Why it matters if your neighbor's struggling to pay the mortgage

Filed in archive mortgage tips on July 9, 2009

You might not want the federal government to bail out your neighbors who took out bad mortgage loans and now can't pay their monthly bills on time.

Most of them were greedy, you might say. They took out odd mortgage loans with artificially low initial interest rates all so they could move into a house they couldn't really afford in a neighborhood that was out of their price range. These homeowners should suffer the consequences for their bad decisions.

Now, I've debated this whole thought process before. I've argued that most homeowners facing foreclosure these days aren't doing so because they were greedy. Most are suffering because they've lost their jobs or are suffering a serious illness.

But that isn't what this particular blog post is all about. Today, I'm telling you why you should care that your neighbors don't lose their homes, even if you think it's unfair for them to get bailed out: Simply put, you don't want your home surrounded by foreclosed properties.

Foreclosures drag down housing prices for everyone else. If you need to sell your house, it's awfully hard to compete with the foreclosed property going for $100,000 less than market value.

Foreclosed homes also attract trouble if they're empty. They're often clogged with weeds or marked with broken steps or windows.

You really don't want foreclosed homes on your block. And that means one thing: You don't want your neighbors, no matter how greedy or stupid you think they were, to lose their homes to the bank.