Foreclosure Crisis


DEFINITION of '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.

  1. Foreclosure - FCL

    A situation in which a homeowner is unable to make principal ...
  2. Ability To Repay

    An individual's financial capacity to make good on a debt. Specifically, ...
  3. Robo-Signer

    An employee of a mortgage servicing company that signs foreclosure ...
  4. Involuntary Foreclosure

    When a borrower defaults on a home mortgage loan and the lender ...
  5. Right Of Foreclosure

    A lender's ability to take possession of the property used to ...
  6. Foreclosure Buyout

    A refinancing program that allows a homeowner to avoid foreclosure ...
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  1. What is a combined loan to value ratio?

    The combined loan to value (CLTV) ratio is a calculation used by mortgage and lending professionals to determine the total ... Read Full Answer >>
  2. Do FHA loans have prepayment penalties?

    Unlike subprime mortgages issued by some conventional commercial lenders, Federal Housing Administration (FHA) loans do not ... Read Full Answer >>
  3. Can FHA loans be refinanced?

    Federal Housing Administration (FHA) loans can be refinanced in several ways. According to the U.S. Department of Housing ... Read Full Answer >>
  4. Can FHA loans be used for investment property?

    Federal Housing Administration (FHA) loans were created to promote homeownership. These loans have lower down payment requirements ... Read Full Answer >>
  5. Do FHA loans have private mortgage insurance (PMI)?

    he When you make a down payment from 3 to 20% of the value of your home and take out a Federal Housing Administration (FHA) ... Read Full Answer >>
  6. How many FHA loans can I have?

    Generally, the Federal Housing Administration (FHA) does not insure more than one mortgage per borrower. This is to prevent ... Read Full Answer >>

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