The Mental Health Consequences of Foreclosure

A foreclosure is more than just a financial loss. Our homes have deep emotional meanings. They are a source of pride for many of us. We have no plans for what will be a massive public mental health crisis.
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Foreclosed people are the people who lived in the now Foreclosed homes. There will be 23,600,000 Foreclosed people by the end of this year.

Approximately 1.9 million homes were foreclosed last year and an additional 3 million will be this year, totaling 4,9 million. If we estimate that each of these houses were homes housing four people, then we will have put 19.6 million Americans out on the street.

No one in 'regular' government shows any real interest in Foreclosed People. Not the President, Vice President, Congress, nor any Cabinet level officials let alone Cabinet Departments, including the Department of Health and Human Services and one of its divisions, the National Institute of Mental Health. There is not a program in sight to aid these people that actually works.

Our Government has initiated plans or programs to aid soon to be Foreclosed people with respect to keeping their homes. Sadly, these programs are useless and don't work -- refinancing, loan modification, etc. These plans rely on the same banks that created this problem in the first place, to carry out refinancing and loan modifications. A little like throwing the supposedly 'repentant' fox into the hen house. These banks are not monitored or supervised, and are performing two services: Foreclosing, at which, interestingly enough, they aren't good at; and getting the foreclosed occupants out of their now bank-owned homes, at which they are also not good at. Unintended Consequences for the good guys. (See LA Times article -- Squatters).

Last year, the primary victims of foreclosure were people who either by ignorance, greed or being mislead or defrauded by banks (by far the largest percentage) bought houses. People in this group, in general, were those who were given very questionable or fraudulent loans: 100% loan to value adjustable loans with teaser rates and no income verification. For them, the 'teaser rates' are gone, home values have plummeted, and they still have no jobs. And their homes are gone.

This year, we are entering a new foreclosure territory, the territory in which most of us live. May I encourage everyone to listen up. Many of us are the people who bought the houses and got the loans the old fashioned way: 30-year fixed rate loans, 20% down, and we actually had the income to justify our loan. This salt of the earth group is rapidly becoming severely distressed -- 'Under Water' is the descriptor. 'Under Water' occurs when the amount owed on a home is higher than the home's value, often by a considerable amount.

This is happening because of plummeting home market values and lost income from lost jobs. These people (i.e. us) often have to walk away from their homes. They are not willing or able to pay mortgages on houses that have lost their value, or a large portion of it. They can't send good money after bad, assuming they even have the money to send. They can't sell, can't refinance, must absorb large financial losses, and suffer crushing emotional consequences.

Oh, yeah. Lest we forget, losing one's home is a very bad life experience, thought by many as equal to divorce and death in their impact on people.

Our homes are more than financial assets. They have deep emotional meanings. They often are the container of many of our childhood memories. They were often one of the indicators of our parents' success. They were a pride to many of us. They offered safety and security. They gained us respect. They attained an outward expression of how hard work had paid off in comfort, safety and respect of the community. When things went well, our houses grew with us.

We have no plans for what is and will be a massive public mental health problem. An excellent paper on this subject was written by Keith Ablow, M.D.: The Emotional Meaning of Home.

Amongst people I have interviewed, one mother, Ms. J, told me: "Having a home to me means shelter, a place to go and unwind at the end of a day, family, safety, comfort, friends, backyard barbecues. To lose my home is devastating. I've really been depressed. You spend so many years paying on your home, and losing it is terrible. Having to start all over seems impossible. The way back seems impossible. I feel like a failure."

Good luck to all the 23,600,000 Foreclosed people.

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