Impact of Foreclosures on the Community

We all know that there is little doubt that foreclosure takes a toll on the affected homeowner. The process is an emotional, frustrating and overwhelming experience. But did you know that foreclosures have a far-reaching impact that extends beyond the individual homeowner. Of course it affects the more obvious players such as mortgage lenders and financial institutions that extended the loans, and now find themselves dealing with a massive amount of debt resulting from defaulted loans and a stock pile of foreclosure homes. And we know that increased foreclosures affects investors and market speculators who expected to make huge profits from a hot real estate market and now watch with dismay as real estate prices fall daily. When we think about foreclosures, seldom do we think about the less obvious players, such as potential homebuyers looking for a home, or a seller putting a property on the market for sale. Nor do we consider the impact rising foreclosures rates have on our own municipalities and communities.

Everyone is impacted, albeit indirectly, by the high rate of foreclosures. For the buyer and possible borrower, it means they may not qualify a loan that just a few months ago was easy to qualify for. Of course, this isn’t a bad thing, particularly if the borrower could not afford the mortgage in the first place. It just translates into smaller and fewer loans being written by lenders skittish and reluctant to overextend themselves and fewer home sales.

continued...› | 11/12/2008