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Addressing the Impact
of the Foreclosure Crisis
Federal Reserve Mortgage Outreach and Research Efforts


A Message from the Chair of
the Mortgage Outreach and Research Efforts
(MORE) Initiative




Improving the Communication of Information
about Foreclosure Prevention Resources


Researching What is Happening on Main Street


Convening Experts to Develop
the Right Policy Responses


Summary of Foreclosure-Related Papers
Produced in Economic Research


Summary of Foreclosure Work
in Community Affairs


A Message from the Chair
of the Mortgage Outreach and Research Efforts (MORE) Initiative

Since the start of the financial crisis, the Federal Reserve System has undertaken a series of well publicized
and unprecedented actions to help stabilize the mortgage and financial markets and promote economic recovery.
What is less well known is that the Federal Reserve has also been working to respond to the foreclosure crisis
on “Main Street,” leveraging its research, community affairs and supervision and regulation functions to support
innovative foreclosure prevention and neighborhood stabilization strategies at the local level. In the spring of
2009, the Federal Reserve’s Conference of Presidents embarked on a collaborative effort to leverage the
substantial knowledge of experts in mortgage markets across the Federal Reserve System. Under the auspices of
the Mortgage Outreach and Research Efforts (MORE) initiative, the 12 Federal Reserve Banks and the Board
of Governors have worked together proactively to inform and engage policymakers, community organizations,
financial institutions and the public.
This publication, Addressing the Impact of the Foreclosure Crisis, highlights MORE-sponsored projects
designed to communicate best practices and information about innovative programs to improve conditions in
neighborhoods affected by high rates of foreclosure. It also reviews initiatives undertaken by the various
Reserve Banks and the Board of Governors to respond to the foreclosure crisis. More detailed information
about MORE projects, including foreclosure toolkits and other valuable information for borrowers and
community organizations, can be found at the Foreclosure Resource Center of and the
other Federal Reserve Bank websites.

Charles L. Evans
President and Chief Executive Officer
Federal Reserve Bank of Chicago

2010 MORE Report


Members of the MORE Committee

Douglas Evanoff


Alicia Williams


Prabal Chakrabarti
Larry Cordell
Tammy Edwards
Joseph Firschein
Scott Frame
Frederick Furlong
Kristopher Gerardi
Erica Groshen
Joy Hoffmann
Jacqueline King
John Krainer

Kansas City
Board of Governors
San Francisco
New York
San Francisco
San Francisco

Matthew Lambert
Andreas Lehnert
Nellie Liang
Harriet Newburger
John Olson
Jeff Paul
James Savage
Theresa Stark
Daniel Sullivan
Douglas Tillett
Scott Turner
Richard Walker

Board of Governors
Board of Governors
Board of Governors
San Francisco
Board of Governors
San Francisco

A special thank you goes to Scott Turner and Carolina Reid from the San Francisco Fed who pulled together
information regarding the Reserve System’s efforts into one cohesive report. Thanks also go to Dan Wassmann,
John Dixon and Ping Homeric for turning the report into a publication.


Federal Reserve System

Fighting Foreclosures
Federal Reserve Mortgage Outreach and Research Efforts

Since the start of the financial crisis, the Federal Reserve System (FRS) has undertaken a series
of unprecedented actions to help stabilize the mortgage and financial markets and promote
economic recovery.
Much work has focused on the foreclosure crisis facing thousands of Americans, with Fed
researchers and community affairs professionals across the U.S. supporting innovative prevention
initiatives and neighborhood stabilization efforts.
Early in 2009, the presidents of the 12 Reserve Banks, working closely with the Board of
Governors in Washington, DC, created the Mortgage Outreach and Research Efforts (MORE)
initiative. Its goal is simple: Leverage the Fed’s substantial knowledge of and expertise in mortgage
markets in ways that are useful to policymakers, community organizations, financial institutions
and the public. This report highlights MORE’s work and the efforts of Economic Research,
Community Affairs and Supervision and Regulation professionals at Reserve Banks and the Board
of Governors.

