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August 29, 2014

3 Hidden Costs of the Foreclosure Crisis

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3 Hidden Costs of the Foreclosure Crisis

Although U.S. foreclosure activity may be declining, the problem is far from over. There have been 5 million foreclosures since 2007, reports the Center for Responsible Lending, which estimates that between 3 million and 5 million more will occur over the next couple of years.

In 2003, one in 38 U.S. home owners were seriously delinquent on their mortgage payments or in foreclosure, but today those numbers are one in 10. Some of the consequences of foreclosures are obvious: family displacements, crime in vacant properties, ruined credit, and the loss of equity.

Other, less obvious consequences have emerged as well. About 8 million children could be affected, including kids of home owners and renters who were evicted due to a foreclosure. Julia Isaacs of the Brookings Institution calls these children the "invisible victims" of the foreclosure crisis, as foreclosures not only can cause emotional trauma, but also interfere with a child’s educational development.

Researchers also have found a connection between rising foreclosures and an increase in medical visits for mental health, such as anxiety, or preventable conditions such as high blood pressure.

And many communities are strapped because of a loss of property tax revenue caused by foreclosures, which can lead to cuts in services — including swimming pools, senior centers, and local law enforcement.

Source: "Three Hidden Costs of the Foreclosure Crisis," MarketWatch (April 24, 2012)

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