Spike in Homeless Due to Bank Owned Foreclosures Increase

by Peter Vernon on Foreclosure Crisis

A growing number of American families who lost their homes to bank owned foreclosures are placed in motels or homeless shelters. Most homeless people are crowding out shelters which forced some states and cities across the United States to find alternative housing.

In Massachusetts, an increasing number of families are holed up in motels due to rising unemployment and bank owned foreclosures rates. This cost the state about $2 million monthly in taxpayer’s money but it provided a lifeline to a great number of desperate families.

Homeless shelters in the state are working in their full capacity. Under the state law, temporary accommodation should be provided to people who are homeless, leading state officials to place about 830 families in 39 motels. These numbers include 1,125 children.

Boston Health Care for the Homeless family team director Nancy Paladino said that the current number of homeless people is the highest the state has ever seen.

Some cities in the country are reporting similar trend. In Indianapolis, Indiana, homeless families are being turned away by overcrowded shelters, forcing many of them to seek vouchers for motels provided by nonprofit organizations, such as the United Way.

Coalition for Homeless Intervention and Prevention Indianapolis director Michael Hurst confirmed the increase in the number of homeless Americans living in motels this year.

In Phoenix, Arizona, the demand for immediate accommodation is becoming a burden to some services as the economic downturn and the unabated bank owned foreclosures problem continue to force families out of their properties.

According to advocacy agencies and homeless services providers, about 80 percent of homeless people lost their properties due to foreclosures. A report released by homeless advocacy groups noted that staying with friends or family and in homeless shelters are the most common living conditions for families who lost their homes to foreclosures.

Hotels and motels are starting to become the next housing options for homeless people. National Coalition for the Homeless executive director Michael Stoops said that many homeless shelters are already full and so the only option for families to stay together is to shell out $200 per week to rent a motel room.

Stoops said that staying in motels is a standard option for many families who saw their properties turned into bank owned foreclosures.