Community Response to the Foreclosure Crisis: Thoughts on Local Interventions

In the wake of the ongoing national mortgage crisis, preventing or mitigating foreclosures and facilitating recovery from the damage they cause have become tremendous challenges for community developers, policymakers, and a wide variety of other actors in cities and metropolitan areas. In a 2008 survey of forty-two cities by the U.S. Conference of Mayors (2008), 53 percent of the municipalities rated their local foreclosure problems as serious or very serious. Another 29 percent rated their problems as moderately serious. Moreover, 71 percent of respondents anticipated that over the subsequent year their foreclosure problems would worsen. While mortgage regulation and foreclosure laws are generally the domain of federal and/or state government, local governments and organizations have attempted to respond to rising foreclosures in various ways. Sometimes this response has meant forming coalitions to change state laws, or banding together with groups in other parts of the country to advocate for a federal policy response. At the same time, however, local governments, nonprofits, and even some local banks have not been able to rely solely upon their ability to effect higher-level policy change. Rather, their responses have also included direct, local action, often in collaboration with other groups. The purpose of this paper is to lay out the range of responses to the foreclosure crisis in which local organizations have been engaged in recent years. It is not intended to be a catalogue of best practices. Rather, it uses examples of strategies and programs only for illustrative, explanatory purposes. Moreover, there is no attempt made to evaluate the effectiveness or impact of any of these strategies or tactics. The primary purpose is to provide a scheme for thinking about local responses to the crisis and the actors and organizations involved. It is also intended to help groups identify where responses in their community might be expanded or strengthened. It is important to point out here that the paper generally does not address efforts to reduce high-risk lending in communities or to improve access to sound and affordable mortgage credit. While these are critically important and complementary strategies, they are beyond the scope of this paper.