Foreclosure: What it means for Homeowners and the Community
As the United States slowly recovers from the mortgage crisis and ensuing economic downturn, the fact remains that thousands of homeowners all across America are still facing the threat of foreclosure. Given the current state of the economy, the possibility of missing just one mortgage payment can sometimes be the tipping point that pushes a homeowner closer to the brink of foreclosure. Despite a seemingly dismal outlook, mortgage modification and foreclosure defense are just two of the tools available to help struggling homeowners protect themselves against foreclosure.
A foreclosure occurs when a lender sues a borrower for not making payments toward the property. The lender’s goal in filing this lawsuit is to recover, through the sale of the property, the money it lent to the borrower. Once a lender files a foreclosure lawsuit, an official will deliver a summons to the homeowner’s residence notifying them of the suit. However, a foreclosure not only has the potential to wreak havoc on a homeowner, it can also lead to community degradation and other negative societal impacts.
According to the Joint Center for Housing Studies, each foreclosed home can reduce nearby property values by 1 percent or more. Additionally, foreclosures can also lead to:
• The foreclosed home and property falling into disrepair
• A decrease in buyer perception of the area
• Unpaid HOA fees, normally leading to an increase in the existing members’ payments
• A refusal by prospective homeowners to live in a neighborhood that includes foreclosed and neglected properties
While these examples are ominous, it is important to note that a successful mortgage modification can help prevent such negative impacts in addition to possibly allowing a homeowner to keep his or her home. Click on the links below for more information.
Lenders’ Cost of Foreclosure Policy Paper – Mortgage Bankers Association
Foreclosure Sales Affect Home Values - Nearby Homes Feel Effect – About.com
Link to Joint Center for Housing Studies – Harvard University
