The Emergence of Post-Traumatic Foreclosure Disorder

By William Hudson

The daily calls haunt Neil Garfield and his staff.  Homeowners facing foreclosure vacillate through a predictable cycle of fear, helplessness, betrayal, confusion, powerlessness and sometimes the desire for retribution. Some callers display a pressured, almost manic-like urgency to correct their situation while some are so beaten down they are complacent. There are also the calls from homeowners who learn that they waited too long- and there is nothing else that can be done. The feeling of hopelessness and despair are palpable.  Many homeowners will prevail against their loan servicers and many will lose, but all will come away from the experience emotionally altered.

The way people react to foreclosure varies depending on personal factors including resiliency, family support, other resources available to them and the expectation of recovering from the set back. These factors are usually complicated by the degree of injustice suffered at the hands of their loan servicer or the judicial system. The people who have had loan modifications revoked, have discovered evidence of fraud, have had their homes broken into by the banks, or have been victims of a bank deliberately engineering a default through lies and disinformation- tend to be the most impacted. It is one thing to fall behind on your mortgage and go through a relatively quick foreclosure, but quite another when you spend years in litigation while the bank’s attorneys play unethical games and engage in illegal activity often with the court’s complicity.

If you have gone through a foreclosure or are in the process, you may be suffering from “Post-Traumatic Stress Disorder (PTSD)”.  But perhaps it is time to coin a new disorder specifically for those who have gone through foreclosure called “Post Traumatic Foreclosure Disorder (PTFD)”.  Although it is not an actual syndrome, perhaps it should be. Although the symptoms would reflect those found in Post Traumatic Stress Disorder- they would be tailored to the experience of foreclosure.  PTSD is a disorder that can be debilitating and tends to affect people who have encountered life events that fall outside the normal experience. Soldiers, survivors of natural disasters and people who have been victimized often have PTSD.  Perhaps Post Traumatic Foreclosure Disorder should be added to the DSM-5, also known as the Diagnostic and Statistical Manual of Mental Disorders- in light of the fact that there are millions of Americans suffering from the disorder after going through foreclosure. The affected might not understand why they can’t “get over it” and why years after the foreclosure- they don’t feel “right”. Perhaps mental health workers should take notice of the mental health toll that occurs with foreclosure and the aftermath. This article is not medical advice, is not for medical diagnosis- but is a brief exploration of foreclosure’s impact on mental functioning.

For creative purposes I will refer to symptoms of the fictitious Post Traumatic Foreclosure Disorder as a disorder similar to Post Traumatic Stress Disorder. However, if you seek medical assistance please don’t state you may have Post Traumatic Foreclosure Disorder- although most health care workers will understand what you are trying to say.

After a stressful event like foreclosure, symptoms may start within three months of the onset of a traumatic event, but sometimes symptoms may not appear until years after the event. The symptoms of Post Traumatic Disorders that result from foreclosure may cause significant problems in social or work situations and in relationships; and in overall life functioning.

PTFD symptoms might be grouped into four types similar to those in diagnosing Post-Traumatic Stress Disorder (an actual psychiatric disorder): intrusive memories, avoidance, negative changes in thinking and mood, and/or changes in emotional reactions.

Intrusive memories

Symptoms of intrusive memories may include:

  • Recurrent, unwanted distressing memories of foreclosure, lawsuits, key events
  • Feelings of guilt for allowing the foreclosure to occur and impact on family
  • Extreme anger about the bank’s tactics or the court’s refusal to enforce the law
  • Upsetting dreams about the traumatic event, waking up with panic attacks
  • The destruction of reputation especially if the foreclosure was caused by layoffs, health issues, etc.
  • Replaying the details of the foreclosure, the lawsuit, the loss of home or a betrayal event
  • Severe emotional distress or physical reactions to something that reminds you of the event including panic and anxiety attacks, depression, thoughts of suicide, etc…


Symptoms of avoidance may include:

  • Trying to avoid thinking or talking about the event despite the huge impact of the foreclosure
  • Refusing to drive by the home or even drive through the part of town where the home was located
  • Avoiding places, activities or people that remind you of the foreclosure including courts, attorney offices or even driving by a building with the name of the bank
  • Refusing to purchase a new home because of servicing fears

Negative changes in thinking and mood

Symptoms of negative changes in thinking and mood may include:

