The total wealth loss suffered by homeowners who live around foreclosed homes is around $2 trillion, based on a recent accounting done by the Center for Responsible Lending (CRL), a consumer advocacy group.
CRL is an independent research and policy organization based in North Carolina. The group aims to protect homeowners from predatory lending practices.
CRL released a report on Wednesday showing that around 50 percent of those spillover losses were experienced by communities of color, where half of the residents are African-American, Hispanic, or otherwise non-white. According to the report, such neighborhoods experienced high numbers of foreclosures.
The research only explored the indirect consequence of foreclosures on homes or properties situated within 220 yards of a foreclosed property. CRL said that since the housing market crashed, the overall loss of home equity has reached $7 trillion, which does not include the added indirect costs.
According to the report, the areas with high numbers of home foreclosures lose tax revenue and bear the costs of properties that have been abandoned. In addition, the homeowners residing in the surroundings of foreclosed properties are losing money due to the depreciation of the value of properties.
Homes in close proximity to a foreclosed property shed or will suffer an average $21,077 in loss of wealth or approximately 7.2 percent of their house value, based on the research. In minority communities, the households lost around 13.1 percent or about $37,084 of their home value.
To compute its estimate, CRL combined statistics data collected by the Mortgage Bankers Association, the government, and the Lender Processing Services.
According to Realty Trac, the rate of filings for new home foreclosures has been decreasing this year, declining 7 percent last from August to September and down 16 percent from the same month last year. That was the lowest rate in more than 5 years.
- For homeowners who are underwater, there are no easy ways to handle the losses they suffered. Should they walk away, keep paying or try for a loan modification? San Antonio Real Estate Attorneys can explain the pros and cons of several options.