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New Rule Might Leave Senior Citizens With No Home

Posted March 16, 2010 by Matthew Denton

Grim Future For Retirees

When senior citizens are in need of securing a home loan, they can opt for reverse mortgage and have their obligation regarding the repayment of a loan deferred until their death, the property is sold or the owner moves out of the home. When they are facing foreclosure, they can resort to bankruptcy. Many seniors have spent their entire lives paying the mortgage to prepare them for retirement however, many have lost pensions due to company bankruptcy or insufficient retirement income. They can then pay for their medical bills after. In Queen Anne’s County, Maryland, they have launched the Senior Citizen Home Repair Program “designed to repair serious health or safety hazards of owner-occupied homes of low-income senior citizens or handicapped persons.”

But there’s another program that instead of helping them enjoy their golden years, they may be facing a grimmer future eventually. And this isn’t a mortgage scam that will trick them into losing their homes. Senior citizens face the risk of defaulting more on their mortgages if their Social Security payments continue to be blocked. The Wall Street Journal reports, “Social Security benefits are off-limits to creditors, such as credit-card companies and banks. But the U.S. can collect debts to federal agencies by “offsetting,” or withholding Social Security and disability payments. The Treasury currently withholds benefits of 3.1 million Social Security recipients to recover defaulted student-, farm- and small-business loans, unpaid income taxes, amounts veterans owe for health care, and other debts to the government. Previously, the U.S. hasn’t been able to withhold Social Security payments to recover most debts delinquent for more than ten years. But a provision in the 2008 Farm Bill lifted the ten-year statute of limitations on the government’s ability to withhold Social Security benefits in collecting debts other than student loans—for which the statute of limitations was lifted in 1997—and income taxes, where the limit remains 10 years.”

Well this could explain why Tim Geithner is certainly vilified. Most seniors are already facing tremendous pressures to support their expenses from medical bills to mortgages and the economy obviously isn’t cooperating. It’s a complete catastrophe what this bill is creating and in one way or another, it can blow out of proportion. Trust me.

I feel no effect of the 5.8 percent increase in Social Security benefits last year if one important segment of the population wouldn’t be benefiting from it. Economics professor Sung Won Sohn explains it best when asked about the economic stance of seniors in the economy, “Right now, many senior citizens are feeling depressed because things seem out of control. They feel like they are in a boat being whipped around by rough seas. Their purchasing power has been going down because of higher prices for food and energy and a lot of other things while their savings have taken a hit because of what is happening in the markets.”

Obviously, the Treasury doesn’t dig this at all.

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