Why do foreclosures remain stubbornly high is some parts of Alabama?
The so-called Great Recession of 2008 is slowly fading into the rearview mirror of the nation's psyche. In Alabama and across the nation, the financial crisis resulted in a number of homeowners losing their homes through foreclosure. While foreclosures in the state are not as widespread as they were during the height of the housing market collapse, some residents of Alabama still face the potential of losing their homes.
Foreclosures in Calhoun County
One particularly hard hit area continues to be Calhoun County, where home foreclosures during the first three months of 2016 were still above pre-recession levels. The county is also struggling with a jobless rate that is higher than the unemployment rate across Alabama. Not only are foreclosures stubbornly high, they were actually up in the first quarter of this year compared to the last quarter of 2015. Even worse, the number of foreclosures thus far in 2016 is higher than in the quarters leading into the 2007 recession. Meanwhile, elsewhere in the state, foreclosures have declined and the housing market is strong and improving.
As many homeowners may recall, the worst recession since the end of World War II led to a housing market collapse in Alabama and across the country. In the wake of the downturn, there were millions of layoffs and this triggered a spike in foreclosures. It became a vicious cycle as home values tumbled, sometimes below the value of the underlying loans, causing a foreclosure ripple effect.
Defense Layoffs
Calhoun was particularly hit hard by the hundreds of layoffs in the county's defense industry due in part to military budget cuts. Many of the jobs have never been replaced, and the county's unemployment rate of 7.2 percent in February was higher than the state average of 6 percent. As a result of the jobless rate and lingering foreclosures, home sales in the county remain tepid.
Nonetheless, housing markets elsewhere in the state have recovered, and while the foreclosure rate is still high in Calhoun County, some industry experts believe recent foreclosures there are not being caused by job losses, but rather other life circumstances, such as illness, death and divorce.
There is hope, however, as some lenders may work with homeowner's to avoid foreclosure through loss mitigation, or a short sale. A homeowner also has the option of filing for bankruptcy in an effort to stop a foreclosure and possibly save the family home. In the end, if you are having trouble paying your debts, including your mortgage loan, an experienced bankruptcy attorney can help you explore all your options.