  • Negative feelings about yourself for causing the foreclosure (even if it was beyond your control)
  • Negative feelings about attorneys who may have poorly defended the case or didn’t deliver on promises
  • Anger over the courts that blatantly ignored evidence and made erroneous presumptions that were untrue- or simply denied the homeowner due process
  • Inability to experience positive emotions- a feeling that the entire system is rigged
  • Feeling emotionally numb- a sign of depression
  • Lack of interest in activities you once enjoyed
  • Hopelessness about the future- the feeling you will never recover from the financial setback
  • Memory problems, including not remembering important aspects of the traumatic event
  • Difficulty maintaining close relationships

Changes in emotional reactions

Symptoms of changes in emotional reactions (also called arousal symptoms) may include:

  • Irritability, angry outbursts or aggressive behavior- the feeling that you must protect yourself
  • Always being on guard for danger- trust is diminished in people and the system
  • Overwhelming guilt or shame
  • Self-destructive behavior, such as drinking too much or driving too fast
  • Trouble concentrating
  • Trouble sleeping
  • Being easily startled or frightened
  • Shame- another negative and paralyzing emotion

These are only some of the symptoms that may manifest.  Even if a mental health crisis does not result in a traumatic disorder, foreclosure is a stressful event.  Although not all people will experience stress disorders, other mental health disorders may surface include anxiety disorders, depression, sleep disorders, eating disorders and substance abuse issues.

It is devastating that banks are being permitted to create not only a mental health crisis but a medical crisis as well. The threat of losing a home can be stressful enough to make a homeowner physically ill. Researchers at Princeton have shown a correlation exists between foreclosure rates and people’s health with an increase in hypertension, diabetes and anxiety-related visits (Kalita 2011). The researchers also found that suicide attempts rise in proportion to the increase of foreclosures.

Foreclosure increases the number of mental health disorders and is one more consequence of the American Banking cartel. It has been found that a health crisis or a job loss is the main reason for foreclosure and yet foreclosure further exacerbates health issues and unemployment (Robertson et al, 2008).  Although stress is a normal part of life, high levels of anxiety, shame, uncertainty, fear and financial devastation contribute to physical and mental illness. However, the long term deleterious consequences of foreclosure are still unknown.

Regardless of their psychological health before the crisis, high degrees of stress affect both grownups and children and last for extended periods. Such a situation can develop into enduring psychiatric ailments that become lifelong ailments if not properly managed (Lashley et al., 2009).  Unfortunately no long-term studies have been done on the mental health of children that go through the uncertainty and trauma of foreclosure. However, researchers have noted that children in afflicted households face the effects of foreclosure and associated financial problems, indicating that mental health practitioners need to develop workable strategies to empower family members to develop resiliency in managing their current economic reality. The children might exhibit psychiatric symptoms, or the impact might be evident in their emotional growth. Some children might develop social functioning difficulties or demonstrate sub-clinical levels of depression.  Foreclosure probably contributes to poor academic performance.  The long-term effects of foreclosure are simply not known at this time- but it appears that the prognosis is not good.  It is known that parents who are under severe stress are unable to parent at a high level.

Foreclosure also leads to other complications.  The humiliation of a foreclosure is broadcast for all to see by being posted on the internet or by nailing foreclosure notices to the front door for all to see. Foreclosure and bankruptcy were once relatively private affairs for the most part- but now families are shamed by Notices of Default displayed on the internet that will never disappear. When a person’s name is ‘googled’ the foreclosure entries are prominently displayed. The foreclosure posts may also impact future employment opportunities. Perhaps litigation should be passed that would remove all derogatory information about foreclosure seven years after the event. The fact that someone should live with a lifelong stigma because of an event that may have been beyond their control is unjust. It is easy to see why people remain traumatized after foreclosure.

The fact remains that the true health risks of foreclosure can’t be quantified. It isn’t only the foreclosure that is traumatic but the resulting fallout including deficiency judgments, IRS 1099 forms, relocation, divorce, loss of social standing, new neighborhoods, school changes, legal fees and credit score decimation. When a person loses a home, the center of their universe shifts from one of stability and permanence to one of instability and impermanence. The overall impact on society is detrimental. Many people with one-time short term financial setbacks could easily restructure their finances and cure any arrearage if the bank would simply help structure a modification or repayment plan in good faith.  However, this does not occur because a loan servicer is incentivized to foreclose not to modify the loan. Our elected officials have the power to reign in the big banks and to pass legislation to stop this insanity- but don’t. HAMP is one example of a program that was engineered to fail, and contributed to many detrimental mental health events.

