BOSTON – Foreclosure initiations spiked in all the New England states during the recent economic downtown, ranging from a peak of less than 3.0% of outstanding mortgages in Vermont in 2010 to a peak of 5.5% of outstanding mortgages in Rhode Island in 2009. Across the entire New England region in 2010, more than 7% of all mortgage holders– nearly 133,000 homeowners – were seriously delinquent in making payments. In response, state and local policymakers have created their own foreclosure prevention programs to supplement those available nationwide.
In a new research report by the Federal Reserve Bank of Boston's New England Public Policy Center, "State Foreclosure Prevention Efforts in New England: Mediation and Assistance," Policy Analyst Robert Clifford reviews and analyzes the New England states' foreclosure prevention programs. The report identifies two major prevention strategies: foreclosure mediation programs and financial assistance programs.
The mediation process provides homeowners a channel of communication with their lenders that has been difficult for most to establish on their own. As these programs have yielded results, they have grown in popularity: in 2008 only 5 states had mediation programs; by 2011 21 states had some form of mediation program in place. Five of the six New England states have initiated mediation efforts, while Massachusetts has implemented a program to facilitate two-party negotiations without the additional presence of a neutral mediator.
Financial assistance programs channel aid directly to homeowners who are at risk of foreclosure. Maine and Connecticut are the only New England states offering this type of program.
Full Report and Multimedia: State Foreclosure Prevention Efforts in New England: Mediation and Assistance