Commentary by Ralph R. Roberts
RISMEDIA, January 26, 2009-Over the past year or so, the American homeowner has taken it on the chin-a one-two-three punch that has knocked many out of their homes and threatens to do the same to millions more. First, the housing bubble burst, stripping billions in equity. Tight credit landed the next blow, preventing homeowners from refinancing their way out of trouble. Finally, a severe economic downturn has led to record job losses, making it difficult or impossible for many families to keep their homes even if they otherwise would be able to negotiate a loan modification with their lender.
If American homeowners weren’t down for the count just yet, some of their fellow citizens are lining up to stomp them into the dirt. These folks, no doubt consisting of those who have been fortunate enough to dodge the foreclosure bullet so far, are calling for the end of the bailouts-specifically for the end of any bailouts for homeowners. These are the people who post comments on blogs and discussion forums every day claiming that homeowners who are drowning in debt shouldn’t be “rewarded” with special deals.
What most of those who are clamoring for an end to homeowner bailouts, such as loan modifications, fail to realize is that we are all in this together. What’s good for homeowners is good for America.
– Foreclosures reduce property values for everyone in the neighborhood.
– Lower property values usually mean states, counties, and towns have less money to fund education and other services.
– Lower property values also lead to lower commissions for real estate agents and less business for everyone who makes a living off of the real estate industry.
– Foreclosures leave vacant homes that tend to attract vandals, vagrants, and other criminal types who either set up shop in the homes or use the homes to commit real estate or mortgage fraud.
– Rising default rates convince lenders to tighten credit, making it more difficult and costly to borrow money.
– As families lose their homes, they have less money to spend on products and services, lowering demand and increasing unemployment.
– The mass exodus of families from an area destabilizes the neighborhood, often attracting transient (just passing through) populations. This makes it difficult for schools and other township agencies to plan for development.
Foreclosures feed on foreclosures as the repercussions from one foreclosure ripple through the economy.
Don’t be fooled-when a family loses its home, everyone in the neighborhood becomes a victim of foreclosure. This is why it is so important for us to work together, as Americans have traditionally done in the face of crises, to stem the tide of foreclosures and stabilize the housing market. We need to stop worrying about homeowners who have gotten breaks that seem unfair and begin to realize that we have a lot more to lose if homeowners across America are not given the breaks they need.
Ralph R. Roberts is a consumer advocate, host of KeepMyHouse.com, and author of numerous books, including Foreclosure Self-Defense For Dummies. Ralph is based in Sterling Heights, Michigan and can be reached at RalphRoberts@RalphRoberts.com.