A modification under the Home Affordable Modification Program is often more stressful than a foreclosure because there is no accountability or way to determine where you stand.  Meanwhile the homeowner cannot proceed with plans to stay in the home or make arrangements to move- they are caught in a never-never land type scenario waiting for the bank to make their decision.  A typical modification will put a homeowner through a process that is deliberately confusing, contradictory and set up to fail.  As the homeowner chases their tail submitting the paperwork again and again- they go through an emotional roller-coaster of hope and fear, that typically ends with a temporary success and ultimate defeat.

A homeowner might apply for a modification ten times over the period of a year before receiving a trial modification.  When they finally receive a letter of approval a mild euphoria sets in and they will go to great lengths to make their payments by certified mail and comply with all of the terms.  However, rarely is the loan modified.  What typically occurs is that while the servicer was taking payments from the homeowner, the bank was making plans to foreclose.  This is called dual-tracking.  Upon receiving notice that they didn’t qualify for some arbitrary reason- the homeowner will be thrown into a state of despair.  Quite often the homeowner will receive yet another offer to modify their loan that they just received notice that they didn’t qualify for.  The homeowner may go through several years of  these bad faith offers to modify.  There is simply no excuse to put a family through this frustrating and expensive process.  The government could easily pre-qualify people before offering a modification and do away with the emotional turmoil the current modification process entails.  It is almost like the bank has some sadistic motive towards homeowners who dared to fall behind on their mortgage.

Foreclosure isn’t a choice people make- it is a situation that is usually the result of other factors beyond the homeowner’s control. Over the past decade people have experienced difficult economic conditions including job losses, job insecurity, bank collapses, retirement fund destruction, market bubbles, financial insecurity and other events that have resulted in economic chaos and the dislocation of families. Soaring food, energy, and health care costs put financial strain on the average household, and coupled with the detrimental circumstances in times of economic uncertainty, those suffering through foreclosure might undergo increased stress exposure. However, it is evident that foreclosure is starting to lose the stigma it once had as the majority of the United States population live paycheck to paycheck and recognize that with one bad event like illness, job-loss or an emergency they might be filing foreclosure also.

Caner and Wolff (2004) stated that approximately 46% of American families have as little as $5,000 in liquid assets, including IRAs, which indicated some families are at the brink of financial disaster. In a survey of 60,000 homeowners, researchers for the Homeownership Preservation Foundation (Ackerman, 2010) found the following circumstances might put individuals at risk of foreclosure: 25% resulted from a health crisis; 32% resulted from a job loss; 50% had already missed two mortgage payments and 85% had already missed one; most had first-time home loans; almost all had no savings, no accessible credit, and few assets available in their extended families; most had already refinanced two or three times; and virtually all loans were less than 3 years old.

Researchers have found that the stress of foreclosure is exacerbated by the length of the process (sometimes taking 5 or more years to resolve), and the aversive procedures foreclosure entails.  The stress to families begins when they become delinquent on their mortgage and the bank starts the foreclosure process; the process itself varies substantially among different jurisdictions of the United States, ranging from several months to over eight years in some cases. If a homeowner chooses to litigate the foreclosure the homeowner will be subjected to high periods of stress, periods of waiting, and a rollercoaster of emotions as new events unfold.

Another consequence of foreclosure is the tendency to avoid banking relationships and the judicial system. Many homeowners voice their reluctance to become involved in any written contract after a foreclosure, with the new understanding that if a banking issue occurs the banks won’t play by the rules and the courts, almost by default, will rule in favor of the bank. The individual facing foreclosure may find that literally overnight they are immersed into an alter-reality of confusing legal terms, procedures and case law without a rudimentary understanding of the terminology being used. The legal experience of foreclosure simply compounds the trauma (the expense, not understanding what is happening, etc). Homeowners may depend on their attorneys for legal education- but very few attorneys have the time to explain basic legal procedure to every client. The homeowner who has always believed they could bring themselves up to speed on most topics quickly discovers that without a law degree they won’t be able to defend themselves.

