Foreclosure Effects Research Articles

The adverse effects of foreclosure on mental health in the United States after the Great Recession: a literature review

The aim of this review is to examine the relationship between mental health conditions and foreclosures after the great recession in the united states (u.s.). Our search yielded 148 studies, eight of which met the criteria for inclusion. Based on a narrative analysis, a worsened psychological condition and an increase in the prevalence and risk of depression and anxiety emerged as consequences of foreclosures. Foreclosures could also compromise mental health for those who did not directly experience it. All in all, we conclude that foreclosure has had a detrimental impact on mental health in the u.s. After the great recession.

The legacy of redlining in the effect of foreclosures on Detroit residents’ self-rated health

The legacy of redlining in the effect of foreclosures on Detroit residents’ self-rated health

Privileging the preventive medicine physician: A solution in search of a problem?

While home foreclosure can lead to mental and physical health declines in persons experiencing the foreclosure, whether neighborhood foreclosures can affect the health of other residents is debatable. Using a racially/ethnically diverse sample of Chicago metropolitan area residents linked to foreclosure data from 2008 to 2014, we assessed whether exposure to neighborhood foreclosure fillings was associated with changes in objectively measured body mass index (BMI) over time. Using a retrospective longitudinal design, we employed fixed-effects regression models that controlled for individual- and neighborhood-level covariates to test the association of neighborhood foreclosures and BMI in >60,000 individuals and for individuals who did not move during the follow-up period. We also adjusted for the non-linear association of age and BMI and comorbidities and employed a series of sensitivity analysis to test for robustness. In fully adjusted models, a standard-deviation increase in neighborhood foreclosure filings within 500 m was associated with increases in BMI for individuals who did not move (nonmovers) (mean = 0.03 BMI units, 95% confidence interval: 0.01, 0.06). Neighborhood foreclosure rates were not associated with changes in BMI for the full sample. Given the potential deleterious effects of neighborhood foreclosure on individuals with longer exposure to the local vicinity, clarifying the potential health effects of neighborhood foreclosures would help policymakers when planning actions to prevent home losses, predatory home loans, and that aim to more efficiently return foreclosure properties to productive uses.

The Relationship Between Foreclosures and Intimate Partner Violence During the U.S. Housing Crisis

The recent U.S. housing crisis led to increases in neighborhood foreclosures and stress. Intimate partner violence (IPV) is linked to neighborhood stress, but less is known about whether foreclosures aggravate neighborhood conditions affecting IPV. Using police, foreclosure, and census data for three cities in the Phoenix region coupled with cross-sectional time series modeling, we find a direct effect of foreclosures on IPV, with the largest effects appearing at the end of the housing crisis. Our findings suggest that households living in communities that recover more slowly from housing downturns may be more prone to IPV.

The legacy of redlining in the effect of foreclosures on Detroit residents' self-rated health.

Historical practices, such as housing discrimination in Detroit, have been shown to have lasting impacts on communities. Perhaps the most explicit example is the practice of redlining in the 1930s, whereby lenders outlined financially undesirable neighborhoods, populated by minority families, on maps and prevented residents from moving to better resourced neighborhoods. Awareness of historical housing discrimination may improve research assessing the impacts of current neighborhood characteristics on health. Using the Detroit Neighborhood Health Study (DNHS), we assessed the association between two-year changes in home foreclosure rates following the 2007-2008 Great Recession, and residents' five-year self-rated health trajectories (2008-2013); and estimated the confounding bias introduced by ignoring historical redlining practices in the city. We used both ecological and multilevel models to make inference about person- and community-level processes. In a neighborhood-level linear regression adjusted for confounders (including percent redlined); a 10%-point slower foreclosure rate recovery was associated with an increase in prevalence of poor self-rated health of 0.31 (95% CI:-0.02 to 0.64). At the individual level, it was associated with a within-person increase in probability of poor health of 0.45 (95% CI:0.15-0.72). Removing redlining from the model biased the estimated effect upward to 0.38 (95% CI:0.07-0.69) and 0.56 (95% CI:0.21-0.84) in the neighborhood and individual-level models, respectively. Stratum-specific foreclosure recovery effects indicate stronger influence in neighborhoods with a greater proportion of residents identifying as white and a greater degree of historic redlining. These findings support earlier theory suggesting a historical influence of structural discrimination on the association between current neighborhood characteristics and health, and suggests that historical redlining specifically may increase vulnerability to contemporary neighborhood foreclosures. Community interventions should consider historical discrimination in conjunction with current place-based indicators to more equitably improve population health.

