Lack of emergency savings could lead to higher home foreclosure rates and reliance on high-cost lending products
Phoenix, AZ – Neighborhood Housing Services of Phoenix is encouraging prospective homebuyers in Maricopa County to come in to its offices for a personal financial review
following a new national survey that found that nearly one-out-of-three adults or more than 70 million people around the county have no emergency savings.
“Emergency savings are an important buffer against unforeseen financial crises,” said Patricia Garcia Duarte, Trellis President & CEO. “Relying on credit cards or highcost,
short-term loans from payday lenders or title companies could quickly compound a consumer’s money troubles.”
According to the survey by NeighborWorks America, approximately one-out-of-seven consumers would use a title loan or a payday loan to pay for a major purchase. These
loans are extremely expensive, with annualized interest rates that often exceed 100 percent. Recently the Consumer Financial Protection Bureau found that 80 percent of
payday loans are rolled over into new payday loans instead of being paid off.
“We’re in the midst of National Financial Capability Month and all of us here at NHS Phoenix want to help prospective homeowners build a plan for a stronger financial
future,” said VP, HomeOwnership Manager Chris Smith.
Although the recession is over, unemployment and underemployment are still big issues in the Maricopa County communities served by Trellis. Data show that home
foreclosure is closely related to loss of income or reduction in income.
“No one wants to fall behind on their mortgage or enter foreclosure,” said Chris. “But we know that more than 60 percent of foreclosure cases are because of lost or reduced
income. Having a strong financial plan in place that includes emergency savings can be a buffer when a serious financial crisis occurs.”