Effects of Foreclosure
Foreclosures are serious business and not only do they impact the homeowner, but also the lending institution, taxpayers and the neighborhood. There are many ways foreclosure impacts those it affects and it is very costly. Families experience shame and are emotionally affected in addition to the task at hand of finding a new place to live.
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Loss of Home
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Foreclosure results in the loss of the family's home. When the mortgage has not been paid in several months lending institutions will begin the foreclosure process and the family will lose their home.
Reduced Credit Score
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A foreclosure will result in the lowering of the homeowner's credit score. It's possible for the score to drop a couple hundred points and the foreclosure will remain on the credit report for seven years.
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Lopsided Housing Market
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If many homeowners are going through foreclosure at the same time then this can create a lopsided housing market and even catalyze a recession due to supply outnumbering demand.
Community Taxes
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Communities are affected by foreclosures by paying for any unpaid utilities, demolition (if necessary), police patrolling costs, inspections and even removal of trash.
Reduced Property Values
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Foreclosures affect neighboring homes by reducing property value in the immediate area.
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