How to Help a Friend Facing Foreclosure

How to reach out and help your friend when they're facing hard times.

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You don't need to go very far to find someone whose home is in foreclosure. According to RealtyTrac.com, one in every 666 housing units received a foreclosure filing in June 2012. And that's for just one month. Even though they may not talk about it at the next BBQ, there's a good chance that you know someone who either has lost their home or is facing that possibility.

Naturally you want to reach out and help your friends who are facing hard times. But sometimes it's hard to know what's the best way to do that. So let's examine how to help friends who are in foreclosure.

Ryan Howell, co-founder of BeyondThePurchase.org and associate professor of Psychology at San Francisco State University, suggests that losing your home is similar to "the Stages of Grief: (1) Denial - 'foreclosure happens to other people' (2) Anger - once foreclosure happens, there is a lot of self-blame and shame involved (3) Depression - there is a great deal of sadness that you let your family down and (4) finally, Acceptance."

How can you help friends through those stages? Begin with what your friends need at this critical time. Start with the obvious. They'll need a place to stay and a place to store their stuff.

Your friends may have trouble finding a rental. Many rentals require an application that asks for proof of income, references from past landlords, and a credit check. Any or all of these could be a problem. Some landlords are more understanding, but it can take time to find them. You might be able to help your friend by making some phone calls for them to help find appropriate rentals for them to consider or providing shelter for a short time.

Can you help with storing furniture, clothing, or kitchen utensils until they find a new home? For many, losing their home means that they could potentially lose many possessions as well—some irreplaceable. Others can be replaced, but at a hefty price. Public storage is often not an option. The monthly fees are more than their restricted budgets can handle. Offering to park your car in the driveway and making the garage available for storage could be huge.

Once your friend finds a new home, help them adjust. Find ways to brighten their new residence. A small housewarming gift, such as flowers or a plant, can make it feel more homey. Offer to throw a painting party for them if the landlord wouldn't object.

Be cautious about giving gifts that are unaffordable for your friend. While they may appreciate the thought, an expensive gift could be a reminder that they are dependent on friends.

Your friend may be having a hard time spending a lot of time in their new, smaller home. Getting out could be good mental therapy. Look for low-cost activities that you can do together. An invitation to join you to watch a little league game doesn't need to cost anything. It might even be time to ask them to join you on that three-times-a-week walking regiment you've been promising yourself to start.

If you're involved with any volunteer work, see if your friend would like to volunteer, too. Helping others has a great way of making us feel better about ourselves and our situation. It's hard to stay focused on our problems while we're busy helping others overcome their problems.

Be prepared to provide a friendly ear. Most of us find it hard to talk about events that we perceive as a personal failure. We tend to keep our feelings inside. Having an opportunity to “talk out” our feelings can be helpful. You don't need to provide solutions. Just being there is often enough.

Howell summarizes it this way: "It is always best to help a person see that they might benefit from a therapist who can help them move past the anger and depression. A therapist can help a person accept that the event, regardless of the reasons, happened and can't be changed. As a friend you can help someone with feelings of depression by being supportive and helping the person see there is 'a light at the end of the tunnel'—that this situation is tough, and they will feel anger and sadness, but you will be there with them while they feel these emotions and help them in any way you can until they are through the tunnel."

Gary Foreman is a former financial planner who founded The Dollar Stretcher.com website. He's written on many personal finance topics, including an article on helping needy friends.