The foreclosure crisis, which began in 2006 and is ongoing, has left few communities untouched and has been particularly devastating for low-income communities and communities of color. By the time the crisis abates, 10 million homeowners will have lost their homes to foreclosure. Many of them will lose their standing in the middle class and suffer tremendous economic and personal losses. But the crisis does not only affect those who undergo foreclosures themselves. Foreclosures also affect neighborhoods, dragging down the prices of nearby homes, dampening the housing market, and draining cash- strapped municipalities of precious resources. In many hard-hit neighborhoods, another destabilizing force is the wave of investors who swept in and bought much of the distressed property stock. Foreclosures also affect the economy, since strong neighborhoods are integral to the economic health of the regions in which they are located. In the face of the crisis, communities and consumer advocacy organizations have organized around a range of strategies at a variety of scales and points in the foreclosure cycle, including preventing further foreclosures, protecting tenants living in foreclosed homes, holding banks accountable, and reclaiming foreclosed properties for community benefit. They also have taken action to reform the broader financial system that created and perpetuated the crisis.
Their advocacy helped shape the Bureau of Consumer Financial Protection, created in July 2010 to write and enforce new, transparent standards for mortgages and other financial products. At a time when federal programs are on the chopping block, these organizations have fought against cuts to critical homeownership counseling and foreclosure recovery programs.
While these efforts have been important, too few people have been engaged in this policy debate. All residents have a stake in how their communities recover from the foreclosure crisis, and all should be involved in the search for solutions. Those working to reduce poverty and increase economic and social inclusion, in particular, should contribute their voices to the ongoing discussions and needed reforms.
This report provides essential information to inform policy discussions about foreclosure recovery.