About Foreclosures Due to Unemployment

When people get laid off or fired, they often cannot pay their mortgages. If the rate of unemployment is significant, it results in an increase in the number of foreclosures.

Considerations

According to apnews.myway.com, foreclosures are sold at discounts which lowers the property values of surrounding homes. Property tax dollars decrease for cities with empty homes, due to foreclosures and declining home values.

Unemployment and Foreclosure

In 2009, 2.8 million homeowners were at risk for foreclosure. Those were record numbers, largely due to unemployment, according to abcnews.go.com. The rate of unemployment is hovering between 9 and 10 percent. Foreclosures are directly related to the high unemployment.

Unemployment Compensation

Unemployed people can file for unemployment compensation in some cases, but the amount received is usually not enough to cover their mortgage and other expenses.

Government Program

One of the programs designed to help those in foreclosure, or at risk of foreclosure, is the "Making Home Affordable" program. This program gives homeowners an opportunity to modify their mortgages, which lowers the interest rate and the monthly payment.

Forecast

In 2010, between 3 and 3.5 million homes will enter into the foreclosure process, according to apnews.myway.com.

References

• Abcnews.go.com: record for foreclosures as unemployment rises
• Apnews.myway.com: Record year for foreclosures as unemployment rises