A new report shatters the myth that older Americans largely escaped harm in the foreclosure crisis by having large amounts of equity or owning their homes outright. In fact, more than 1.5 million people age 50-plus have lost their homes since 2007 and at least 3.5 million more remain at risk at this most vulnerable stage of their lives.

Have you experienced a foreclosure? Tell us your story.

"Nightmare on Main Street: Older Americans and the Mortgage Market Crisis," produced by AARP’s Public Policy Institute, found that mortgage debt has been increasing among older Americans and that more of them are taking it right into retirement.

Perhaps most disturbing, homeowners age 75 and older showed the fastest rise in this kind of debt, which can crumple fixed-income retirement budgets. Likewise, they had a higher foreclosure rate (3.2 percent) than younger members of the 50-plus group, the study found.

All in all, the foreclosure rate on prime loans in 2011 for older borrowers was 2.3 percent, 23 times higher than the 0.1 percent rate of 2007.

“More older Americans are carrying mortgage debt than in the past, and the amount of that debt is also increasing … leading to their worsening situation,” said Debra Whitman, AARP executive vice president for policy. “It’s one thing if your housing value goes down in your 50s. It’s another thing if you’re 75. For some people, it’s not like you can go back to work.”

It’s not clear whether the increasing debt is because of refinancing, taking out new mortgages or grappling with rises in adjustable rate loans. However, higher living costs and fixed incomes appeared to contribute significantly to older Americans’ plight. The study found that as of December 2011:

• 3.5 million older mortgage holders were “under water,” meaning they owed more than their homes were worth.
• 625,000 were 90 or more days delinquent on their loans.
• 600,000 were in foreclosure.
  

If there was any good news for older people in the report, it was that in 2011 they had a slightly lower overall foreclosure rate, 2.9 percent, than the 3.5 percent figure of people less than 50 years old. Yet even that was conditional: The older group’s rate had grown at a faster clip than younger people’s.

The AARP analysis, using facts and figures from the data tracking firm CoreLogic and other sources, was the first to measure the effects of the foreclosure crisis and plunging property values on older homeowners. The findings exposed the deep financial vulnerability of boomers and other older adults who got caught up in the mortgage mess at a time when they had few working years, if any, left to rebuild a savings cushion for retirement.

Try AARP's exclusive mortgage payoff calculator.

More older Americans carry mortgage debt than in the past, and that debt is increasing. — Photo by iStockPhoto

In their older years, people often tap their home equity — the biggest asset that many have — to pay for long-term care, home maintenance, medical bills and other expenses. What happens when that money no longer exists?

"You may have been working for years toward paying your mortgage, and the security you thought you’d have isn’t there," Whitman says. "Not only that, the downturn in the market meant savings fell flat. Pensions are going away. It's really this huge storm of things hitting people right now."

Next: Some groups felt the pain more than others. »