The cause of foreclosure is simple: so the lender forecloses, taking the home as a penalty for 29, A homeowner falls behind on his mortgage payments. With foreclosure rates high, agencies and individuals —for example, the U.S. Department of Housing and Urban Development—happen to be appearing deeper, trying to discover how and why homeowners end up in that circumstance.
Negative Equity
A key factor in foreclosure is negative equity, the Wall Street Journal reported. If a house 's value has fallen so far that it's worth less than the mortgage, the homeowner can merely give up. He also decides to cut his losses and quit making payments.
Sub-Prime Mortgages
Loans made to borrowers with minimal prospect of keeping up the payments another contributor to this foreclosure crisis, based on Default Servicing News are considered by HUD. By making loans, big profits were generated through origination prices and selling the mortgages to investors, even if the homes had to be foreclosed on later.
Fraud
As many as 9 percentage of foreclosures could possibly be associated by the creditor or the borrower, according to a Default Servicing News article.
Unemployment
Losing a project and subsisting on unemployment benefits or savings can make it impractical or impossible to keep paying off the mortgage. The web site of foreclosure expert John Nazareno (theforeclosuresinfo.com) states this is one of the top causes of foreclosure.
Other Personal Reasons
Illness can make it impossible for many homeowners to work, or drain their financial resources until they can't cover the mortgage. Divorce could be a variable. She may not be able to maintain payments with just 1 income if one spouse keeps the house. Homeowners with substance or gambling dependence may spend their money to fulfill their habit, rather than.