Beat the Housing Crisis

Word came late on a Thursday afternoon. The bank planned to sell Lynette Neidhardt's house two weeks later, on a Friday. The place she had called home for 23 years, a two-bedroom Craftsman on a hilly street in Oakland, California, would be auctioned at the county courthouse.

Neidhardt, 63, was worn down. She'd been battling to save her home for two years — ever since the sputtering economy had sideswiped her one-woman graphic design business and she could no longer keep up with her mortgage payments.

See also: Picking the right mortgage options.

Still, she kept fighting. That Friday morning Neidhardt and more than a dozen friends and neighbors strode into a downtown bank branch, chanting : "Stop the auction; stop the sale today!" Her bank agreed to postpone the foreclosure, and in January 2011 it put her into a trial loan-modification program that cut her monthly payments almost in half.

In the wake of the housing crash, millions of older Americans like Neidhardt are struggling to pay their mortgages. A 2010 survey by the National Community Reinvestment Coalition found that 45 percent of distressed homeowners seeking help through its counseling services were older than 50.

Homeowners have also lost tens of thousands of dollars in home equity — money they were counting on to bankroll retirement. Nationwide, home prices are down more than 30 percent since their 2006 peak, according to the Case-Shiller housing index. Some 11 million homeowners are underwater — owing more than their homes are worth.

The news isn't all bad. Economists expect home values to recover, though in some places it may take 15 years or more. In the meantime, "help is available and there are ways to try to make it work," says Bill Druliner, a housing counselor at GreenPath Debt Solutions in Milwaukee. Read on to learn about three common scenarios facing older homeowners — and a range of creative solutions.

Next: What to do when you can't pay your mortgage. >>