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Neighbors Hurt by Foreclosures Even If They Don't Have Bad Credit
By Francine L. HuffMortgage Credit Problems Columnist
The number of U.S. foreclosures
during February 2008 rose 57% from the previous year, according to RealtyTrac.
Although people with bad credit who can't pay their mortgages are being hit
hard by foreclosures, they aren't the only ones affected. People who live in
neighborhoods with a high foreclosure rate may experience real estate woes of
their own. "For every homeowner who's directly affected, another 48 will
get hurt too," Ellen Schloemer, executive vice president of the Center for
Responsible Lending, told the New York Times.
Depressed Property
Values
Housing values have already declined in this tough economy.
But living in a neighborhood where other homes have gone into foreclosure can
bring down everyone's property value even more. Sales data for comparable
houses nearby are looked at to determine the value of a home that is being
appraised. Too many foreclosures and not enough sales in an area can make it
difficult to calculate a home's value.
Unable to Sell or Refinance
Some homeowners become stuck in their homes because they're
unable to sell them for as much as they owe. Others may be turned down by refinance
companies because they don't have enough equity in their homes. People with bad
credit who are counting on help from a refinance company to get out of
adjustable rate mortgages and lower their payments may find themselves facing
foreclosure.
Bad Credit and
Abandonment
More people with bad credit who can't afford to pay their mortgages
are choosing to abandon their homes. Rather than deal with the stress of trying
to salvage their mortgage, they walk away and allow their lender to foreclose
on their house. Often homes that have been abandoned are in a state of
disrepair or have been trashed by former owners. Neighboring homes may have a
tough time selling if potential buyers become focused on the "ugly house
next door." Abandoned houses can also attract crime, another hit to
property values.
People who live in areas with a lot of foreclosures and want
to sell their home or tap their equity will need to have an appraisal done. Online
searches can be helpful for locating a refinance company to get help with
determining a home's current market value. Even those not planning on selling
or refinancing might want to consider getting a market analysis done by a local
real estate company just to see where prices are headed in their area.
Sources
RealtyTrac
New
York Times
New
York Times
About the Author
Francine L. Huff is a
freelance journalist and the author of The
25-Day Money Makeover for Women. She
has appeared on a variety of TV and radio shows.
About the Author
Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.
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