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Foreclosures and Homelessness: Understanding the Connection

Foreclosure and homelessness are linked in the public’s mind. But as shown in “Foreclosures and Homelessness: Understanding the Connection," the latest brief from ICPH, the lack of data collection means that the effects of foreclosures on homelessness are still inconclusive.  This ICPH policy brief looks at foreclosures and homelessness in the United States from 2005 to 2011, and provides recommendations to government agencies and researchers for how to better track the number of homeless people who have experienced foreclosure.

The number of high-cost, subprime mortgages issued to lenders increased rapidly from 2003 to 2006, initiating a foreclosure crisis that spiraled into the Great Recession (December 2007 through June 2009).1 The housing market, whose strength is commonly measured by the change in the actual resale value of single-family homes, fell sharply as the number of foreclosures skyrocketed (Figure 1). Initially, borrowers could avoid default by refinancing or selling their homes, but by late 2006, the housing market had begun to collapse and the number of delinquent loans had surged. Propelled by escalating unemployment and a deepening economic downturn, the crisis spread to the prime mortgage sector in 2008 and 2009 and has become a protracted problem (Figure 2).2

Figure 1
Figure 2

Near the peak of the crisis, in 2009, one in every 46 properties went into foreclosure (Figure 3). Throughout the Southwest, the situation was even more alarming: one in 10 properties in Nevada and one in 17 homes in Arizona entered the foreclosure process. Florida (one out of 17) and California (one out of 21) also experienced high rates, while the Mountain region remained largely unscathed. Vermont had by far the lowest rate, at one in every 2,198 properties.3

In 2010, 2.9 million properties received foreclosure filings, an increase of 239.1% since 2005. Compared with those at the height of the crisis, the 2011 numbers suggest that the situation is subsiding (Figure 1). That decline, however, is most likely temporary, caused by banks’ postponing foreclosure proceedings while reviewing their highly criticized procedures; the number of foreclosures was 2% higher in the second quarter of 2012 than at the beginning of the year.4

The increase in family homelessness during the Great Recession can be partially attributed to the foreclosure crisis, although the extent of the relationship is unclear.5 There have not been any nationwide data-collection efforts on the rate at which foreclosures lead to homelessness. The federal government failed to require states to collect such data—through mandatory point-in-time counts, the existing Homeless Management Information System (HMIS)  infrastructure, or Homelessness Prevention and Rapid Re-housing (HPRP) client intake forms—and few researchers anticipated the importance of tracking the issue. This article provides new analysis on the impact of foreclosures on homelessness, using annual homelessness point-in-time count and foreclosure-filing data.6

Exploring the Impact of Foreclosures
Approximately 60% of families affected by foreclosures nationwide have been homeowners. Less attention has been focused on renters, who are more likely to be very low-income and of minority status and thereby even more vulnerable to homelessness. Tenants are often not informed of their landlords’ mortgage problems until told to vacate, leaving them with inadequate time to secure alternate housing. The 2009 passage of the federal Protecting Tenants at Foreclosure Act entitles renters to at least a 90-day notice; however, many are unaware of their rights and continue to be evicted under illegal circumstances. Others see building conditions deteriorate, as financially distressed landlords discontinue property repairs and utility payments, or are evicted en masse from bank-controlled properties prior to resale. Many distressed households are unable to afford the relocation costs and have difficulty recovering their security deposits post-eviction. As a result, they may double up with family and friends or enter shelter.7

Figure 3


1 Subprime loans are those issued to borrowers with incomplete, poor, or limited credit histories and have higher interest rates than prime loans.
2 U.S. Department of Housing and Urban Development, Report to Congress on the Root Causes of the Foreclosure Crisis, January 2010; Ingrid Gould Ellen, “The Foreclosure Crisis: Origins, Consequences, and Responses” (conference presentation, Grand Rounds, Columbia Center for Homelessness Prevention Studies, New York, NY, December 9, 2010).
3 RealtyTrac, “RealtyTrac Year-end Report Shows Record 2.8 Million U.S. Properties with Foreclosure Filings in 2009,”; U.S. Census Bureau, 2009 Housing Unit Estimates.
4 RealtyTrac, “2011 Year-end Foreclosure Report: Foreclosures on the Retreat,” report/2011-year-end-foreclosure-market-report-6984; RealtyTrac, “1 Million Properties With Foreclosure Filings in First Half of 2012,”
5 Urban Institute, The Impacts of Foreclosures on Families and Communities, May 2009; National Coalition for the Homeless, Foreclosure to Homelessness 2009: The Forgotten Victims of the Subprime Crisis; Peter Goodman, “Foreclosures Force Ex-homeowners to Turn to Shelters,” New York Times, October 18, 2009; Manny Fernandez, “Helping to Keep Homelessness at Bay as Foreclosures Hit More Families,” New York Times, February 4, 2008; Wendy Koch, “Homeless Numbers ‘Alarming,’” USA Today, October 21, 2008; Ross Colvin, “Family Homelessness Rising in the United States,” Reuters, November 12, 2008; U.S. Conference of Mayors, Hunger and Homelessness Survey: A Status Report on Hunger and Homelessness in America’s Cities; A 25-city Survey, December 2008.
6 U.S. Department of Housing and Urban Development, HUD’s CoC Homeless Assistance Programs—Homeless Populations and Subpopulations, 2007–10; RealtyTrac, Foreclosure Activity Reports 2006–09 (unpublished data).
7 The Protecting Tenants at Foreclosure Act of 2009 will expire at the end of 2014; Urban Institute, Renters Need Protection Against Foreclosure Too, February 2009; National Low Income Housing Coalition, Renters in Foreclosure: Defining the Problem, Identifying Solutions, January 2009; National Low Income Housing Coalition, Renters in Foreclosure: A Fresh Look at an Ongoing Problem, September 2012; Lawyers’ Committee for Better Housing, Chicago Apartment Building Foreclosures: Impact on Tenants, April 2010; Tenants Together, 2010 Report: California Renters in the Foreclosure Crisis; National Law Center on Homelessness and Poverty, Staying Home: The Rights of Renters Living in Foreclosed Properties, June 2010; Toluse Olorunnipa, “Collateral Damage: Tenants of Foreclosed Properties,” Miami Herald, April 23, 2011.

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