Psychological Effects of Foreclosure

A few years back it was easy to get a home loan. Credit standards were lax, down payments were low or nothing, proof of income was largely ignored and interest rates (at least initially) were favorable. In fact, it was so easy to get a home loan that many people bought houses that they could not afford. As a result, many are facing foreclosure today. This is compounded by the over ten percent unemployment rate, which is causing the foreclosure rate to remain stubbornly high.

The financial ramifications of the rapid rise in the rate of foreclosures, both to the individual and for the society as a whole, has been well documented. There are other, and equally serious, personal and societal costs and consequences as well.

is invariably accompanied by anxiety and stress. Damaged credit, potential homelessness, having to uproot the children from their schools and friends, and embarrassment with peers are just a few of the immediate consequences of foreclosure. This has led to a variety of psychological disorders such as anxiety.

Unchecked, anxiety can lead to depression. There is a feeling of being lost and of hopelessness. Depression can be marked by a tired feeling, both mentally and physically. Self-doubt comes from the feelings of embarrassment and disgrace. The process fuels itself. The very feeling of insecurity leads to an inability to act.

The unemployed cannot seem to get out there are find another job. This of course, only serves to make the situation worse. It becomes a downward spiral. Clinical depression invariably requires professional medical treatment, which ironically is outside the budget for the person that has just lost his home.

Other ailments too have been observed. Among those that have lost their homes through foreclosure, there is an above average tendency towards alcoholism, drug abuse, gambling addiction, eating disorders and other self-destructive conditions. In this environment, divorce is common as is a tendency towards violence. There is a positive correlation between the increase in foreclosures and an attendant increase in domestic abuse cases.

The economic costs are fairly immediate and therefore, well documented. A house is foreclosed upon, eventually it is resold and it is off the statistic books, so to speak. However, the psychological problems take time to develop into conditions that find their way into our statistics. The effects tend to last longer and permeate the fabric of our society.

Yes, loss of the home through foreclosure is tragic. However, there are things that can be done to reduce both the financial and the psychological effects. Take action as early as possible. Your lender does not want to foreclose. If there is any way to forestall the process, they likely will listen. They are experts and may know of government programs that can help you.

In addition, even if you are not successful in staving off foreclosure you are likely to be better prepared for the consequences. You will have more time to make plans for the future. Perhaps more important, the very actions you take early on will help you fight off the feeling of helplessness, which so often leads to anxiety and depression.

Original: Psychological Effects of Foreclosure