Some might assume that foreclosure happens primarily to irresponsible people who have low income and education, and are in a position to lose their home because of their own bad life choices and laziness. While some people experiencing foreclosure might fit that description, it's wise to remember what your mother told you about assuming: it makes something undesirable out of 'u' and 'me'.
Foreclosures do happen in neighborhoods of lower socioeconomic status, to homes that are modest in appearance and value. There are some homeowners who can only blame themselves for the sorry state they find themselves in. There are those who've lost their homes due to uncontrolled spending on things like diamond-encrusted jewelry, scratch-off lottery tickets, or perhaps even diamond-encrusted scratch off tickets. But are these types of situations the norm, or is there more to the foreclosure story than what a snap judgment leads us to believe?
Take a closer look and you will see that there are often multiple factors converging and contributing to foreclosure. In fact, most homeowners are trying to be responsible and cope with, and adjust to difficult circumstances.
Does foreclosure only affect poor people?
Foreclosure affects anyone and everyone who falls behind on their mortgage payments. Even wealthy celebrities (really, really wealthy celebrities) who have earned hundreds of millions of dollars in their careers have had homes foreclosed for a variety of reasons. Some simply spent too much money. Others received bad financial advice, or had money stolen from them by people they trusted. And, of course, many of them have experienced the same kinds of hardships that the unwashed masses have. When the rich fall behind on their mortgage payments, they hear from their lender the same way regular people do.
Since people of any income level can lose their home, homes of all values in all neighborhoods, can be foreclosed. Everything from mansions in Beverly Hills to the single-family homes of the middle class can be affected. Therefore, we can say definitively that foreclosure is not a problem that only affects poor people.
Real Reasons for foreclosure:
Job loss. Unless you have an employment contract, in most states you can lose your job at any time for any reason. People can be laid off despite doing their job exceptionally well. Companies go out of business, restructure, or change in ways no one employee can control. Accountants and janitors, and secretaries and bankers can all find themselves suddenly unemployed, but their mortgage payment will stay the same. Monthly mortgage loan payments don't get suspended or reduced until you can find another job. If somebody loses their income suddenly, they may want to sell their house, but find that it's not possible because the home is worth less than they owe. Even in a best case scenario, selling a home takes months. Loss of income can make things very serious, very quickly, and is a significant contributor to foreclosure.- Illness. Suffering from a health problem can put you on the hook for mind-boggling sums of money. If having to pay those medical bills weren't bad enough, the issue that caused those bills may also have prevented you from working, resulting in lost income.
- Death in the family. Losing a member of the family is not only difficult emotionally, but also financially. If the person who died was the one bringing home a significant income, their loss may mean that the family can no longer afford its mortgage payment.
- Unexpected maintenance expense. As a homeowner, when something breaks you have to pay to have it fixed yourself. There's no landlord to call, and it's impossible to predict what will break and when. When something goes wrong that must be fixed and is expensive it can cause a homeowner to fall behind on their mortgage payments.
Divorce. Roughly half of all marriages end in divorce, but no one gets married thinking that they will get divorced. Married couples combine their finances and take out loans for a home accordingly. When they separate, the home is often not affordable for just one of them and, if they can't sell it, trouble ensues.
Foreclosure happens to people of all income levels, in all types of neighborhoods, for all types of reasons. It's easy to assume negative things about people who are experiencing foreclosure and make judgments about their character. Not only are broad generalizations and stereotypes offensive, they are often factually incorrect. You wouldn't want to paint any race, nationality, or religious group with one brush. And you wouldn't want to do it to people who are experiencing, or are in danger of experiencing foreclosure. Homeowners who've experienced tremendous hardship know that some things happen that can't be predicted or controlled.
Most homeowners find themselves unable to pay their monthly mortgage payment not because of irresponsible spending on luxury items, but because of unexpected medical bills, loss of income, divorce, or a death in the family. Anyone in that situation should think about retaining an attorney experienced in foreclosure defense who can help them understand what options are available. Loans can be modified, and agreements can be reached that make the best out of bad circumstances.
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