Foreclosures Lead to an Increase in Murders and Suicides

NEW YORK (MainStreet) — When Michael Jace was arrested for murdering his wife of ten years, it was widely reported that the Los Angeles actor owed $411,000 on his family home and that it was on the brink of foreclosure.

"Financial strain over a period of time can cause a person to do desperate things," said Richard J. Martin, vice president and senior loan officer with Sterling National Bank. "In this case there is also a bankruptcy which can be extremely stressful and very embarrassing for a public figure."

The "Shield" actor and Alice Jace were allegedly arguing about finances when he shot and killed her. Records show Jace filed for bankruptcy protection in 2011 listing debts up to $1 million. He also owed more than $22,000 in state and federal income taxes and more than $20,000 to the state of California for 2008.

"I am not sure how killing his wife accomplished anything unless she was an additional source of unknown stress and he just snapped," Martin told MainStreet.

While there's no excuse for violent outbursts, an American Journal of Public Health study found that the foreclosure crisis has likely contributed another form of harm, this one self-inflicted: a rise in suicide rates since 2005, independent of other economic factors.

"Beyond wiping out the family's main asset, foreclosures have other harmful effects on the homeowner and surrounding community," said Kevin Stein, associate director with the California Reinvestment Coalition (CRC). "Recent studies link foreclosures to increased incidents of suicide and high blood pressure."

Homeowners in California like Jace are facing unreasonable delays, obstacles and run-arounds from their mortgage servicers despite new laws, programs and settlements intended to protect them, according to a CRC survey.

"When homeowners don't qualify for help or are incorrectly denied help from their bank, they will likely lose their home whether it's through foreclosure or a short sale," Stein told MainStreet.

As a result, homeowners are not receiving access to much-needed relief to avoid foreclosure.

"The very laws and regulations intended to protect the consumer are bogging down the system," Martin said. "Lenders that have to abide by these rules are afraid to interpret them incorrectly and as a result they take an overly conservative stance. This has the effect of making the mortgage process more onerous on the consumer."

While many homeowners don't qualify for assistance, others fall through the cracks when banks transfer servicing to outside companies, such as Nationstar and Ocwen.

"A homeowner may be halfway through a modification, but when their loan servicing is transferred, the new servicer forces them to start over from square one," said Stein. "Or they may already have a modification but the new servicer fails to recognize it and moves to foreclose on them."

The state of California passed a Homeowner Bill of Rights that includes the ability to sue a bank if it doesn't abide by the law.

"We believe this mechanism is a powerful way for a homeowner to hold their servicer accountable and that the law is making a difference in forcing loan servicers to comply with rules," Stein said. The City of Los Angeles, for example, is reportedly suing three big banks because of the $481 million it lost in property tax revenue due to foreclosures after predatory mortgages.

"The most important thing that homeowners can do if they are having a hard time making their mortgage payments or dealing with their loan servicer is to contact the nearest HUD-approved nonprofit housing counseling agency," Stein said. "These agencies are mission driven to help community resident, and have developed expertise in dealing with loan servicers." Other solutions include filing a complaint with the CFPB website and finding a housing counselor with the U.S. Department of Housing and Urban Development website or call 800-569-4287.

--Written by Juliette Fairley for MainStreet

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