Foreclosure can be devastating, causing losses far greater than the family home. In fact, foreclosure affects all aspects of our lives-including our mental, physical, financial, emotional, and even spiritual well-being. Naturally, those facing foreclosure are directly impacted, but the effects of foreclosure into the homes, lives, and businesses of everyone throughout the community.
Eventually, even those who aren't facing foreclosure will experience the negative effects in their lives, neighborhoods, and businesses. With today's high foreclosure rates, the rising loss of homes will impact all of us in at least one of the following eight ways.
1) Foreclosures affect neighborhood stability, jobs, local business, service-related business, crime, and property values.
When homeowners lose their homes, their families are displaced, causing multiple problems in the neighborhood. Vacant and/or abandoned properties become a blight upon otherwise well-kept neighborhoods. Even upscale communities are not immune to the negative impact of foreclosure, as once manicured lawns become overgrown and weed infested, and a lack of routine maintenance creates an eyesore to other residents and would-be buyers, while driving down property values of homes in the near vicinity.
These properties are also appealing to criminals. Vacant properties can become hangouts for criminals and gang activity and are inviting to thieves, who sometimes dismantle these homes piece by piece, taking light fixtures, appliances, and copper pipes. Eventually, the damage and loss can make repairs more costly than the value of the home, deeming it unsellable to a permanent homeowner.
In addition, communities lose much-needed jobs to foreclosure. Businesses need homeowners and residents to survive, and each foreclosure results in a decline in customers. This also applies to service-related businesses and jobs. With each foreclosure is a loss of property or real estate tax-funds which support libraries, schools, parks, medical care, and support services for the residents in the community. The loss of jobs and social and support services lowers property values and results in neighborhood instability as homeowners relocate to other communities. In fact, some cities have had to file bankruptcy in response to the loss of revenue resulting from foreclosures.
Each of these has the potential to affect all of the residents of a neighborhood or community, and they all result in lower property values, higher crime rates, higher unemployment, and a decline in neighborhood services, safety and appeal.
2) Foreclosure affects our youth. Adults aren't the only ones who suffer from foreclosure. Children are especially vulnerable to its effects. Not only does it increase their stress levels as they wonder about the uncertainty of their family's future, but they are also affected by the stress their parents face. Foreclosure is emotionally devastating, and the worry and anxiety parents experience greatly impacts their children. Along with the loss of their home, stability, and childhood friends, they usually experience a change in schools and lifestyle. Extracurricular activities are often no longer possible. Some older children will seek part-time employment in order to assist their family, leaving less time for studies or the pursuit of other interests. Those who are displaced become homeless or move into less desirable neighborhoods, resulting in fear, loneliness, and anxiety.
Children who are victims of foreclosure have also been found to have less confidence. Their self- esteem is directly affected and they are more likely to exhibit behavioral problems, have health-related issues, and experience a drop in grades or interest in school, sports, and making friends. The trauma is further exacerbated when these children leave behind their belongings or pets, leaving them with little or nothing of their former lives.
3) Foreclosure causes health-related issues, depression, and has been the psychological force in many suicides since the foreclosure crisis began.
I've witnessed firsthand the stress of foreclosure on homeowners. Stress is a contributing factor to many physical and mental health-related issues. These health problems add to emotional burden and worries, often leaving them in anguish and despair, which compounds depression and increases suicidal tendencies. The National Bureau of Economic Research states that foreclosure rates directly impact health, resulting in significant increases in hospital visits for high blood pressure, diabetes, and anxiety-related issues. In addition, they found a 39% increase in suicide attempts among foreclosure victims.
This information is troubling, particularly since a large percentage of foreclosures can be directly attributed to joblessness, which means that these individuals are often without health insurance. As a result, they don't seek medical assistance or wait until their condition is very serious, and the costs are passed along to businesses, insurance companies, and other patients.
4) Increased homelessness as displaced homeowners often struggle with home loss and job loss simultaneously. It's a cycle that repeats itself. Job loss causes homeowners to fall behind on their mortgage payments, resulting in foreclosure, and foreclosure often results in joblessness, as people are displaced and move. Thus, there is an increase in homelessness, with people who are unemployed and cannot find a job or a home. The effects and costs of homelessness increase the need for shelters, food banks, and charitable donations.
5) Increased alcohol abuse. The psychological effects of foreclosure are among the most devastating. Foreclosure is more than the loss of a residence-it's also the loss of social status and self-esteem, resulting in hopelessness. Alcohol provides some with numbness from their plight, resulting in a temporary reprieve. In the long-term, it can result in alcoholism, which creates health, emotional and mental problems, as well as unemployment. Alcohol abuse, as well as other addictive behaviors like gambling and illegal drug use increase as foreclosures increase.
6) Increased divorce rates. Financial problems are one of the biggest causes of divorce, and foreclosure increases the likelihood of a marital split. The stresses of foreclosure and financial obligations are often too difficult for families to overcome, and the increase in divorce numbers among this group is likely to continue as foreclosure rates climb.
7) Decreased job performance and ability to get a new job. The emotional burden of foreclosure can overwhelm all aspects of a person's life, resulting in decreased job performance, absences from work, and an inability to concentrate and make decisions. Naturally, these factors all contribute to termination or poor work performance. In addition, many businesses now conduct credit checks on potential employees. When individuals who have faced foreclosure seek employment, the low credit rating and foreclosure make them an unfavorable job prospect.
8) Foreclosure affects people from all walks of life from blue-collar workers to celebrities, and not all foreclosures are the result of buying homes they cannot afford or irresponsibility.
Low to middle-income families, as well as high-income families, are all subject to foreclosure. It's a misconception that most foreclosures can be attributed to buying more home than one can afford. In fact, many foreclosures are the result of hidden fees, rising interest rates, illness, injury, temporary or long-term unemployment, divorce, or death of a spouse.
As you can see from these facts, foreclosures directly or indirectly affect families, businesses, neighborhoods, and communities. Loan modification is the vital ingredient to stop the devastating effects of foreclosure. Now more than ever, when it takes a village to bring power back to the people of this country, it is important for us all to empower ourselves with the right information to fight back and be your own best advocate or become an advocate for a friend, relative, or neighbor. The costs of foreclosure are far too great for all of us to stand back and do nothing. Together, we can educate and help others take back their homes and their lives.