The tragic side of the foreclosure saga...

Posted by: Dean Foust on October 29, 2007

standoff.jpgA troubled man in Houston who was facing foreclosure boarded himself up in his home, engaged in a standoff with police, and then ended his life. Granted, from this account in the Houston Chronicle, the man was deeping with more than just foreclosure—divorce, a drug problem, financial issues. But many Americans look at a home as their biggest financial investment, and when they lose it to foreclosure, they lose more than just a roof—they lose their nest egg. I wonder if this scene will play out more than once across the country in coming months.

Reader Comments

Brian R.

October 29, 2007 8:48 PM

Dean, if a homeowner has any appreciable equity, he or she likely would have saved the home. (I did not read the linked article, but as you said, the man had financial problems.) This is not to say that those who have lost their homes to foreclosure have not lost anything, as emotionally many likely suffer a jolt. On the other hand, there remain lots of hungry lenders out there, including FHA. FHA will refi a home if the owner has as little as 3 percent equity. And something tells me that the government will lean, hard, on its appraisers to find that 3 percent equity. I would venture that the vast majority of those who will lose their homes to foreclosure over the next 2 to 3 years will have no skin in the game. And, no, having made a few mortgage payments and painted a few rooms does not constitute skin.

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BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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