It is no secret that the housing situation in America has been a poor one for some time now. Foreclosures have been on the rise over the past several years, and as a result consumers have responded by devising several different approaches to deal with potential foreclosures. Unfortunately, walking away from a foreclosure only exacerbates the problem.

Credit Scores

The first negative effect of a foreclosure is the effect that such action has on the credit scores of homeowner. No matter what the ultimate result of the foreclosure might be, whether the property is sold at short sale, or the property is voluntarily returned to the bank, the credit agencies will still treat the situation identically by noting that the homeowner paid less on a settled account. The practical effect is that the homeowner’s credit score will be downgraded, which will result in the homeowner having to pay higher rates on his credit card, auto loans, and other consumer debt.

Effect on Employment

A little known effect of a foreclosure is that it may make it more difficult for the one to obtain employment. Many employers not only make routine credit investigations as part of their hiring practice, but there are some employers that use a foreclosure as a basis for termination. Both of these situations may appear to be unfair, but employers are within their rights to take such action, and homeowners facing a potential foreclosure should be aware of these possibilities.

Deficiency Judgments

Many homeowners may be under the mistaken belief that once their property has been foreclosed on, they are free and clear of any further financial obligations for said property. Unfortunately, this is not the case. Depending on the circumstances, even after the foreclosure there may be remaining debt, and the mortgage holder may elect to pursue that. The options available to the mortgage company include taking a deficiency judgment against the homeowner and using such judgment to pursue a wage garnishment. This can be a consequence of the foreclosure that might follow the homeowner for some time and that could also jeopardize one’s employment, as some employers are not sympathetic and may use garnishment as a reason for termination.

Stress

In addition to the clear and direct consequences of foreclosure, there are also a number of more subtle consequences that homeowners should be aware of. The circumstances leading up to and continuing throughout the foreclosure process are the source of considerable stress. The pressure of trying to make payments, dealing with the mortgage company, and facing the likelihood of losing one’s home are all stress creating events. Living with day-to-day stress can cause a homeowner to act in ways that are inconsistent with his or her normal behavior, which may serve to cause them additional difficulties.

Conclusion

Foreclosures are not pleasant for anyone. The mortgage holder incurs expenses that they would like to avoid, and are burdened with disposing of the foreclosed property. Mortgage companies are not in the real estate business, and would prefer not to have this additional responsibility. The problems for the homeowner, as described above, certainly are not pleasant. The bottom line is that homeowners should make every effort to avoid foreclosure. The effects can be devastating, and it may take the homeowner years to escape them.

About the author

This article was composed by Ty Whitworth for the team atwww.manhattandallasapartments.com/.