The threat of foreclosure usually occurs after months, years, even decades of slipping behind on finances. For some families, foreclosure is the result of an immediate and unforeseeable event such as an accident, medical condition, job loss, or the death of a breadwinner. According to reports, 6.5 million homeowners have already lost their homes to foreclosure since the housing bubble burst in 2008. For most of these homeowners, the most identifiable cause of foreclosure was unemployment. Losing a job doesn’t just mean a temporary lack of income, it can mean the inability to pay a mortgage. While homeownership was supposed to be a security blanket, homeowners also weren’t able to tap into equity because of depressed housing values.
Facing foreclosure can be overwhelming, especially when there are children involved. According to a study conducted by the Federal Reserve Board of Governors in a partnership with Northwestern University, many homeowners were able to protect their homes against foreclosure with their unemployment insurance benefits. The reports indicated that between July of 2008 and December 2012, an estimated $250 billion in federally funded unemployment was used to pay mortgages to prevent foreclosure. This means that there were more homes saved through unemployment benefits than through the Home Affordable Modification Program (HAMP).