Few countries in the world put as much importance on home ownership as we do. In the U.S., we have long treasured the ideal of home ownership as part of the American Dream.  For many that dream became a nightmare when the real estate bubble started to burst in 2007.  Here in Rochester, we’ve been blessed to have a relatively stable market, but let me paint a different picture for you around the country.

For most of us, a home is the largest purchase we’ll ever make.  Forget the people who flip houses, or the ones who are on the late night infomercials with “Other People’s Money Real Estate Strategies.”  Bankers tell us it’s the right thing to do.  Financial publications and commentators tell us it’s the right thing to do.  And we purchase homes because our parents tell us the best investment they ever made.  We put our money in, we pay our mortgage off in 30 years and then we have a major asset to fall back on if needed in our golden years.  This is why most people think of it as an investment.  Only, many people are starting to realize it’s not the golden goose they thought.

According to AARP Public Policy Institute, 3.5 million homeowners over the age of 50 are “underwater” on their mortgage – they owe more than their property is worth.  600,000 loans to people over age 50 were in foreclosure last year and another 625,000 loans were 90 or more days delinquent.  For these people, a home is an anchor that’s forcing pulling them into deep water, not the life vest we’ve been trained to think of it as.

Now we can argue that these people made some very poor decisions.  In many cases, I’m sure they were lured by the prospect of easy money and ever increasing home prices.  But these people are our family, our neighbors, and they’re in trouble.  When I see Robert Wagner hawking his reverse mortgages on TV, besides thinking about Natalie Wood, I can’t help but wonder how many people need this tool but can’t get access to it.  And reverse mortgages are a great tool in the right situation.  But you can’t get a reverse mortgage when you have negative equity in your home.  You can’t take a home equity line of credit because once the bank sees the debt to value ratio, they won’t touch it.  The asset that was supposed to save retirement is now ruining it for many seniors.  Like so much these days, that’s just not the way it should be!