Neighborhood Housing Resilience: Examining Changes in Foreclosed Homes During the U.S. Housing Recovery

ABSTRACTThe surge in foreclosures in the United States that began in 2007 reached a peak in mid-2011, and since then, the rate of foreclosures has been decreasing, providing evidence of the housing market recovery. This study examines factors that affected changes in ZIP code-level foreclosure rates in more than 300 U.S. metropolitan areas during the national housing recovery. Using multivariate analyses of the long- and short-term effects of foreclosures simultaneously, this finding shows that certain characteristics of the mortgage and housing markets led to more rapid neighborhood recovery. Results also indicate, however, that most urban-form variables led to neighborhood resilience over the long term, that high shares of mixed land use were strongly associated with fewer foreclosures, and that high shares of auto dependency were associated with high foreclosure rates. Finally, findings suggest that low- and moderate-income neighborhoods, particularly in cities, were more vulnerable and less resilient to economic shock, and the accumulated effects of foreclosures worsened over the long term. However, low- and moderate-income neighborhoods surrounded by suburban affluent neighborhoods recovered more rapidly than those in cities did. Understanding such resilience to economic crises will provide policymakers with insights that they can leverage to establish housing policies for sustainable neighborhoods.

Foreclosure’s Fallout: Economic Adversity and Voter Turnout

With the foreclosure crisis continuing to impact individuals and communities across the country, understanding the extent of its effect on political life is tantamount. In this paper, we ask how political behaviors are influenced by the economic adversities created by this crisis: loss of home, loss of resources, and perhaps loss of political efficacy. Previous research on economic adversity focuses almost exclusively on unemployment. Here we explore the demobilizing effects of foreclosures at the individual level, community levels, and the intersection of individuals nested in communities. With a unique dataset that matches voter file data to a database on individual foreclosures, we show that the foreclosure crisis was associated with a decline in voter turnout, both individually and for those in neighborhoods hit harder by the foreclosure crisis. We find that homeowners facing the loss of their homes were less likely to go to the polls. Consistent with previous research, we also show that turnout was suppressed in neighborhoods with higher rates of foreclosure. Taken together, our results suggest that political elites were less likely to hear from constituents most directly impacted by the foreclosure crisis.

Foreclosures and weight gain: Differential associations by longer neighborhood exposure

While home foreclosure can lead to mental and physical health declines in persons experiencing the foreclosure, whether neighborhood foreclosures can affect the health of other residents is debatable. Using a racially/ethnically diverse sample of Chicago metropolitan area residents linked to foreclosure data from 2008 to 2014, we assessed whether exposure to neighborhood foreclosure fillings was associated with changes in objectively measured body mass index (BMI) over time. Using a retrospective longitudinal design, we employed fixed-effects regression models that controlled for individual- and neighborhood-level covariates to test the association of neighborhood foreclosures and BMI in >60,000 individuals and for individuals who did not move during the follow-up period. We also adjusted for the non-linear association of age and BMI and comorbidities and employed a series of sensitivity analysis to test for robustness. In fully adjusted models, a standard-deviation increase in neighborhood foreclosure filings within 500 m was associated with increases in BMI for individuals who did not move (nonmovers) (mean = 0.03 BMI units, 95% confidence interval: 0.01, 0.06). Neighborhood foreclosure rates were not associated with changes in BMI for the full sample. Given the potential deleterious effects of neighborhood foreclosure on individuals with longer exposure to the local vicinity, clarifying the potential health effects of neighborhood foreclosures would help policymakers when planning actions to prevent home losses, predatory home loans, and that aim to more efficiently return foreclosure properties to productive uses.

Housing crisis, hardship and safety net support: examining the effects of foreclosure on households and families

The housing market crash in the mid-2000s was characterized by unusually high rates of mortgage delinquencies and foreclosures. Thus, many householders and their families faced the prospect of losing their homes. This paper employs a unique data-set linking the 2008 Survey of Income and Program Participation with individual foreclosure event records from Realty Trac to examine the effects of foreclosure on changes in household well-being. Results from random effects models suggest that foreclosure was positively associated with hardship and food insecurity. Further, households at risk of foreclosure had greater odds of accessing government assistance programs but lower odds of receiving support from private safety nets. Results from lagged dependent variable models suggest that changes in foreclosure status are associated with increased hardship and reduced economic well-being. The lack of access to private safety nets suggests the need for comprehensive public programs to identify and assist homeowners at risk.

