What to do when your neighbor is near foreclosure
A foreclosure in your neighborhood can be a stressful time -- not just for the family losing its house, but for the whole block. The ramifications are both personal and practical: As friends move out, property values will probably take a hit. The Center for Responsible Lending estimated a few years ago that foreclosures would cost neighbors hundreds of billions of dollars.
But you can ease the transition for both your neighbor and your neighborhood -- and you might prevent worst-case scenarios. Here are a few ways you might be able to help, and a couple of ways not to:
Empathize, don't ostracize. "A real neighbor is someone who is willing to lend a hand when they need help, just as easily as you would lend sugar if they needed that," says Richie Frieman, Macmillan Publishing's Modern Manners Guy. He adds: "Even if you were not a big fan of said neighbor, having to watch someone lose their home is so life-altering that even the harshest grudge should be lifted."
Your compassion has pragmatic benefits to you, too, says Marki Lemons of Keller Williams Realty, who bills herself as Chicago's "queen of foreclosures." It motivates your neighbors to stay engaged with the community, and makes it easier for you to obtain contact information before their forwarding-address postcards expire. Don't let them detach emotionally, because then they're more likely to lash out -- by, say, stripping their property.
Cut the lawn, water the plants, clean the pool. Overgrown grass, weeds and wilted flowers contribute to blight and drag down the neighborhood, and unoccupied houses are more vulnerable to vandalism. But first get the owner's permission and make sure you're not going to be accused of trespassing, as Investopedia advises. Lemons suggests a further step: If the owner is moving out, "ask for a copy of the keys and a letter stating you have the right to use the keys." That way you can easily give police access if necessary.
Keep watch over the house. Vandals, thieves and scammers prey on vacant homes, so set up a neighborhood watch and call the police if you see any suspicious activity. You and your neighbors can also call police if the property falls into serious disrepair and violates code; Bankrate.com has detailed advice about how to get cops' attention.
Know any great real estate pros? Provide referrals. "Seventy percent of foreclosed owners never even talk to a real estate professional about their rights," says Realtor Heather Gennette of Orange County, Calif., whose brokerage deals primarily with short sales and foreclosures. The right adviser might be able to help your neighbor avoid foreclosure altogether with a mortgage modification or a short sale. "Sometimes, even in the 11th hour, we are able to stop the foreclosure, sell their home to a person they choose and get them a little money to move," Gennette says.
Offer space while the family is transition, either for belongings or for the neighbors themselves -- but only if you mean it and feel comfortable doing so. "The most important thing folks should never do is to ignore their struggling neighbors because they don't know what to say or how to act, or believe that the neighbor would be uncomfortable having any contact with them," says licensed psychotherapist and relationship coach Toni Coleman, who has experience working with the grief caused by foreclosure. "Instead, they should say very simply that they are sorry -- and offer assistance if they are truly willing to give it."
Offer to babysit, pack boxes, bring over pizza, whatever. Your neighbor could probably use the help -- and maybe you'll help free up time that the neighbor can devote to a job search.
Don't forget about the kids. If the neighbors stop paying association fees, they lose access to shared facilities, Realtor Karyn Anjali Glubis of Tampa Bay, Fla., points out. She suggests including the children in community clubhouse activities so they don't feel left out.
Listen, but don't be nosy. Maybe the neighbor's financial distress was avoidable and maybe it wasn't -- it could have its roots in a layoff, divorce, adjustment of a mortgage rate, bad luck. Does it matter?
Don't be gossipy, either -- for your sake as well as your neighbor's. If you signal your neighbor's financial distress to prospective buyers, or worse, to buyers of another neighbor's property, the property may sell for less -- and that means you've lowered your own property value, too.
