Defaulting on the Dream: States Respond to America's Foreclosure Crisis

  • April 16, 2008

Few imaginable economic events send the same message of fear and foreboding in America as a housing crisis. For most Americans, their homes are their greatest asset. And for the states, industries dependent on housing are cornerstones for economic growth and fiscal stability.

While this is a national crisis, states and local municipalities arguably will be asked to carry a larger share of the foreclosure burden as tax revenues decline and they experience increased demands for police and other services to deal with vacant and abandoned properties.

A growing number of states have taken action, seeking at least to mitigate the damage to homeowners, lenders, municipalities and their own budgets. The severity and speed of the crisis have meant that, in many cases, states are experimenting with innovative but as yet unproven approaches. The jury is still out about whether and to what extent they will be effective. Still, several states among those hardest hit by foreclosures also have been among the most assertive in trying to address the problem.

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