The Future of Foreclosure Law in the Wake of the Great Housing Crisis of 2007-2014

Abstract

As 2014 came to an end so, perhaps, did the worst foreclosure crisis in U.S. history. On January 15, 2015, RealityTrac, one of the nation’s leading reporters of housing data, declared the foreclosure crisis had ended. Whether or not their declaration proves true, the aftermath of the crisis will be felt for years to come. During the crisis it is estimated more than five million families lost their homes to foreclosure. Federal, state and local responses to the crisis changed laws and perceptions regarding foreclosure. Despite these changes, we end the crisis much the way we began -- with a nationwide foreclosure system mistrusted and disliked by lenders and consumers alike. This paper examines the responses to the crisis in an effort to determine what worked, what did not, and where foreclosure law should go from here. In the end, it is clear that we need a more uniform system, but one that also prioritizes homeownership, or at least home occupancy.

Keywords: judicial foreclose, nonjudicial foreclosure, mortgage

JEL Classification: K11, K23, K42