Posted on Thursday, October 21, 2010
What’s a State to Do?
Highlight: State-by-State Data
This new report includes the latest foreclosure figures, state-by-state, including projected foreclosures through 2012, the rate at which foreclosures are increasing (or, in very rare cases, declining), and the amount of home equity wealth that neighboring households are losing as a result of foreclosures.
Practical Guidance for Addressing the Foreclosure Crisis
As all 50 state Attorneys General investigate widespread allegations that loan companies use fraudulent documents to push through foreclosures, CRL’s new report, “Foreclosure as a Last Resort,” highlights other strategies that states are using to stabilize their housing markets and prevent unnecessary foreclosures.
After describing limitations in how loan servicers and the federal government have responded to the foreclosure crisis, CRL’s report concludes that the best tool available for state-led foreclosure prevention is mandatory loss mitigation. This requires mortgage servicers to do a cost-benefit analysis before pushing foreclosures through; that is, they must weigh the investor’s cost of foreclosing against the benefits of modifying a loan to prevent foreclosure. This simple determination goes a long way in ensuring that foreclosures proceed only when they are unavoidable.
Advantages of Mandatory Loss Mitigation
A low-cost, high impact approach
Requires loan servicers to modify loans when it makes financial sense
Flexible in how it can be adapted locally
Allows for greater accountability and transparency.
Some states are already finding creative ways to incorporate mandatory loss mitigation in their foreclosure prevention efforts. To find out which states are using this tool and how it can be implemented.