Monday, April 6, 2009

Half of foreclosures due to sickness and medical bills

In a legislative meeting Friday I heard an amazing statistic from a realtor – that half of foreclosures are due to medical bills. This doesn’t surprise me, many of our clients have health problems that threaten their ability to pay the mortgage. Previous studies have found that half of bankruptcies are due to high medical bills. But still many people in the meeting were surprised to hear the connection. It is not well-reported. This blog featured a March 15th Courant article about a family’s bankruptcy to avoid foreclosure and noted that the precipitating factor, an illness that led to a lost job that led to the financial problems, was buried in the 8th paragraph.
Searching the internet to find the realtor’s source, I found “Get Sick, Get Out: The Medical Causes of Home Foreclosures”, a study by Christopher Robertson, Richard Egelhof, and Michael Hoke at Harvard Law School. In a study of foreclosures in four states, they found that medical illness and high bills caused half (49%) of the cases of families losing their homes and were involved in seen out of ten. Thirty two percent were due to illness or injury, 23% due to unmanageable medical bills, 27% due to lost work resulting from a medical problem, and 14% due to caring for a sick family member. Thirty seven percent of respondents paid more than $2,000 out of pocket for health costs, 30% missed two or more weeks of work due to illness or injury, 8% were disabled and unable to work, and 13% used home equity to pay medical bills. The authors recommend legally suspending foreclosures during a verifiable medical crisis as a policy option to address the housing crisis.
Ellen Andrews