If, due to foreclosure, you have a vacant property that is not being cared for, your neighbors will no doubt take notice of your mail box crammed full of notices.  This unsightliness is only a small reflection of an even more unkempt property—overgrown weeds and peeling paint—all of which affects the value of not only your property, but that of everyone else’s in your neighborhood.  In turn, this situation will make it problematic for your neighbors to sell their properties, since the unsightliness will drag down the values of their homes.

In reaction to your unsightly property, your neighbors will call the code enforcement authorities to report your infractions.  However, since you are in foreclosure, you will not want to spend money to maintain a property that you are about to lose.  Still, if you violate the codes, then you will have to pay fines; and if you are incapable of paying them, then the law suit will be against your property, which in turn may hinder your attempts to sell it.  Furthermore, the fines will not disappear even if you do sell the property, or even if the bank takes over your title.  So now on top of your late mortgage payments, you will need to pay these fines in order to clear the title to your property.

When banks foreclose and sell homes for prices far below market value, this increases the burden on surrounding property owners, including condominium associations, because if homeowners stop paying their loans and the properties are foreclosed, then the new owners have to pay the loans.  In this case, these properties will have to bear the liens from the homeowners association, and these liens would be negated by the foreclosure.  Also in this instance, you will need to pay for the maintenance that was paid by the association, and this might further contribute to the increase in the rates of foreclosure.

In some cases, however, the property is maintained by a bank or other mortgage holder, because the bank desires to earn a high interest rate in the future, which in turn would help it to earn large profits within a short period of time.  Usually, though, the bank will not pursue this more greedy strategy.  Instead the bank will force the owner to give up the title of the property so that the bank can sell the bank at auction as quickly as possible.

In short, you need to know the long-term effects of foreclosed homes on your neighborhood. If you are not able to sell the foreclosed property, then the value of the property may go down continuously, thereby making the property more difficult to sell, both in terms of its price as well as in the timing of its sale.  In this way, your neighbors’ well-maintained properties will lose value.  The process often continues in a downward spiral.  As you can see, failure to pay your mortgage payments will not only affect you, but your neighbors as well.