll somehow end up stuck dealing with all the crap they have in their full basement. Their house is always clean and organized, but they fully use all the closets and basement storage for so.much.stuff. My hope is they downsize before it becomes my problem.

OMG. This is going to be TERRIBLE when my ILs die. My MIL has collected so.much.stuff. They have a 3-bedroom house for the two of them, and there is just stuff EVERYWHERE. Because MIL has some fairly significant health problems, I suspect she will die before FIL despite being 5 years younger. I imagine FIL will just leave everything in the house as is, and then when he dies, we will have to deal with everything. H is an only child and a sentimental bastard. He will want to keep everything. I am going to be tempted to "accidentally" knock a candle over near something flammable.

#stonecoldbitch

Fortunately my H is not sentimental so we have purged nearly all of my MIL's ugly stuff.

But my FIL also has an insane amount of junk. And he is one of those paranoid gun nuts who isn't so great with safety, so he's got about 200 guns (no that's not an exaggeration) scattered all over the house, tucked away in boxes and cushions of old furniture. I don't even know how one begins going through stuff in that scenario.

[Cicero]

Sept 8, 2015 9:31:42 GMT -5 1234FIF! said:

Sept 8, 2015 9:20:08 GMT -5 Cicero said:

Who in their right mind would underwrite a brand new mortgage for someone who is 65? Are these 30 fixed?

Someone who figures if they can't pay it, they will get family help or they will die and the estate will pay it off or the house will go on the market. What's the loss for the banks? 

You're almost guarenteed that they'll die before the loan term is up and the majority of the time the executor of an estate with a property that has little to no equity is just going to let it go into foreclosure rather than waste assets covering the mortgage.

[ttt]

Sept 8, 2015 10:02:50 GMT -5 ESF said:

Sept 8, 2015 9:26:04 GMT -5 tacosforlife said:

OMG. This is going to be TERRIBLE when my ILs die. My MIL has collected so.much.stuff. They have a 3-bedroom house for the two of them, and there is just stuff EVERYWHERE. Because MIL has some fairly significant health problems, I suspect she will die before FIL despite being 5 years younger. I imagine FIL will just leave everything in the house as is, and then when he dies, we will have to deal with everything. H is an only child and a sentimental bastard. He will want to keep everything. I am going to be tempted to "accidentally" knock a candle over near something flammable.

#stonecoldbitch

Fortunately my H is not sentimental so we have purged nearly all of my MIL's ugly stuff.

But my FIL also has an insane amount of junk. And he is one of those paranoid gun nuts who isn't so great with safety, so he's got about 200 guns (no that's not an exaggeration) scattered all over the house, tucked away in boxes and cushions of old furniture. I don't even know how one begins going through stuff in that scenario.

[laurenpetro]

Sept 8, 2015 8:29:07 GMT -5 eponinepontmercy said:

Sept 8, 2015 8:23:24 GMT -5 Velar Fricative said:

Say what? Why??? What is the point of this? I thought it was typical to look forward to the empty-nest years and stay where you are or downsize, not build a gigantic new home that you'll be too old to maintain the way it needs to be maintained.

Geez, this boomer vision of retirement gives me hives.

There's a commercial for some real estate site that has a woman with a small child helping her mom find a new house.  She ends up with a huge house on a lake and everyone is so excited.  Every time I see it, I wonder how excited everyone will be when the mom can't handle the lake house anymore and they have to drive up every weekend to help her instead of swim.

my father had the brilliant idea to build a 3 story reverse living house on the beach.  now that he's in terrible shape he can't even climb the stairs to his bedroom.  he spends most of his time alone on the first floor and she stays in the kitchen on the second. 

my sister and i tried to talk him out of it but his direct quote was "i've become accustomed to a certain lifestyle and i'm going to live it."    

[Cicero]

Sept 8, 2015 10:10:47 GMT -5 1234FIF! said:

Sept 8, 2015 10:04:27 GMT -5 Cicero said:

You're almost guarenteed that they'll die before the loan term is up and the majority of the time the executor of an estate with a property that has little to no equity is just going to let it go into foreclosure rather than waste assets covering the mortgage.

So then the bank scoops it back up and sells it. Seems like it will work out for the bank to me. 

If by work out you mean work out at a loss, then yes.

ETA: I just reread that and did not mean it as snippy as it came across. My point is that it's a risky mortgage with a higher than average probability to lose the bank money and a lot of them won't write mortgages like that without a serious down payment because of it.

[scout8]

Sept 8, 2015 10:15:14 GMT -5 Cicero said:

Sept 8, 2015 10:10:47 GMT -5 1234FIF! said:

So then the bank scoops it back up and sells it. Seems like it will work out for the bank to me. 

If by work out you mean work out at a loss, then yes.

I haven't noticed any of my senior clients having trouble getting a mortgage if they want one. So, the banks must find them to be a pretty safe risk or they wouldn't do the loans. I have also handled a lot of estate sales. Most of the time, older buyers are putting a lot down. When they pass, there is usually enough equity in the house to pay off the mortgage.