Policy & Research INSIGHTS
What's the connection between foreclosures and homelessness?
by Anna Simonsen-Meehan -
By now, we’ve all heard the story: The volume of high-cost, subprime mortgages issued to lenders starting in 2003 fueled a ballooning real estate industry, which overheated and collapsed in 2006. A foreclosure crisis ensued , leading to the Great Recession of December 2007 through June 2009, the effects of which are still being felt today. Despite the severity and longevity of the foreclosure crisis, the federal government has failed to realize the importance of tracking foreclosed households. How many people who experienced foreclosure have become homeless? No one knows.
As ICPH’s latest brief, “Foreclosures and Homelessness: Understanding the Connections,” details, the foreclosure crisis is not yet over, and it’s not too late for the federal government to implement tracking so we can better understand the link between foreclosure and homelessness.
Though the number of foreclosures started to decline in 2011 and 2012, these dips should not be taken as a sign that the crisis is over. While the 2010 peak in foreclosure activity may have passed, the slowdown observed since may be in part due to banks postponing foreclosure proceedings while reviewing highly criticized procedures and adjusting to new federal regulations. In addition, half of states experienced a rise in the number of properties entering the foreclosure process in 2012, with New Jersey, Florida, and Connecticut seeing the largest percentage point-increases. Researchers predict that in the years to come, the number of properties entering the foreclosure process will be in the millions.
The federal government has tried to right some of the wrongs of the foreclosure crisis. A soon-to-be-finalized settlement between the federal government and more than ten of the nation’s largest banks could finally bring some financial relief to families and individuals harmed by faulty foreclosure procedures, but is too little, too late for most affected families. New banking regulations issued by the Consumer Financial Protection Bureau will, to some degree, help prevent a similar crisis in the future, but the consequences of today’s families going through the traumatic and financially devastating process of losing their homes and ending up homeless through foreclosure remain unknown.
As the crisis unfolds over the coming years, data collection continues to be an overlooked policy priority. While we anecdotally know that families experience homelessness—the most extreme form of housing instability and poverty—due to foreclosure, the link between the two is unclear. Without data collection and rigorous research addressing this gap in knowledge, the responses developed to address the crisis will be inadequate.
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