We read the statistics about the number of home owners facing foreclosure and listen to the conventional wisdom telling us what the causes are. But no list of numbers brings home the foreclosure crisis more clearly than profiles of the people who are actually fighting to stay in their homes.
Where there are the typical patterns of lost jobs, failed business, illnesses, and broken marriages—each case represents a unique mix of causes.
Beware of blanket assumptions about what leads to foreclosure—such as financial mismanagement. Statistics from the National Foreclosure Mitigation Counseling Program, which supports affordable housing and community revitalization efforts nationwide, paint a picture of foreclosure you might not expect.
Myth: Most people facing foreclosure overextended themselves.
Reality: Only 6% of those counseled by NFMC cited poor budget management skills.
Myth: It’s all the fault of ARMs.
Reality: Only 5% of those counseled by NFMC report an increase in loan payments. And fewer than half of NFMC clients said they held ARMs.
Myth: Greedy people made bad bets on investment properties.
Reality: 82% of foreclosures have been on primary residences, not investment properties, according to a recent Center for Responsible Lending study. In fact, the main reason for default is a change in income due to a job loss, according to 58% of those counseled by NFMC.
Job and a reduction in household income are the top causes of personal residence foreclosure.
If you would like more information on the Short Sale Process,