Foreclosure & Divorce: The Unexpected Link
While the foreclosure crisis continues to wreak havoc on homeowners across the country, more and more unexpected side effects of a tight housing market are coming to light. Traditionally, divorce has been cited as a potential causal factor in foreclosure cases, but with the weakening economy and slouched housing market, foreclosure may play a new role in divorce proceedings.
According to the County Press, Michigan couples looking to separate or divorce are finding that ending a relationship is no longer as simple as moving out and starting over.
Apparently, in traditional divorces, one spouse buys out the other (to keep the family home) or the couple agrees to sell the house and split the profits. But, with unprecedented numbers of abandoned homes, declining property values and record mortgage debt, many are evidently finding they can't afford a buyout. And, with so many recently-foreclosed properties on the market, selling a home is harder than ever.
Plus, sources indicate that, in places like Michigan where the job market is slow, layoffs and salary cuts often mean that even one partner moving to an apartment is often financially out of the question.
Between 2002 and 2005, Lapeer County, MI foreclosures reportedly hovered at around 200 per year, with about 17% of those redeemed by homeowners before being put back on the market. Since the housing bubble began to burst, though, it seems foreclosure rates have skyrocketed, with 376 in 2006 and 642 last year.
Redemptions have apparently plummeted to barely 5%, meaning that more families are losing their homes than ever.
One woman reportedly had to live with her husband for several months after they decided to divorce, which proved disastrous for their long-term relationship. Evidently, the tension of the situation led to strong negative feelings, which she expects to have damaging effects on future interactions with her ex-husband and their children.
In a Law.com article, California judges and lawyers are quoted as witnessing similar problems to those in Michigan. One family court judge reportedly estimates that couples request to sell their family home before a final ruling has been made four times as frequently as before the housing bust.
Many families, it seems, are struggling with mortgages and need the money of a quick sale to avoid foreclosure proceedings. Sources indicate that judges have also begun ordering the sale of a home more often in cases where couples can't agree on what action to take, again to help families avoid foreclosures.
Plus, job loss can mean reduced income available to pay child support. More troubled spouses are evidently turning to counseling in an effort to keep their homes long enough to outlast the soft market and sell it at a time when doing so would be more profitable.
As the foreclosure crisis continues to unravel the country's housing market and economy, more unexpected side effects will likely emerge.