As the housing market crash drags on, foreclosures are on the rise due to adjustable rate mortgage payments increasing beyond home owner's budget. Obviously, the foreclosure will affect the home owner's credit report and the ability to purchase another home in the future but what about the home owner's neighbors? Analysts state that 44.5 million homeowners living near foreclosed properties will see a decrease in their home value of up to $5,000 in the coming months. Eric Stein of the nonprofit research group Center for Responsible Lending, estimates that 44.5 million homeowners living near foreclosed properties will see home values drop by an average of $5,000, as foreclosures surge. "The impact of foreclosures on local communities are far worse than any impact these bills would have on the mortgage market." Lower home values mean more trouble for an already doomed home mortgage industry. Less equity in properties makes it more difficult to refinance and cash out equity. That in turn means less money for consumer spending. All this adds up to a very lean holiday season for consumer spending.
See the full article in the Washington Post about pending bankruptcy legislation to help homeowners.
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