Since 1935, when the U.S. passed its first Social Security Act, protection of the elderly has been a national priority. By 2009, according to this Wikipedia article, the U.S. Social Security plan became the largest government program in the world and the single greatest expenditure in the federal budget, with 20.8% for Social Security, compared to 20.5% for discretionary defense and 20.1% for Medicare/Medicaid. Nevertheless, the housing crisis is devastating the elderly and according to AARP, millions may be forced from their homes. These statistics are sobering:
• About 600,000 people who are 50 years or older are in foreclosure.
• About 625,000 in the same age group are at least three months behind on their mortgages.
• About 3.5 million — 16 percent of older homeowners — are underwater, meaning their home values have gone down and they now owe more than their homes are worth.
AARP said that over the past five years, the proportion of loans held by older Americans that are seriously delinquent jumped by more than 450 percent.
Of course older people have fewer years left in their lives to recover from this economy and those in retirement have fixed incomes: relying on social security and pensions to maintain mortgages for homes that are underwater becomes a greater challenge when food, gas and prescription drugs get more expensive each year. The real culprit for this crisis is politics: loan modifications under federal programs remain mainly illusory and Congress, under pressure from the mortgage industry, still refuses to allow Chapter 7 lien stripping or Chapter 13 modifications of home mortgages.
The federal government created the revolutionary social security system during the Great Depression yet remains deaf to the struggles of its oldest citizens during the Great Recession. The time is long past for Congress to amend the Bankruptcy Code to allow genuine relief to the millions of struggling homeowners, many of them elderly, who are faced with foreclosure and homelessness.