Author of How to Prep When You’re Broke and Bloom Where You’re Planted online course
How do people become homeless?
It’s a question that a lot more people are asking this year. The number of foreclosures in America has climbed for eight months straight as of October, and evictions also appear to be on the rise, though this number is harder to track. It’s not about laziness – many of the people who face losing their homes are employed and just struggling to keep their heads above water.
The way foreclosure or eviction happens to people is so easy, it’s scary.
Foreclosure can happen to nearly anyone.
According to a report on CBS News, most foreclosures are for one simple reason: the homeowner loses all or part of their income.
Roughly 94% of mortgage defaults occur after a homeowner loses income to extenuating circumstances, according to The Urban Institute, citing data from the National Bureau of Economic Research.
Todd Teta, chief product and technology officer at ATTOM, a real estate data company, says we’re about to face another problem that could end in a new rash of foreclosures. People with variable interest rates are about to see their payments go up.
A high-interest-rate environment can be particularly challenging for homeowners with variable-rate loans, which reset at certain intervals in part based on market conditions. That means a homeowner might see a major jump in their monthly mortgage payment if their reset occurs when interest rates are elevated.
More such loans are now hitting their reset periods, Teta noted, a trend he expects to continue. “While there has been a small dip in interest rates, they remain significantly higher than just a few years ago, so borrowers with upcoming resets are still likely to see sizable payment increases.”
You are supposed to receive notice that your mortgage is falling into default, but more and more people are saying that they are getting very little notice to vacate their homes – sometimes only a few days.
Renters are also hitting hard times.
Rents in America are ridiculously high in many areas, and nearly impossible to find in other areas. This is harder to track than foreclosures for two reasons.
Nobody official is keeping track of evictions, so we have to rely on extrapolated data from regions that do have somebody watching. One example of this is a company called “Eviction Lab” that tracks data from ten states, but only in specific cities and counties in those states. Even with this sparse reporting, their home page shows more than a million evictions over the last year, and more than 78,000 just last month.
The other reason we don’t have official numbers is something called “informal evictions.” Some states have laws against dramatic increases in rent, but not all states do. Both my daughter and I, living in a metro area, have faced a vast increase in rent when our leases were up. For my daughter, the increase was $900 a month and for me it was $600 a month.
Landlords – particularly corporate landlords – can be tricky about this. They can make “improvements” that the tenant doesn’t want, which drives up their rent, or, if the local law allows, they can simply include it in the lease renewal. Imagine having your monthly payments go up by $600-$900 per month. If your budget is already tight, that’s all it will take to put you in a very bad situation.
Winter is coming.
A lot of folks think that people cannot be evicted in the winter. A lot of folks would be wrong. According to RocketLawyer:
You can evict tenants at any time, so long as you follow the appropriate state or local laws for eviction. There may be some limits, however, when it comes to removing the tenant physically from a unit during extreme weather…
…Tenants have no special legal rights to prevent evictions from occurring during the winter. During periods of extreme cold, however, some jurisdictions may refuse to enforce a valid eviction order until the temperature rises.
Often, during extreme cold or other extreme weather, local law enforcement will not physically remove tenants from their units. Additionally, landlords can face legal consequences for turning off utilities during extreme cold, even after a court issues an eviction order.
So, to make a bad situation even worse, imagine becoming homeless during the coldest part of the year.
Coming to an area near you
It’s important to note that there are, of course, people and companies who profit from the hard times of others. If it’s a new lease and a new tenant, landlords can make the rent whatever they want it to be in most places, which means your apartment, with no improvements, will be rented to somebody for a lot more than you pay. Huge companies are buying up large rental properties and snapping up foreclosed properties, and it’s soon going to turn us into a nation of renters…if we can afford the rents they’re charging.
I came across this video that is a collection of people on the verge of homelessness. The specific reasons are many but overall, it’s just like the statistics say: they lost all or part of their income. Watch below.
What do you think?
As someone who has lost her home to foreclosure in the past, my heart goes out to the folks who are struggling. If you are in or near this situation, here’s an article that could help you. Some of the links are no longer good, but I plan to update the post soon. Still, the general ideas apply.
Have you ever lost a home to foreclosure and eviction? How did it happen? Did you have a place to go? What did you do to find a new place to live? Please share your stories in the comments section.
7 Responses
It’s happened to me. It all started when I bought my first home. I don’t think my finances really were sufficient to buy it but I was obsessed with not renting. Then I got a good job that paid better than many others around me, it was an excellent fit. It was even close to the house! Things went on for a while – then the company I was working for decided to outsource all their workers to overseas. I actually helped train my replacement! By the way, that company was getting bonuses/tax writeoffs for hiring locally. So yes, they kept perhaps two people who worked locally and outsourced everything else. I was let go.
The only job I could get paid a whole lot less and had a very long commute. Things started getting tougher. Then Washington Mutual, the bank who held the mortgage, gave me some bad advice and lost some paperwork. Foreclosure proceedings began. A friend promised me work on a ranch in Nevada. Not seeing much of a better option I downsized, giving most of my belongings. I headed south, living in a tent with my spouse, times were very hard. The offer of work fell through. In November. We headed further south to Arizona, ending up in someone’s backyard.
I found more work there, work that had paid training. It was the same crappy stuff I’d been doing but paid two dollars an hour better, with a lower cost of living. We finally got a toehold. Moved into a little crackerbox apartment. Worked our way up from there. The foreclosure eventually fell off my credit rating and I bought a much better house. During this I’d found a much better job than the original one! Our situation is far better than it was before but it took time, grit, partnership and years of work.
