Preventing Foreclosures
Several years into the economic downturn, the foreclosure crisis continues to plague neighborhoods throughout the country. In September 2011, one in every 605 American homes received a foreclosure filing;12 in the third quarter of 2011, foreclosure filings were reported on 610,337 properties throughout the country.13 Due in large part to abusive industry practices and record long-term unemployment rates, a significant number of American homeowners are at imminent risk of losing their homes and will likely face family disruption and damage to their savings and credit ratings.14 The cumulative effect of foreclosures damages entire communities, which suffer from reduced tax bases and property values.

The right reforms can stem these problems and prevent them in the future. Policymakers can address the foreclosure crisis by investing in counseling programs, aggressively promoting and supporting loan modifications and revising foreclosure procedures to make them fair and comprehensible to borrowers. Even in the absence of new rules, lenders and servicers can act voluntarily to achieve constructive compromises with borrowers and avoid defaults.

12 RealtyTrac, "Foreclosures on a Slow Burn" (Oct. 2011), foreclosure-market-report/third-quarter-and-september-2011-us-foreclosure-market-report-6880.

13 Id.

14 See "Lost Ground, 2011: Disparities in Mortgage Lending and Foreclosures," CRL (2011), available at: