foreclosure prevention: overview
What communities need foreclosure prevention programs?

Foreclosure prevention programs help homeowners who are delinquent on their mortgage payments and are in danger of foreclosure or a forced sale that will strip them of their home and any accumulated equity. Since the mortgage crisis, the foreclosure rate has risen dramatically. Data from LPS Applied Analytics' Mortgage Monitor show that nationally the foreclosure rate has been around 4 percent in recent years – up from less than 1 percent during most of the 1990s (Elmer and Seelig 1998). Rising foreclosures have affected rural, urban, and suburban communities in both the center of the country and on the coasts. Only a small handful of metropolitan areas have foreclosure rates lower than 2 percent. And in some of the hardest hit metropolitan areas, more than one in six mortgages are in foreclosure. When mortgage delinquencies are also considered, the number of mortgages at serious risk of
foreclosure is as high as one in four in some metropolitan areas and as low as one in 50 in some of the least affected areas. To assess serious mortgage delinquencies in your metropolitan area, click here for charts and rankings.

Foreclosure rates and serious delinquency rates show that struggling families all across the country need foreclosure prevention programs. By providing these families with counseling and access to affordable refinancing options and other assistance, foreclosure prevention can keep families in their homes while preserving home values and stability in the surrounding community. Skip to the section of the policy guide on why foreclosures matter to learn more about community impacts.

Click on the thumbnail below to see a foreclosure prevention policy timeline. foreclosure prevention policy timeline

What policies can help prevent foreclosures?

Foreclosure prevention policies can target assistance directly to families in need, or they can focus at the community level on modifying the regulatory environment to reduce foreclosures and their impact on neighborhoods. The policies that can help prevent foreclosures vary depending on how deeply into financial trouble families are.

States and localities have adopted a range of short- and long-term educational, financial, legal, and regulatory policies for preventing foreclosures and protecting affected families and communities. Foreclosure prevention strategies often include immediate assistance such as 24-hour hotlines, short-term loans, flexible refinancing programs, and legal assistance. Some communities also have instituted mediation programs to encourage borrowers and lenders to assess foreclosure alternatives, while others have extended the foreclosure timeline to give borrowers more time to assess their options or find new housing if foreclosure is inevitable. Additional policies, such as predatory lending restrictions, go a step beyond immediate assistance and aim to reduce the risk of foreclosures in the future. More information on all of these foreclosure prevention policies can be found in this section.
Solutions in Action
Chicago's Home Ownership Preservation Initiative (HOPI) is an early example of a one-stop approach to foreclosure prevention that includes both counseling and research efforts to prevent foreclosures now, reduce foreclosure risk in the future, and mitigate the damage foreclosures can cause.

Neighborhood Housing Services, the organization that administers HOPI, reports that the initiative prevented over 3,900 foreclosures since 2003.

Learn more about HOPI...

For guidance on putting all of the policy pieces together into a strategic response, click here to move to the section on creating a coordinated response strategy.

Click on the links below to learn about ways to prevent foreclosure and keep families in their homes.

Westminster PlaceCounseling, Mediation and Legal Assistance
Linking homeowners with both outside experts and neutral third parties can help families understand their options and reach a resolution that avoids foreclosure and its related costs for families, communities, and mortgage servicers.

NHS ChicagoFinancial Assistance
By connecting families with low-cost refinance loans, second mortgages, and emergency loans, state or local housing finance agencies can help homeowners avoid foreclosure and stay in their home at a monthly mortgage payment that they can afford.

Extending the Foreclosure Timeline

Extending the process of home foreclosure through a temporary moratorium on foreclosure or by increasing the notice period required before a foreclosure may take place may allow homeowners additional time to reduce the financial damage of foreclosure.

Friendship CourtReduce the Risk of Foreclosures in the Future
Foreclosure risks are often identifiable and preventable many years in advance. Governments can counter these risks through targeted outreach, regulations to prohibit the riskiest loans, and enhanced consumer awareness to help families make better mortgage decisions.

Click here for more resources on preventing foreclosure.

The Center for Housing Policy gratefully acknowledges the input and feedback provided for the version of this policy section that was originally posted on by the following reviewers (in alphabetical order): Sonia Garrison, Self-Help; Dan Immergluck, Georgia Institute of Technology; Steve Tuminaro, NeighborWorks America; and Christen Wiggins, Neighborhood Housing Services of Chicago. Please note, however, that the views and opinions expressed on are those of the Foreclosure Response team alone.