Oh, and Washington Mutual? They eventually “made it right.” Gave me a whole three thousand dollars in apology!
WAMU as known in the banking sector, did not survive the Great Recession. Had some talented IT people however.
The bottom line is, when you rent a place to live, you are at the mercy of the market that determines how much your rent will be. My parents lived in rented apartments their entire lives, and I lived in rented apartments until I was 54. On the verge of a lease renewal, the landlord raised my rent from $850 to $1,200, plus fees. A friend in real estate told me about a new condo building near a Metro station, and I wound up buying a condo there for a mortgage payment of $1,500 a month. Of course, there is the $400 monthly condo fee and utility bills, but my point is, if you have the choice of throwing $1,350 a month down the toilet or investing $1,900 a month into your apartment that you own, it is worth doing whatever you must do to get the extra $550 a month so you can live in your own place. Once you do that, no one will raise your monthly “rent” or evict you ever again.
I lost a beautiful rural mountain home in 2017. My younger son was nearly killed in an on the job accident. When discharged from the hospital I had to agree to move him in with me and my husband. We’d both just retired and I had bought the home almost three years earlier. We were able to live and make the payments but in those first few months before my sons disability and medical care payments kicked in I had to take him to mental counselors, physical therapist, medical and neurological doctors at least one per day and many days two in the day, all hours away. The travel plus one more man to feed were more expenses than we were able to meet. I lost my dream home.
But I was lucky, 100 miles away I still owned three acres with an unlivable old double wide sitting there. My so was doing better and moved back where he’d lived before the injury. New job was good.
We moved to my old property and I started trying to repair the mobilehome. It was beyond anything I could do and care for a husband who was developing Alzheimer’s. We froze and camped in that horrible mobile-home for a year. I found an unrepaired small singlewide repo mobile home. I bought it “ as is”. I worked hard making small repairs and painting the entire interior. We moved in with the livingroom floor still in need of a floor covering. A family, a friend knew, had put down a new wood floor. The wife didn’t like it and insisted on tearing it out and putting down a different wood floor. They gave me the flooring they used for less than 6 weeks. Friends helped put down enough to cover the livingroom in one day. I lived there 2019 – 2022. My husband died in 2021. Another old mobile home is still lived in on my property. Friends had lost their home and business. I moved them into that old mobile home rent free – if they could make it liveable. He’s passed away but she and the grandchildren still live there. I look at them as guardians of my land. If no one were there everything I own that is stored there, would be gone.
My fiancé moved me into an apartment connected to his home. He pays the utilities and most of the groceries. I do the cooking and we both do housekeeping, repairs, and laundry. He maintains all of our vehicles. That has allowed me to catch up on old bills. It’s been a hard 9 years. The worst is past. We’re planning a wedding.
Even today, if we didn’t own the properties, two incomes wouldn’t pay the taxes and necessities of life.
I look at a family friend. She’s in her 50s and just lost her Job. She had been there several years, good pay, liked the job. She bought a new pickup and had the rent paid ahead to December. Suddenly the job is gone. She borrowed money from friends but is out of propane and the electric is about to be cut off. I don’t know what she’ll do. For the lower income folks things are getting much harder.
I lost a home early 2000’s to rising taxes and a drug addicted husband robbing me blind. I did not buy above my means, no brand new 3k sf house. Fast forward 20 yrs, lost my new DH to cancer. Couldnt afford to stay in rental in our area due to data centers moving in, raising rents. Decided to move closer to DD and grands with a parallel job transfer. No rentals to be found in this rural area. Bought a camper, put it on kids property, and here I am. It aint easy, no matter your age/financial situation.
@Clergylady, I am happy for you that you are in a good place now, after all you have been through. I wish you well.
Thanks Grammyprepper. It is wonderful to be able to be here. We’re closer to town than anywhere I lived in over 50 years but it’s quiet and feels rural. I’ve planted a nice fruit orchard, moved the garden from down a steep hill away from the home to the fenced front yard and another nearby area on the level with the home. Land here is heavy clay and tons of rocks. I bought a dump truck of dirt and put in inexpensive raised garden beds. I planted part of it this year and I’m preparing the rest for spring planting. I put in 7 new grapes with room for one more and pretty trellises for them to climb. I’m adding edible and medicinal wild areas the same as I’ve done at every home for decades. My 14 hens and 3 roosters are peacefully keeping us in eggs and I have my incubators here so if a hen or two don’t get broody I’ll set eggs to hatch for new hens and some to add to the freezer.
My fiancé just sold an older tractor with a front loader and backhoe. The buyer was a few hundred short of the agreed on price so we have an almost new freeze dryer we’ve been experimenting with the last few days. The dried vegetables are perfect and dried pineapple chunks are incredibly good.
It’s amazing to me to have a partner in prepping. I’ve not had that before.
ClergyLady, I too lost my husband in 2021. He was not understanding of the need to prep. Living in the suburbs on a standard residential lot, I got rid of useless landscaping and had loads of woodchips dropped to reform the clay/sand soil. Fruit trees were planted and are happily producing. Vines grow under and nearby them in the growing season. I was given some raised beds and they are growing healthy beans and lettuce. The blessing – Like you, I now have a man in my life who is a serious prepper. He supports me in my canning, and is developing alternate energy sources and protection. It is raining today and he found some barrels to divert the roof runoff to.