Foreclosed American Dream? Parental Foreclosure and Young Adult Childrenns Homeownership

This study investigates homeownership decisions of young adult children who experienced parental foreclosure. The results show that they were less likely to become homeowners when parental foreclosure happened. The foreclosures between 2009 and 2011 had the strongest negative effects; yet, young adults appeared to postpone rather than giving up homeownership. The parental foreclosure effects did not seem to operate through neighborhood effects or common economic shocks, but the foreclosure effects exceeded the positive effects of savings, making homeownership less likely among foreclosure witnesses who saved than those who did not. In sum, the delay in young adult children’s homeownership reveals a reinforcement effect of a housing market downturn but limited effects on the wealth accumulation of the affected children.

Identifying the Exclusionary Effect of Across-Platform Parity Agreements

Although across-platform parity agreements (APPAs) are increasingly scrutinized, their exclusionary effects remain ambiguous. This article posits that the practice can either prevent entry or lead to the exit of rival platforms. Assessing this foreclosure effect presupposes, however, using one of the available tests, namely, the no economic sense test, the as efficient competitor test, and the consumer welfare test. Whether APPAs lead to the foreclosure of rivals depends ultimately on the applied test and, sometimes, on the way the test is applied. This reflects the paradox of APPAs. In an effort to identify the most appropriate test to deal with APPAs’ foreclosure effect, this article also suggests that the consumer welfare test is far superior to the others.

Saving Strong Neighborhoods From the Destruction of Mortgage Foreclosures: The Impact of Community-Based Efforts in Detroit, Michigan

Mortgage foreclosures hit Detroit, Michigan hard between 2005 and 2014, especially in what we define as strong neighborhoods; there, more than one third of homes experienced foreclosure. Before the crisis hit, these selected tracts had largely intact physical environments and higher owner occupancy, household income and property value than the citywide median. In some of them residents worked intensely to abate the neighborhood effects of mortgage foreclosures. This study examines those efforts’ effectiveness. We selected neighborhoods with the most extensive efforts, as measured, for instance, by creation of community-based plans and applications for grants, and we conducted interviews and field observations to examine those efforts. To assess strengthening of neighborhood housing markets, we applied a modified adjusted interrupted time-series approach to evaluate changes in prices as one measure of neighborhood change. We found that strong resident initiative supported by community development organizations and external assistance led to increased neighborhood housing prices, compared with comparable neighborhoods. However, when initiative, context, and support were weaker, community-based efforts could not prevent considerable decline.

Well-Being and Large Financial Shocks: Evidence from Foreclosures between 2008-2014

Abstract This paper explores the causal effect of foreclosure on individual well-being and social capital. Using plausibly exogenous variation in the timing of interest rate changes on different types of adjustable rate mortgages (ARMs), we find that a 10% rise in foreclosures is associated with a 0.58% and 0.28% decline in current and expected future life satisfaction. These effects are primarily driven by the effects on local optimism and social capital. The results are consistent with models of spatial externalities where large-scale shocks generate adverse effects on communities, not just individuals.

Foreclosures and the Labor Market: Evidence from Millions of Households across the United States, 2000-2014

We exploit the staggered and discontinuous changes in interest rates among adjustable rate mortgages to identify the effects of foreclosures independently of housing prices. First, interest rate resets predict foreclosure, accounting for up to 18% of the change in foreclosures. Second, a 10% rise in foreclosures is associated with a 1.14% and 2.57% decline in non-tradables employment and hiring, respectively, accounting for up to 10% of the decline in the hiring rate between 2006-2011. Third, we introduce a new mechanism independent of housing prices whereby foreclosures reduce local optimism and raise uncertainty, thereby leading to a contraction of credit that affects hiring, especially small businesses.

Are Walkable Neighborhoods More Resilient to the Foreclosure Spillover Effects?

Since 2007, many studies have explored the price spillover effect of foreclosures. However, none has examined the potential moderating effects of built-environment characteristics such as walkability. By using the interaction term between neighborhood foreclosure and walkability, this study found that property values in walkable neighborhoods were less subject to foreclosure spillover, but this was only significant for middle/high-income neighborhoods. Walkable neighborhoods were shown to offer more advantages in maintaining neighborhood stability during the recovery of 2013 than in the market crash of 2010. This study supports development strategies and policies that include walkability to achieve neighborhood stability and livability.

Invited Commentary: Foreclosures and Health in a Neighborhood Context.

