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Who
Who is most at risk of foreclosure?

Foreclosures affect homeowners at all income levels and in all types of homes. The latest wave of foreclosures is mainly due to income loss from unemployment rather than any inherent riskiness in borrowers' mortgages.  However, borrowers who took out high-risk loans, including high-priced subprime loans adjustable rate loans with very low teaser rates, may be more vulnerable to foreclosure than others. These households do not fit a single profile but research suggests that racial minorities have been disproportionately affected (2010 Center for Responsible Lending).

Visit the Maps and Data section of this site to learn more about the communities in which high-risk lending has been most concentrated.
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Who are the key players in responding to foreclosures?

Lenders and loan servicers; federal, state, and municipal governments; non-profit organizations; and others all have roles to play in preventing foreclosures and stabilizing communities.

  • Lenders and loan servicers can help by proactively reaching out to borrowers in distress or potential distress and by offering aggressive loan modifications to help families stay in their homes.
  • Federal government agencies set regulatory policies to make the mortgage market work better in the future or encourage loan modifications. The federal government allocates funding for states to administer foreclosure prevention and neighborhood stabilization efforts and the guidelines for how those resources can be spent, such as the Neighborhood Stabilization Program (NSP) and the Hardest Hit Fund.  The federal Making Home Affordable program, launched in 2009, provides refinance and loan modification programs such as the Home Affordable Refinance Program (available only to borrowers with mortgages owned or guaranteed by Fannie Mae or Freddie Mac) and the Home Affordable Modification Program.
  • States and localities may provide financial assistance to distressed borrowers, create opportunities for borrowers and loan servicers to communicate about foreclosure prevention options through outreach events and mediation programs, or convene stakeholders to form a foreclosure prevention task force that helps lead and coordinate foreclosure prevention and neighborhood stabilization activities.
  • Non-profit housing counseling agencies may negotiate a loan workout on behalf of a troubled homeowner directly with the servicer and may refer borrowers to legal services if needed. With governmental support, non-profit legal service agencies can train pro bono lawyers in local foreclosure laws and increase their capacity to respond to a growing number of foreclosure cases.
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Image courtesy of the Board of Trustees of the University of Illinois, (c) 2001
  • Philanthropic foundations have the capacity to provide vital resources to non-profit organizations' foreclosure prevention outreach and assistance activities. Foundation support may enable non-profits to hire more staff, avoid service reductions due to funding cuts, or fund innovative programs that help families stay in their homes.
  • Community-based organizations, such as CDCs and neighborhood associations can engage and education local residents through outreach activities on the risk of foreclosure and provide or refer homeowners to housing counseling services. Community-based organizations have the ability to concentrate efforts in areas with high foreclosure risk and work directly with families that might need assistance.
Click here to learn about bringing these parties together to develop a coordinated response to foreclosures.
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Who is responsible for maintaining foreclosed properties?

In general, maintaining properties is the responsibility of the property owner. After a foreclosure, the owner is the lender or servicer that holds the property in its REO portfolio. The lender or servicer, often an entity located far from the property itself, may be required to assign and list a local agent who can be contacted quickly to respond to a property's maintenance needs. After a foreclosure proceeding has commenced, but before it has been finalized, however, responsibility for maintenance can be tricky.  The homeowner may retain responsibility up until the foreclosure is finalized, but he or she has little incentive to put time and effort into a property that the bank may soon own. In order to reduce neglect during the foreclosure process, some communities have clarified that the lender or servicer is responsible for maintaining any property that is vacant and in the process of being foreclosed upon.  To learn more, see the policy guide section on securing and maintaining vacant properties.
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