We all know the immediate impact of foreclosure. Most of the time it ends with a family losing their home and the sense of security that comes with it. In addition it leaves a vacant building in a community where a family once lived. However the long-term effects of foreclosure go beyond that to have an even deeper impact on both families and communities. For families the impacts can include housing instability, economic hardship, and above all stress along with all the negative effects it causes. For communities high rates of foreclosure can lead to declining property values and physical deterioration, crime and social disorder, and a breakdown of government services. The point is foreclosure isn’t in anyone’s best interest.
Families typically suffer from foreclosure for a variety of reasons. Housing instability for both young and elderly family members can lead to problems. Children can suffer from poor academic performance as well as social development issues, and studies have shown that the children of home owning families have more self-confidence. For elderly family members having a familiarity of place is an important coping mechanism for those who have declining health and independence and foreclosure can take that away. The problems that accompany housing instability can also affect a families economic health. The credit impact of foreclosure can make it difficult to rent or secure loans for a new house. Additionally the forced move caused by foreclosure can lead to job loss for people whose careers are location dependent. Finally the stress of being forcibly removed from your home can be enormously detrimental on numerous levels. This can put a strain on family relationships and additionally can lead to costly medical problems which can exacerbate a families financial difficulties. All these problems feed each other and can stem from the foreclosure of a family’s home.
Additionally communities also face problems associated with a large number of foreclosures in the area. When a property is vacated and maintenance is stopped, physical deterioration can occur. This can be exacerbated by squatters or vandals damaging te home and will quickly accelerate with no one to take care of it. In addition to being an eyesore this can depress property values across the community and erode a local tax base. By losing the money of local supporters who would occupy the home along with the decreasing value of the tax base, the city loses out on substantial amounts of money. This leads to the cutting of local government services which negatively impact the citizens. Without money to support local government social disorder and crime rises, which feeds the cycle of devaluing the community’s assets. Property owners are also statistically much more likely to support government programs and help suppress crime, another way in which foreclosure hurts communities.
With all of these negative effects it’s obvious that foreclosure is in no ones best interest. The reason it happens is that banks can feel that they have no other way of reclaiming their investment without foreclosing. However most of the time banks still end up losing substantial amounts of money foreclosing, not to mention the negative effects it has on their communities. That’s why it’s important for banks to work with the clients they have who are in danger of being foreclosed upon. This is where CDCB steps in with our loss mitigation program. By working with clients and their mortgage holders we are often able to negotiate a new payment plan that allows the family to stay in their house and for the banks to still receive their payments. With this system everyone is significantly better off. If you or someone you know has been struggling with foreclosure, don’t feel like you have to deal with it alone. At CDCB we’re here to help you, and that ends up being best for everyone involved.
