What does it mean when a home is a foreclosure? Foreclosure is the legal process by which a borrower in default is deprived of his/her interest in the mortgaged property. When a home is foreclosed on the ownership usually reverts back to the lending institution. People used to think home foreclosure was just a problem for down and out folks, and those with bad credit. Not so anymore. The financial profile of borrowers who experience foreclosure now includes prime borrowers, as even the most credit-worthy folks face economic hardships in the current economy.
What does it mean for a neighborhood when one or more homes go into foreclosure? Foreclosure has consequences beyond those felt by the distressed homeowner. Neighbors will experience a decline in home values, loss of equity and the increased possibility of vandalism and theft. Additionally, the effects of foreclosure on the surrounding community include a reduced taxpayer . This could mean higher property taxes and/or reduced community services and amenities.
If you know a homeowner at risk of default or who has defaulted on their mortgage, also know that there are agencies who can help distressed homeowners avoid foreclosure. Colorado established the Foreclosure Hotline (1-877-601-HOPE) that connects callers with local HUD approved housing counseling agencies. Nationally, homeowners may find HUD approved foreclosure avoidance counseling agencies by visiting the HUD Foreclosure web page.
Homeowners in a distressed mortgage situation should be proactive and get advice as soon as they think they might be in trouble. Contact the counseling agencies listed above, as well as a local real estate professional who can tell you what the real estate market is like in your neighborhood. You will need to know how easily your home would sell under current market conditions and the likely sales price as compared to your mortgage amount.
Information in this article generously provided by:
Broker Associate, Colorado Landmark, Realtors