Foreclosures are in nobody's best interest

Owing more on properties than they're worth, some local homeowners are voluntarily walking away from their house notes. Although the vast majority of foreclosures are involuntary, walkaways could be a growing problem.

The notion is very unsettling that foreclosure is an option. The home is a palace of things for many. But they seem willing to accept the disadvantages of foreclosure -- the damage to their credit, their ability to re-enter the housing market and even their capacity to find a job in the future.

The cost of foreclosures is not only felt by those who lose their houses. A 2007 study by the Association of Community Organizations for Reform Now (ACORN) details the impact of foreclosures on neighborhoods. It has been estimated that a single foreclosure depresses all property values within a city block, and a single foreclosure in a low- to moderate-income neighborhood causes property values to decrease even more.

For example, the report stated, citing a study on Chicago neighborhoods, if the average house value in a low- to moderate- income area is $150,000, then each foreclosure in the area costs each of the homeowners $2,100. If the neighborhood has 10 foreclosures, then each remaining homeowner has lost $21,000 in value.

Furthermore, a 2005 study prepared for the Homeownership Preservation Foundation estimated that each foreclosure has the potential to generate as much as nearly $20,000 in direct costs to cities in the form of increased costs of code enforcement, greater police expenses due to higher rates of crime, and, when a borrower walks away from a property before foreclosure, a loss of property taxes.

As a real estate professional, spread the word that there is help available. The first piece of advice you should always offer is to contact their lender.

Programs such as FHASecure, HOPE NOW and Project Lifeline seek to help the more than 2 million homeowners in trouble with their debt payments. Details of these programs were printed in your March In Contract magazine and are available online at ColumbusRealtors.com. Significant lending reform and loan modifications have been proposed -- and some implemented -- by state and federal governmental bodies and non profit organizations.

The Ohio Division of Real Estate has just launched a Save The Dream campaign with a $160,000 contribution from the Education & Research Fund. It is intended to help homeowners who may be facing mortgage foreclosure. To find more information, go to www.savethedream.ohio.gov.

CBR's new ad campaign The Grass is Greener Here will also offer ailing homeowners information on our ColumbusHousingFacts.com web site through our partner The Columbus Housing Partnership.