What happens to people after foreclosure?

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What happens to people after foreclosure?

Sad article on the lives of people who have been forced out of their homes and where they go afterwords. I am surprised to read of 'tent cities' and 'parking lot communities' but overall the sad thing is the low level of income and savings. A very good read.

The impact of the mortgage crisis has been obvious in both the worldwide credit crunch and the presidential campaign, where there has been a lot of talk about the plight of overextended homeowners. But the specific personal costs of home loss have been less evident, at least to those not paying them.

Not surprisingly, the forced loss of a home — the place where many of the memories that define a life and a family are made — is deeply traumatic, according to Dr. Robert Gifford, an environmental psychologist at the University of Victoria, Canada. This is true, he said, even when the loss is due in part to a homeowner’s own financial mismanagement.

“When you choose to move, of course you have to pack up and move, but you’ve probably chosen a better job, a better place, there’s an upward trajectory to your life.” Dr. Gifford said. “When someone tells you you must leave,” he continued, it undermines “a key part of well-being: perceived control over your life.”

And given that “the home is the center of the psychological universe,” Dr. Gifford added, “when people lose it, it’s like their planet blew up.”

Dr. Rosalind Dorlen, a clinical psychologist in Summit, N.J., whose patients include many Wall Street workers, sees the home as a potent symbol of one’s place in the social universe, of “how you see yourself and how you want to be portrayed in the world.” Losing that symbol can produce depression and a great sense of anxiety, she said.

For those with few financial resources, finding a new place to live can also be challenging.

Forty-four percent of employees live paycheck to paycheck, according to a survey conducted by MetLife in late 2007, and 48 percent of American households have less than $5,000 in liquid assets according to Edward Wolff, an economist specializing in the study of poverty and income distribution at New York University.

When people in such straitened circumstances can’t keep up with mortgage payments, the resulting damage to credit ratings can make it nearly impossible to qualify for a lease. These families often find themselves at the mercy of friends or relatives, who may or may not be able to take them in.

Some people are taking refuge in tent cities and parking lot communities across the country that have cropped up or expanded recently, from Santa Barbara, Calif., to Athens, Ga. Compared to them, the families profiled below are lucky. They have found accommodations, at least for now. But all are dealing with the emotional tumult of losing a home, and the discomfort and uncertainty that accompany it.

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By netchicken: posted on 24-10-2008

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