What Social Issues Normally Lead to Foreclosure?

Are you feeling lost and perplexed when seeking to under the complicated Foreclosure Process? John and Carrie were first time buyers two years ago.

They didn’t really understand the complicated real estate buying procedure then.  Now they were stuck in a confusing foreclosure process.  Their cry was “Please somebody help me!”

Well let me help with the basics of the foreclosure process.  Know that this information will vary depending on the state, county or city that you live in.  You may find that some of the terms will be different depending on where you live.  However they basic overall premise is the same.

If you are facing foreclosure and caught between whether or not you should stay and fight your way through or take flight and walk away from the property, I strongly encourage you to read an article I wrote on this blog just last week called “Should I Stop Foreclosure By Fight Or Flight?”

We are living in a time where there are literally thousands of people entering into the foreclosure process every single day.  You might have heard much about Adjustable Rate Mortgages or the crash of the sub prime lender market.

Many are caught up in the foreclosure process because they got a bad loan or entered into a mortgage they really could not afford.  This is one very stark reality of the foreclosure process that has caused an overall decline in the market today.

However, there are many other reasons people fall into foreclosure that have absolutely nothing to do with a bad loan or unscrupulous lending practices.  One reason is that the system in which we live is very hard on people.

So if you bounce a check at your bank you are assessed a $25.00 to $30.00 fee.  If you get a $50.00 parking ticket that you don’t pay after a while your car will get towed and impounded.  Now you are forced to pay the towing fee and the impound lot fee.   In many cases this can come up to two or three hundred dollars.

If you are late paying your credit card then you pay an added late fee.  We live in a society where there are fees on top of fees.  For most who have a small money problem initially the added fees help compound to make things worse.

It is important to understand that not everyone who is facing foreclosure is in their situation because of a bad loan or because of unscrupulous lending practices.  There are many who have had great credit for 20 or 30 years and have a history of paying their bills on time.

But then you ask “what happened?”  Well, life happened!  They are in foreclosure because they experienced a bump in the road and they were not able to steer their way out of the skid or slide that resulted.  So what are some of the crucial social crisis that causes foreclosure?

Well typically those in foreclosure are there because of one of four crucial social crisis taking place in their lives.  A death in the family, prolonged illness, loss of job or a divorce.   You ought to know that if you are facing any of these four social problems then you are at high risk for entering into foreclosure and losing your home

Let me just take a brief moment and explain why these four areas cause many to end up in foreclosure.

Death In the Family:

When you lose a loved one there is so much that can result because of that loss.  Not only do you have to deal with the pain and hurt but there are financial decisions that usually have to be made.

Now if that loved one was the bread winner or prime income earner in the home, then the remaining family members are left without his/her earning potential.

For some who have purchased a housing insurance policy that includes death insurance before they die there is help because in most cases the house will get completely paid off upon the passing of their loved one.

However in other cases though the house may pass from the deceased to the next of kin there can be a world of problems waiting to happen.

Somebody has to pay the mortgage.  Many times the mortgage payments get overlooked for two or three months while the family suffers through their grief.  Other times there is simply not enough money to pay the mortgage.

And furthermore their may be a natural break down in communication if the banker doesn’t know who to call or contact to get the mortgage payments.

Prolonged Illness:

Sometimes a foreclosure procedure may begin when a homeowner becomes ill for a long period of time and is unable to pay their mortgage.  Illness is one of those social issues that usually stops your finances before it stops your life.

Just because one is sick does not mean that the bank will stop wanting their monthly check.  Many consider lenders insensitive simply because of this simple fact.  “Can you imagine they are continually harassing me for money even though they know I’ve been in the hospital for 13 weeks?” Yes I can imagine.

The truth is sickness doesn’t release you from your financial responsibility.  You are still expected to perform and pay all your monthly bills.  In fact your bank or lender may even say “I’m sorry you are sick but you promised to pay and we expect to receive that money.”

So many who fall sick failed to prepare for this eventuality.  Thus they may easily fall prey to an impending foreclosure situation.

Loss of Job:

Once again a loss of one’s job does not stop the mortgage clock.  This is a serious social issue because it may be compounded by illness.  Sometimes the prolonged illness is what causes the job loss.

How does one get back on their feet after being unemployed for a long period of time?  There are incredible challenges that result from loss of employment.  But the bank or lender is still going to want to get paid.

In all of these situations it really helps to have some savings.  Most people only have two or three months in reserve savings and they are running their lives paycheck to paycheck.  So when they lose a job or suffer an illness they are extremely vulnerable.

If you have lost your job it is important to be willing to take anything you can find while still looking for the kind of job you really want.

Bear in mind neither the banker nor the lender is going to accept “I lost my job and so I can’t pay my mortgage.”  They will draw up the foreclosure papers and proceed against you nevertheless.

Divorce:

Divorce is the fourth main social issue that causes one to go into foreclosure.  Many times there are so many ill feelings when two people are separating that there is little common sense.

Sometimes if the husband leaves and he was the one primarily paying the mortgage, the wife is left holding the bag if he refuses to continue paying.

I’ve met individuals in divorce who purposely quit paying the mortgage or contributing to the household simply because they want the house to go into foreclosure.  Some spouses want to lose the house so that their wife or husband will get nothing or be further ruined financially.

Foreclosure is the process by which a bank or lender will take over ownership of a property because the homeowner has not paid the the note or mortgage on a property.

What is interesting is that once again the bank or lender isn’t really concerned that you are in the midst of a divorce.  The missed or late payments will affect the credit of both husband and wife who are on the title.  And the resulting foreclosure will negatively affect both as well for a long period of time.

So if you are facing the possibility of losing your home today as a result of one of these social issues, I greatly encourage you to educate yourself about the foreclosure process.  Become aware of the law and process that governs foreclosure in your state.

One of the best ways to stay informed about basic aspects of foreclosure is to visit this site often.  I really encourage you to book mark the main site at Foreclosure Doctor Online.  I have great resources here to help anybody who is facing foreclosure.  You can learn more about the situation and possibly find some innovative solutions to help you.

If you would like to negotiate a debt workout or a loan modification I strongly encourage you to visit the site called American Foreclosure Specialist Can Help.  They have a powerful and comprehensive but affordable program that can be of tremendous help to you in stopping your foreclosure through loan modification.

Make sure you download my Free Stop Foreclosure Package and read it thoroughly.  It contains vital information to help you understand the laws in your state that govern the foreclosure process.  I’ve also placed within it an amazing life changing book called “As A Man Thinketh” by Allen.

I’m available to answer any question you might have about your foreclosure situation.  I have an entire time of people who work with me to help as many people as we can.

We understand that foreclosure can hit any household regardless of race, color, nationality, sex or creed.  Fee free to contact us anytime with you questions or concerns.  We are here to serve you.

All the best!

The Foreclosure Doctor (Online)