When I first started working on this piece, I was told that the mortgage community in general—and loss mitigation professionals in particular—would be resistant to the message. But I don’t think that’s true. Because we’re not just an industry that values what’s important, we serve the spirit of the American dream of home ownership. If there’s one part of our economy that understands aspiration, it’s us.
During the Great Recession, I had the opportunity to work with thousands of families who wanted to become homeowners, but found themselves in various stages of the foreclosure process. Whether these families were receiving a Notice of Default, a Notice of Intent to Default, or facing the days of a Trustee Auction, they all had one thing in common—each family was in dire straits.
Buying a home is the single largest investment most Americans will make in their lifetime. Saving for down payment and closing costs takes time, sacrifice and determination. And when they finally get the keys to their house, it fills them with a sense of pride and satisfaction. Owning a home is more than just a brick and mortar structure—it becomes part of their identity. Now they are home owners.
And for many Americans, owning a home means that they are building wealth in equity, which in turn creates wealth that is generated and provides all the benefits that we understand so well in this industry. They can use this equity to send a child to college, help a family member start a new business, or many other opportunities that benefit generations. This is the true American dream—creating a stable foundation in the past, building memories in the family home in the present, and ensuring a better future.
But what happens when life changes suddenly and unexpectedly?
Divorce. Death. Serious illness. Sudden termination of employment or layoff. An injury that prevents you from working for a period of time. A loved one who now needs constant care.
Regardless of the combination of each of these changes or the number of any other, the way in which the home is significantly reduced. Rapid changes in savings accounts bleed income and lack of options leads to lack of sleep. When accounts are empty, difficult decisions must be made about any remaining resources.
This is the crossroads where many loss mitigation professionals often encounter these creditors: facing the loss of not only their largest financial asset, but also the loss of their family home full of memories. Christmas dinners. Baby’s first steps. Older couples who make history together. Young couples who were full of dreams of that house. Divorcing couples are not only saying goodbye to their marriage but also to the home that was built by the same marriage.
We meet them when their hearts are broken.
The American Sociological Association published a report in June 2023 using Census Bureau Surveys and state-level data on evictions and foreclosures. Their research concluded that being a homeowner going through the foreclosure process led to higher levels of stress, anxiety and other mental health challenges. Additional data showed that out of 35 studies conducted in 2015, 91% concluded that the foreclosure process had negative effects on the homeowner’s physical and/or mental health.
Experts also concluded that the constant stress due to the sale process will destroy a person’s mental capacity. This means that “closure-related depression” can manifest symptoms such as:
- Continuous sadness
- Hopelessness
- Fatigue
- Difficulty concentrating
- Changes in sleeping or playing
- Drug abuse
- And sadly, even suicide
The study also showed that there are physical health challenges that often occur to borrowers in the foreclosure process such as:
- The risk of heart disease increases
- Strengthening existing heart disease
- Diabetes
- High blood pressure
- Being overweight
We also know that the stress of foreclosure can put a lot of strain on marriages and relationships, which can lead to breakup or divorce—to say nothing of the stress placed on any children living in the home.
Whether we want to be honest about it or not, there is a stigma many people feel about people going through the foreclosure process. Many borrowers who experience bullying feel ashamed and guilty, causing them to withdraw from friends and family. It is a very difficult time, and the withdrawal from support organizations adds to the increased emotional stress.
In February of this year, the Huffington Post published an op-ed written by Michelle Polizzi titled “I Was 17 When My Family Lost Our Home. Here’s What No One Tells You About Real Estate.” He says:
Our crisis began in 2009, the beginning of my senior year of high school and the middle of the subprime mortgage crisis. My father, deep in the pain of addiction, stopped making payments on our house in upstate New York and left suddenly, taking my younger brother and most of our furniture.
My mother and I stayed as long as possible, raising the prospect of being reunited as a family when I graduated. That winter, I was hiding in a house we didn’t pay for, the cold was closing us in and eating at our heels, I was scared like never before. Stronger than the cold and greater than my fear, however, was an unwavering sense of disappointment.
Most Americans know someone who has gone through mortgage default – whether they know it or not. Many of these people sink their living expenses into their home: they put in a pool, fix up the yard, build a swing set of their children’s dreams. These families are singed and sad. Sometimes, this emotional reaction comes with a desire to take revenge on their creditor and user, which can be seen in serious damage to the property. Whether borrowers are selling appliances for cash or vandalizing windows, punching holes in walls or causing water damage on purpose – they may feel justified in venting their anger through demolition.
Let me be clear: I am not saying that I condone this behavior or that I find it acceptable in any way. On the contrary. However, after working in loss reduction for over 10 years, I have learned that these people operate in a crazy state of mind. They are emotionally overwhelmed and cannot control their anger. And while their behavior throws gas on the proverbial fire, I ask you to at least consider the emotional hell they must be going through in order to light a match.
So, the big question for our industry and for us is: What can we do to show compassion to our borrowers who are facing defaults and foreclosures? As an industry, we must ultimately consider the bottom line. But as individuals I ask each of you to consider the following.
Imagine that the row of all the spreadsheets is displayed as a row on the face of that borrower. A smile line. The crows feet near their eyes show the age of their story. The pressure lines on their foreheads reveal all that they have survived and endured.
Their collective story is far greater than the numbers in the spreadsheet you’re reviewing. Showing compassion, giving kindness, and guiding with as much compassion as we can call it will not only help these people when they are most vulnerable. It just won’t have a positive impact on your bottom line. It will celebrate your humanity in the face of adversity.
Tai Christensen is the president of Arrive Home
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
To contact the editor responsible for this piece: [email protected].
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