Many clients who have successfully received a loan modification state they live in absolute fear of accidentally missing one payment or having another issue that may be used as an opportunity by the bank to force them into default. They say that after dealing with the bank bureaucracy and receiving conflicting answers provided by customer “service” agents they fear the problem will never be resolved. I spoke to a recent client that now records all conversations with her bank. Foreclosure isn’t just about losing a home- it causes a complete reevaluation of a person’s core beliefs about the goodwill of people and especially about their government who subsidizes the banks that break the law with impunity.

In conclusion, although Post Traumatic Foreclosure Disorder is not a recognized medical diagnosis, foreclosure can result in a trauma that manifests in conditions like Post Traumatic Stress Disorder and even physical illness.  It is important that people who are experiencing mental health complications from the overwhelming nature of losing a home seek professional assistance.  In time, the trauma of foreclosure typically fades and the homeowner rebuilds their life- but there is no doubt that the trauma of foreclosure takes an emotional toll.


When to see a doctor

If you have disturbing thoughts and feelings about a traumatic event for more than a month, if they’re severe, or if you feel you’re having trouble getting your life back under control, talk to your health care professional. Get treatment as soon as possible to help prevent PTSD or PTFD symptoms from getting worse.

If you or someone you know is having suicidal thoughts, get help right away through one or more of these resources:

Call a suicide hotline number — in the United States, call the National Suicide Prevention Lifeline at 800-273-TALK (800-273-8255) to reach a trained counselor. Use that same number and press 1 to reach the Veterans Crisis Line.

Make an appointment with your doctor, mental health provider or other health care professional.

If you know someone who’s in danger of committing suicide or has made a suicide attempt, make sure someone stays with that person. Call 911 or your local emergency number immediately. Or, if you can do so safely, take the person to the nearest hospital emergency room.


Ackerman, T. (2010, March/April). Foreclosure vs. homeless: Take a proactive approach. Facts and Findings. Retrieved from


Caner, A., & Wolff, E. N. (2004). Asset poverty in the United States: Its persistence in an expansionary economy. Levy Economics Institute of Bard College, Public Policy Brief, 76. Retrieved from – See more at:

Kalita, S. (2011, August 1). Tying health problems to rise in home foreclosures. The Wall Street Journal. Retrieved from 6.html?mod=WSJ_hp_LEFTTopStories

Lashley, M., Maudry, B., Jeffers, A. E., & Davis, D. E. (2009). Psycho-social impact of mortgage foreclosure. European Journal of Management, 9(3). Retrieved from

Mental health: Keeping your emotional health. (2002, October 1). American Family Physician, 66(7), 1287-1288. Retrieved from

Robertson, C., Egelhof, R., & Hoke, H. (2008, August 18). Get sick, get out: The medical causes of home mortgage foreclosures. Health Matrix, 18(65). Retrieved from



The Goal is Foreclosures and the Public, the Government and the Courts Be Damned

13 Questions Before You Can Foreclose

foreclosure_standards_42013 — this one works for sure

If you are seeking legal representation or other services call our South Florida customer service number at 954-495-9867 and for the West coast the number remains 520-405-1688. In Northern Florida and the Panhandle call 850-765-1236. Customer service for the livinglies store with workbooks, services and analysis remains the same at 520-405-1688. The people who answer the phone are NOT attorneys and NOT permitted to provide any legal advice, but they can guide you toward some of our products and services.


The selection of an attorney is an important decision  and should only be made after you have interviewed licensed attorneys familiar with investment banking, securities, property law, consumer law, mortgages, foreclosures, and collection procedures. This site is dedicated to providing those services directly or indirectly through attorneys seeking guidance or assistance in representing consumers and homeowners. We are available TO PROVIDE ACTIVE LITIGATION SUPPORT to any lawyer seeking assistance anywhere in the country, U.S. possessions and territories. Neil Garfield is a licensed member of the Florida Bar and is qualified to appear as an expert witness or litigator in in several states including the district of Columbia. The information on this blog is general information and should NEVER be considered to be advice on one specific case. Consultation with a licensed attorney is required in this highly complex field.

Danielle Kelley, Esq. is a partner in the firm of Garfield, Gwaltney, Kelley and White (GGKW) in Tallahassee, Florida 850-765-1236

EDITOR’S NOTE: SOMETIMES IT PAYS TO SHOW YOUR EXASPERATION. Danielle was at a hearing recently where all she wanted was to enforce a permanent modification for which her client had already been approved by Bank of America and BOA was trying to get out of it and pursue foreclosure even though the deal was done and there was no good or valid business reason why they would oppose a modification they already approved — except that they want to lure people into defaults and foreclosure to avoid liability for buy-backs, insurance, and credit default swap proceeds they received.

