What is 'Foreclosure Crisis'
A period of unusually high home foreclosure rates that caused high uncertainty in the housing market from 2008-2010. During the crisis, the number of foreclosures rose so high that banks were unable to process all of them properly. In many cases, banks were so overloaded that foreclosure proceedings would not be initiated for many months after the homeowner stopped making payments.
BREAKING DOWN 'Foreclosure Crisis'
The process for recording the transfer of ownership for mortgage notes was overly lax during the housing boom, leading to difficulty in proving whether a bank even had ownership of the mortgage being foreclosed. Due to the widespread nature of these problems, banks halted all foreclosures in certain states for months until proper documentation could be assembled.