Resource Library: Affordable Housing

Homelessness  |  Affordable Housing  |  Community Development

Connecticut and the Foreclosure Crisis
Introduction

• Introduction 
• Neighborhoods - Foreclosure Impacts and Solutions  
• Renters - Avoiding Eviction When the Landlord Faces Foreclosure 
• Homeowners - Keeping Homes, Repairing Lives   

Connecticut, like most other states, is grappling with a wave of home foreclosures.  Foreclosures are more heavily concentrated in other states, but Connecticut certainly has its share. Early on, these foreclosures were largely driven by subprime mortgages and predatory lending.  But as the recession has deepened, unemployment has risen, and family income has become more insecure, many previously-affordable mortgages are going into foreclosure. Connecticut’s foreclosures are happening throughout the state, but largely concentrated in lower-income urban neighborhoods, where predatory lending has been common.

In addition to the obvious hardship endured by homeowners facing foreclosure, the impacts on neighborhoods are profound.  Large concentrations of vacant homes can lead to increased blight and decay, increased crime, decreasing nearby property values, and generally a downward drag on the neighborhood’s housing market and way of life. If neighborhood disinvestment pervades, it can take years to recover.

Efforts at the federal, state and local level are attempting to address several aspects of the situation simultaneously:

• Keeping the foreclosure crisis from further damaging the overall economy and financial system. 
• Helping struggling homeowners avoid foreclosure and stay in their homes, while getting their financial situation in order and expanding their knowledge and homeownership skills. 
• In neighborhoods afflicted by high numbers of foreclosures, acquire and rehab homes so they can be quickly occupied, so that vacancies don’t lead to blight and neighborhood disinvestment.
• Step up blight enforcement to protect highly-impacted neighborhoods to maintain quality of life and protect from disinvestment.
• Keep renters from being evicted when their landlord is foreclosed upon.

To better understand the origins of the foreclosure crisis, and the scope of the problem:

• Getting Started: What Everyone Should Know About Foreclosure Prevention and Neighborhood Stabilization
  http://www.foreclosure-response.org/
   
  
• The Giant Pool of Money
  The National Public Radio (NPR) show This American Life and NPR News collaborated on a one-hour episode on the subprime mortgage situation called The Giant Pool of Money.  It explains how the crisis occurred, its connection to the larger economy, and its consequences on homeowners and mortgage and banking industries. 
  
  
• The Challenge of Foreclosed Properties: An Analysis of State and Local Plans to use the Neighborhood Stabilization Program 
  This report from Enterprise Community Partners and Neighborworks America is designed to help states and communities in their Neighborhood Stabilization work by assessing how these jurisdictions are using the funds and collecting innovative ideas that can be replicated.
  
  
• Community Maps and Data
  http://www.foreclosure-response.org/
  
  
• Dynamic Maps of Nonprime Mortgage Conditions in the United States 
  Interactive map from the Federal Reserve Bank of New York showing information about loans, foreclosures, ARMs, and more.
  
  
• Foreclosure to Homeless 2009: The Forgotten Victims of the Subprime Crisis 
  This nationwide survey of local homeless providers was conducted by national housing and homeless organizations and released as a joint report by the National Coalition for the Homeless, the National Low Income Housing Coalition (NLIHC), the National Alliance to End Homelessness, the National Health Care for the Homeless Council, and other national organizations.
  
  
• Understanding the Securitization of Subprime Mortgage Credit 
  Federal Reserve Bank of New York Staff Report examining the subprime loan securitization process and "frictions" inherent to the process that led to the subprime mortgage crisis.
  
  
• What's a C.D.O.?
  An interactive illustration of collateralized debt obligations provided by Portfolio Magazine's website.