They need the foreclosure because that is the stamp of approval that the loans were valid and the securitization wasn’t a sham. Without the foreclosure, they stand to lose not only a lot of money in paybacks, but their very existence. Right now they are carrying assets that are fictitious and they are not reporting liabilities that are very real. At the end of the day, the public will see and even government officials whose “Services” have been purchased by the banks will not be able to deny that the nation’s top banks are broke and are neither too big to fail nor too big to jail. When that happens, our economy will start to recover ans the flow of credit and funds resumes and the banks’ stranglehold on government and on our society will end, at least until the next time.


 At the hearing against BOA on an old case of mine and Bill’s [William GWALTNEY, partner in GGKW] today I moved to enforce settlement. They actually agreed to a trial payment with my client in writing at mediation 2 years ago. The Judge granted the motion and wants a hearing in 60 days on the arrears (which he agreed my client isn’t liable for), sanctions and fees. She made her payment post-mediation and they sent the checks back. I gave him the Massachusetts affidavits from the BOA employees.  The Judge looked shocked. Opposing Counsel argued the Massachusetts case had nothing to do with our case.
Judge said “Mrs. Kelley how about I enter an order telling Plaintiff they have so many days to resolve this?”  I said “with all due respect your Honor BOA hasn’t listened to the OCC and followed the consent order, they haven’t listened to DOJ on the consent judgement and they are violating the AG settlement. I can assure you 100% they won’t listen to this Court either. Once we leave this room we are at the mercy of BOA actually working with us and their own attorney nor this court can get them to.  Their own attorney couldn’t reach them yesterday or today.  My client was to send in one utility bill two years ago. She sent it the day after mediation and they’ve sat and racked up two years of arrears and fees. This court has the power to sanction that behavior under rule 1.730 and should because this was orchestrated. The Massachusetts case is a federal class action which includes Florida homeowners like my client. It says Florida on the Motion for class certification so it does matter in this case. This was a scheme and a fraud.  It was planned and deliberate”.
Opposing counsel wanted to start the modification process over because the mediation agreement said “Upon completion of the trial payments Defendant will be eligible for a permanent modification”. Opposing counsel said “just because they meet the trial payments doesn’t mean they get a permanent mod.”  I said “under the consent judgment they better” and told the judge we were not going through the modification again, my client had already been approved. He agreed and said that the trial would become permanent and ordered BOA to provide an address for payment. He told opposing counsel that the argument that a trial period wouldn’t become permanent wasn’t going to work for him.
I love the 14th circuit. There is a great need from here to Pensacola and in the smaller counties like I was in today you can actually get somewhere.
Now the banks won’t even say impasse at mediation. It’s always “no agreement”.   But they’ll tell you to send in documents the next week only to say they didn’t get them. Now after those affidavits I see why.

Danielle Kelley, Esq.

Garfield, Gwaltney, Kelley & White
4832 Kerry Forest Parkway, Suite B
Tallahassee, Florida 32309
(850) 765-1236


Response to Cat: Why Hold Onto an Upside Down Investment?

Mortgage Meltdown: Cat Writes:


All good but why would I want to keep paying on a house that I owe $450,000 that is only worth $325,000 at best.



THERE ARE ONLY TWO REASONS YOU WOULD WANT TO HOLD ONTO THE HOUSE — MONEY AND STRESS. Using the procedures and substantive claims addressed here it is POSSIBLE to get the mortgage note down to something considerably less than the value of the house.

The violations of TILA and other claims (including fraud) gives you a leg up on a complete refund of all the interest and points you paid, plus the down payment and improvements you made to the house, and a refund of the difference between what the house was really worth in fair market value and what it was stated to be worth.

Put all that together in a settlement (rather than a trial) and you can end up with a mortgage that is perhaps 50% of true fair market value, with your payments down by as much as 75%+ per month. 

Whether you offer an olive branch to the lender/investor of participating in the upside (an honest increase in the fair market value of the home) so that they recover some of their investment when you sell or refinance, is up to you. We would suggest that you offer that inasmuch as it is more likely to lead to settlement.


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