The effects of a foreclosure are far reaching, and the impact is felt by more than the family who is losing their home. Aside from the very real emotional impact of losing a home to foreclosure, there is significant economic to others as well.
Lender: According to a 2007 study by the The Joint Economic Committee of Congress, foreclosures carry an average cost of $77,935, The costs associated in preventing a foreclosure are estimated at $3,300. Most of estimated expense of $50,000 is shouldered by the lender, who takes title to the home. Standard & Poors estimates the cost of foreclosure at 26% of the loan amount on the property. Lost principal and interest payments, taxes, appraisal costs, insurance, maintenance, and selling expenses are components of this number.
Homeowners: The congressional report put the average cost to homeowners at $7,200 for lost equity, moving expenses, legal fees and the like. The credit score of the owner of a foreclosed property will also take suffer for years to come as a result. This could lead to higher future borrowing costs for the owner.
Local Government: Communities can lose anywhere from a few hundred dollars to more than $30,000 on foreclosed homes. That includes lost property taxes, unpaid utilities, and costs for upkeep of a property.
Neighbors: Particularly for close neighbors, studies show a single foreclosure can lower home value anywhere from 0.6 percent to 1.8 percent. The Center for Responsible Lending put the average neighbor dollar loss at $5,800 to $8,700. The community cost of a foreclosure is not only economic. A buyer’s perception of a neighborhood can suffer as a result, and can lead to lower sale prices.
In 2010 6.4% of Wallingford homes sold were Bank Owned Foreclosures. In comparison 11.8 % of Delaware County homes sold were reported as Foreclosures.