Recent systematic reviews link foreclosure to worse health at both the individual and population levels. In this issue of the Journal, Downing et al. (Am J Epidemiol. 2017;185(6):429-435) add to what is known about foreclosure and health by examining annual measures of glycemic control in relation to local foreclosure activity. They provided evidence that between 2007 and 2010, glycemic control was not associated with rates of completed foreclosure among a continuously insured managed-care population of persons with type 2 diabetes living in 9 California counties. In this commentary, I consider 5 possible interpretations of the null results: 1) foreclosures do not affect health in general, 2) glycated hemoglobin is insensitive to local foreclosure activity, 3) the presence of real estate owned foreclosures (rather than the competed foreclosure rate) affects health, 4) an integrated health-care delivery system buffers patients from the effects of the foreclosure crisis, and 5) community conditions and responses to the foreclosure crisis buffer patients from the effects of the foreclosure crisis. I close by arguing that research on the contextual effects of foreclosure on health should continue despite the ongoing recovery of the housing market.

Is something better than nothing? The impact of foreclosed and lease-purchase properties on residential property values

Lease-purchase (L-P) programmes that rehabilitate foreclosed property for sale as affordable housing may provide a way to reduce foreclosure externalities on nearby property values. This paper investigates the feasibility of such a strategy by estimating the effects of foreclosed properties on nearby residential property values compared with those of an L-P programme operated by the Cleveland Housing Network, Cleveland, Ohio. The findings indicate that although both L-P and foreclosed properties have a negative effect on the value of nearby non-distressed homes, the negative effect of foreclosure is larger. At the same time, the scope of the foreclosure externality is greater in low- and moderate-income neighbourhoods, while the foreclosure externality is generally smaller in high income neighbourhoods. Such results imply that an L-P strategy is likely to be more effective in offsetting foreclosure externalities in low- and moderate-income neighbourhoods than in high income neighbourhoods.

The Effect of Neighborhood Density and GIS Layout on the Foreclosure Contagion Effect

Agent-based modeling and simulation has been used to examine the effects of foreclosures on property values and the overall health of the property market. Past agent-based simulations simplistically use an equally-spaced grid structure for the layout of the properties. This simple spacing does not reflect the actual size and dispersion of properties. Instead, we use GIS models of actual neighborhoods to study the impact of size and spacing within a real estate agent-based simulation to investigate the foreclosure contagion effect. The topologies of five neighborhoods in Virginia Beach, Virginia were uploaded into an agent-based simulation using publicly accessible GIS data. The results indicate that non-linear pricing changes occur within the neighborhoods. Moreover, the density of a neighborhood is a significant determining factor in explaining differential results.

The Effect of Seller Ownership and Financing Choices on the Selling Price of Foreclosed Homes

Numerous studies have examined the effect of foreclosures on the selling prices of residential properties, but few have considered whether ownership and financing terms affect selling prices. The findings indicate that investor-resale properties sell at a significant premium relative to comparable properties sold by commercial banks, while GSE-owned properties sell at a slight premium. Also, cash buyers are able to negotiate lower prices from sellers.

Exposure to Neighborhood Foreclosures and Changes in Cardiometabolic Health: Results From MESA.

Home foreclosures can precipitate declines in health among the individuals who lost their homes. Whether home foreclosures can "spillover" to affect the health of other neighborhood residents is largely unknown. Using longitudinal data from the Multi-Ethnic Study of Atherosclerosis that were linked to foreclosure data from 2005 to 2012, we assessed whether greater exposure to neighborhood foreclosures was associated with temporal changes in 3 objectively measured cardiometabolic risk factors: body mass index, systolic blood pressure, and fasting glucose level. We used fixed-effects models to estimate mean changes in cardiometabolic risk factors associated with changes in neighborhood foreclosures over time. In models in which we controlled for time-varying income, working status, medication use, neighborhood poverty, neighborhood unemployment, and interactions of age, sex, race, and state foreclosure laws with time, a standard-deviation increase in neighborhood foreclosures (1.9 foreclosures per quarter mile) was associated with increases in fasting glucose (mean = 0.22mg/dL, 95% confidence interval: -0.05, 0.50) and decreases in blood pressure (mean = -0.27mm Hg, 95% confidence interval: -0.49, -0.04). Changes in neighborhood foreclosure rates were not associated with changes in body mass index. Overall, greater exposure to neighborhood foreclosures had mixed associations with cardiometabolic risk factors over time. Given the millions of mortgages still in default, further research clarifying the potential health effects of neighborhood foreclosures is needed.