HIP Tool: Foreclosure Resources

Foreclosure resources help homeowners in jeopardy of losing their homes avoid or navigate the foreclosure process. Programs include a variety of tools such as homebuyer education, debt and financial counseling and facilitating mortgage refinance. Jurisdictions with high foreclosure rates may also choose to engage in foreclosure mitigation and recovery strategies to support homeowners and neighborhoods.


At the peak of the 2006 housing bubble, mortgage interest rates were low and home prices were high. Many lenders attracted homebuyers into mortgage agreements with adjustable rates that would reset within a few years with higher monthly payments. Buyers assumed their homes would increase in value within a few years and that they would be able to refinance into more traditional, fixed-rate mortgages. This practice made homeownership available to many moderate-income households, who were otherwise unable to purchase homes through traditional mortgage lending.

As the economy declined in the late 2000s and unemployment rose, many homeowners became unable to afford their mortgage payments. When home values declined sharply and interest rates increased, homeowners found themselves “upside-down” or “under water” on their mortgages– making prohibitively higher payments than the new worth of their home and having few options to refinance. Lenders, unwilling to re-negotiate mortgages with homeowners in default, moved to repossess property through foreclosure. This situation had an acute and lasting effect on moderate and low-income homebuyers, who were more often victims of unsound lending practices and adjustable rate mortgages, and thus more exposed to the faltering economy and housing crisis.

The foreclosure and housing crisis created additional unforeseen impacts and outcomes, including: abandonment and neglect of bank-owned foreclosure properties; displacement due to evictions of tenants renting units in bank-owned foreclosure properties (Real Estate Owned or REO); and banks selling foreclosed properties to investors rather than individuals. Jurisdictions with persistent high foreclosure rates of REO properties and investor owned properties may seek to implement policies and programs that improve the likelihood of low and moderate-income homeowners staying in their homes and ensure that foreclosed upon homes remain affordable in the long-term.

Tool Profile

Focus Areas

  • Expensive Housing Markets
  • Citizen Education & Outreach

Project Types

  • Single Family
  • Multifamily
  • Ownership

Affordability Level

  • 80% to 120% AMI
  • Less than 80% AMI

Housing Goal

  • Affordability