Since 2008 upward of four million families have lost their homes to foreclosure. However, many families who defaulted on their mortgages avoided foreclosure and still remain in their homes. In this brief, Hannah Thomas explores how families in foreclosure exhaust their wealth.
Policy makers do not have a clear picture of the financial impacts of default and foreclosure for households. Yet, households who have experienced default and foreclosure, whether or not completed, are likely to have experienced financial impacts that may increase their need to draw on public programs. Unique and timely data reported in this brief, shows that the financial impacts of foreclosure are significant. Motivated by the social and economic meanings attached to their homes, families spend down their savings and retirement funds leaving themselves vulnerable to future economic shocks and financially insecure.
This is a process of asset depletion when families use up savings and other liquid and non-liquid investment vehicles to cover day-to-day expenses when income is not enough to do so. Asset depletion often leads to asset exhaustion when all liquid and non-liquid financial resources are depleted completely. Drawing on thirty-seven interviews with predominantly families of color in foreclosure around the city of Boston between 2007 and 2008, the following brief will outline the ways that families spend their assets to keep their home, and then explore the contextual meanings that are important motivators for making the decision to keep paying the mortgage rather than selling the house or walking away from it.