help families recover » relocation assistance for owners and renters

Families displaced by foreclosure – whether owners or renters – may need assistance to regain housing stability and move on with their lives. Involuntary moves, such as displacement due to foreclosure or eviction, can strain families' finances and lead to psychological distress and disruptions in parents' work or children's education.

Many communities already offer services and assistance in the form of homelessness prevention programs to help displaced families get back on track, and they may wish to expand existing services to meet the rise in demand (Fernandez 2008).

The following are some of the actions states and localities can take to help families struggling with displacement:

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Dealing with displacement

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Protecting renters

Oak Grove
Rebuilding credit

Hastings Marketplace
Preventing displacement

Help families qualify for and afford to move to new housing

Families forced to move as a result of foreclosure -- whether they are former homeowners or tenants living in foreclosed properties -- may incur sudden, substantial costs for moving and providing security deposits that they may not be able to afford. The inability of such families to secure new housing can lead to financial and psychological distress, overcrowding and other loss of housing quality, and even homelessness.
There are limited examples of government agencies providing emergency assistance specifically for displaced families after foreclosures. Yet many communities already have emergency assistance (through federal and state welfare programs) or homelessness prevention and rapid re-housing programs (through HUD's Continuum of Care) that offer precisely the kinds of emergency financial assistance that displaced families may need (Burt Pearson Montgomery 2007, Shinn Baumohl 1998). In addition, a catalog of state-funded rental assistance programs can be found in the appendix of the National Low Income Housing Coalition's 2008 report, Housing Assistance for Low Income Households [PDF].)

HUD is the primary source of funding for rapid re-housing programs that can help many families facing displacement due to foreclosure. In 2009, the Homelessness Prevention and Rapid Re-Housing Program (HPRP) received $1.5 billion in funding through the American Reinvestment and Recovery Act (ARRA) for state and local governments to provide short-term assistance to prevent homelessness -- whether due to foreclosure or other causes -- and to help those who are already homeless to be quickly re-housed. The funds can be used to provide financial assistance or services, including paying for moving costs, security deposits, rent in a new unit, storage fees, and utility costs.

Since funding for these assistance programs may not be sufficient to serve the increasing numbers of families affected by foreclosure over the long-term, states and localities may wish to supplement funding to help programs serve more families in need. Some states already provide funding for homelessness prevention. The National Low Income Housing Coalition's 2008 report, Housing Assistance for Low Income Households [PDF] includes a catalog state-funded homelessness prevention programs in its list of state-funded rental assistance programs.

Other policy recommendations worth considering include:
  • Provide funding for housing counseling assistance to help families locate suitable alternative housing. Click here to review the resources on this topic available through
  • Expand relocation assistance programs that help with first- and last-month's rent, security deposits, and the housing search process.
  • Negotiate with landlords for more flexible screening processes for applicants that have been displaced by foreclosures (see Solutions in Action).
Solutions in Action
Manual Credit Review in Memphis

Over the last few years, property managers in Memphis, Tennessee started to recognize that an increasingly high number of renter applicants were being rejected due to damaged credit from a foreclosure or other effect of the worsening economy. Because property managers were evaluating applications automatically based on credit score requirements, they had fewer qualified applicants which resulted in high apartment vacancy rates. The vacancy rates were reducing rental income and increasing property theft and vandalism.

In response, property managers and community organizations have partnered through the Project Safeways initiative, a broad strategy for crime reduction and improved quality of life in Memphis apartments. One part of the initiative is for property managers to consider manual credit reviews for residents to establish their creditworthiness. This would allow for a flexible screening process to approve applicants based on criteria more thorough review of the credit report rather than just the credit score.

The manual credit review process being developed will be performed by HUD-certified foreclosure mitigation counselors that will choose potential renters based mainly on the detailed information in their credit reports. For example, credit problems involving medical bills and student loans will not influence the referral decision; while others, like nonpayment of rent will continue to factor into the decision.

With manual credit review and Safeways, people facing foreclosure in Memphis will have more and safer rental options. This progress can be replicated in other cities to help families recover from a foreclosure.

Click here
to read an in-depth case study on Project Safeways.
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Help families access a wide range of social services

Displaced families may need services that go beyond helping them find and pay for a new place to live. Communities with large numbers of foreclosures can anticipate increasing demand for in-kind assistance, such as food and clothing, as well as counseling and advocacy to help families cope with the causes and/or effects of their displacement. Some families may need access to job placement and training programs, and many will require legal assistance to deal with bankruptcies and other consequences of foreclosure.

Schools may need to develop or expand programs to help children cope with family stress and the destabilizing effect of foreclosures (Been et al. 2010, Kachura 2011, Comey and Groz 2010). School officials may also wish to allow children to remain in their school through the end of the year even if the family has had to move out of the district.

Finally, some families will need help with mental health problems, abuse, and addictions that often become worse with the stress of foreclosures. A survey of mortgage counselors suggests that it is fairly common for homeowners at risk of foreclosure to exhibit signs of depression and other health risks (Pollack et al. 2011). Training and support for mortgage counselors could help them identify mental health problems in their clients and make appropriate referrals. Click here to read more about the survey of mortgage counselors.

At Risk from Foreclosures in Minneapolis: Renters, School Children, Immigrants, and Racial and Ethnic Minorities

A 2009 paper entitled The Unraveling of the American Dream: Foreclosures in the Immigrant Community of Minneapolis examines the characteristics of families directly affected by foreclosures in the City of Minneapolis during fiscal years 2006 and 2007, focusing particularly on race, country of birth, and presence of children enrolled in the Minneapolis Public School system.

Findings indicate that most of the foreclosures that occurred in Minneapolis during this period involved rental properties. Whether they experienced the foreclosure as a tenant or owner, 40 percent of households living in a foreclosed property had at least one child enrolled in the Minneapolis Public School system at the time.

African-American and Hispanic households made up a disproportionate share of households that had a child enrolled in the public schools and experienced a foreclosure (as an owner or tenant). Non-English speaking homeowners with children in the public schools were also over-represented among households undergoing foreclosure during this period.

Author Ryan Allen, Assistant Professor at the Humphrey Institute of Public Affairs at the University of Minnesota, suggests that these findings signal a need for increased counseling services for displaced renters, as well as expanded foreclosure prevention, financial literacy, and homebuyer education for non-English speakers.  Access the full report [PDF].

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