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THE FORECLOSURE CRISIS

CONTENTS
Foreclosures on the rise: “Hard to talk about any recovery” ...............................
Initiatives to stem foreclosures: “Persistently disregard”......................................
Flaws in the process: “Speculation and worst-case scenarios” ............................
Neighborhood effects: “I’m not leaving”..............................................................

FORECLOSURES ON THE RISE:
“HARD TO TALK ABOUT ANY RECOVERY”

Since the housing bubble burst, about four million families have lost their homes to
foreclosure and another four and a half million have slipped into the foreclosure


process or are seriously behind on their mortgage payments. When the economic
damage finally abates, foreclosures may total between  million and more than 

million, according to various estimates. The foreclosure epidemic has hurt families
and undermined home values in entire zip codes, strained school systems as well as
community support services, and depleted state coffers. Even if the economy began
suddenly booming the country would need years to recover.
Prior to , the foreclosure rate was historically less than . But the trend
since the housing market collapsed has been dramatic: In , . of all houses, or
 out of , received at least one foreclosure filing. In the fall of ,  in every 

outstanding residential mortgage loans in the United States was at least one payment
past due but not yet in foreclosure—an ominous warning that this wave may not have

crested. Distressed sales account for the majority of home sales in cities around the
country, including Las Vegas, Phoenix, Sacramento, and Riverside, California. 
Returning to the , borrowers whose loans were pooled into CMLTI -
NC: by September , many had moved or refinanced their mortgages; by that
point, , had entered foreclosure (mostly in Florida and California), and  had
started loan modifications. Of the , still active loans then,  were seriously
past due in their payments or currently in foreclosure. 
The causes of foreclosures have been analyzed by many academics and govern-
ment agencies. Two events are typically necessary for a mortgage default. First,
monthly payments become unaffordable owing to unemployment or other financial