The four regional Reserve Bank presidents leading the MORE effort are (left to right)
Federal Reserve Bank of Chicago President Charles Evans,
Federal Reserve Bank of St. Louis President James Bullard,
Federal Reserve Bank of Kansas City President Thomas Hoenig,
and Federal Reserve Bank of Minneapolis President Narayana Kocherlakota.

2010 MORE Report


Section 1

Improving the Communication of Information
about Foreclosure Prevention Resources

Federal Reserve Chairman Ben Bernanke is actively involved in leading the Federal Reserve System’s efforts
to address the national foreclosure crisis.

Working with federal agencies to assist unemployed homeowners
In early 2009, as the unemployment rate soared to new heights, the Federal Reserve recognized the challenge
of foreclosure prevention among unemployed households. To address this challenge, Reserve Bank staff
served as a liaison between the U.S. Departments of Labor and Treasury and the HOPE NOW Unemployment
Taskforce. The collaboration led to the creation of a web-based tool that allows homeowners and servicers
to document unemployment insurance benefits as part of income for federally sponsored mortgage-modification programs. Fannie Mae guidance directs servicers to use the tool for Home Affordable Modification
Programs (HAMP).
New York Fed staff also introduced steps to improve the coordination of unemployment and housing
resources and to increase unemployed homeowners’ awareness of all the resources available to them. As a
direct result of the Federal Reserve’s efforts, the Department of Labor and HOPE NOW websites now crossreference each other’s foreclosure prevention and work force resources so that unemployed workers have easy
access to information on both types of aid. Similarly, job fairs and foreclosure prevention events across the country
now have information or representation from both local work force specialists and housing counselors. In addition,
the parties developed and deployed call-center scripts to direct callers to each other’s resources.


Federal Reserve System

Partnering with NeighborWorks® to support neighborhood stabilization
In September of 2009, the Board of Governors signed a memorandum of understanding with NeighborWorks®
for foreclosure-related activities. This expanded the Fed’s outreach to more communities and developed
additional informational resources on neighborhood stabilization. NeighborWorks®:
• Developed a case study series on local community stabilization projects, found at: http://www.stablecommu-;
• Hosted webinars on the Neighborhood Stabilization Program (NSP) and stabilization issues that helped local

communities learn how to redevelop foreclosed properties for productive use;
community stabilization place-based training in Florida, California, New Jersey, and Nevada;
• Provided 49 scholarships for staff from nonprofits to attend training workshops in Florida and Louisiana; and
• Overhauled and re-launched the ( website, which
provides comprehensive resources to localities seeking to address the problems of concentrated foreclosures.
• Provided

In addition, the Board has coordinated the development and distribution of a new quarterly survey to
NeighborWorks® organizations and National Foreclosure Mitigation Counseling (NFMC) grantees and
sub-grantees. The survey is intended to gather information on loan modification efforts, bank walk-aways,*
and key emerging issues faced by low- and moderate-income communities (the emerging issues component is
based on a tool developed by the Richmond Fed). The survey was distributed to approximately 850 organizations.
The Board received initial results in April and is currently circulating a summary to interested parties.

Issuing bank examiner procedures for tenant protection
On May 20, 2009, the president signed into law a bill containing provisions to protect tenants living in foreclosed
buildings and ensure that those facing eviction have adequate time to find alternative housing. (The Protecting
Tenants at Foreclosure Act is Title VII of Public Law 111-22.) These provisions immediately went into effect
and are “self-executing,” so no federal agency (such as HUD) is responsible for making them work. It is up to
advocates to make sure that tenants, landlords, public housing authorities, courts, the legal community and
others involved in the foreclosure process are aware of these new rights for tenants.
To support this law, the Federal Reser ve issued information and bank examiner procedures to
ensure that banks regulated by the Federal Reserve understand and implement these protections. The guidance
provides FRS bank examiners with instructions to evaluate an institution’s awareness of the law, its efforts
to comply when it must foreclose on a property that has tenants, and its responsiveness in addressing
implementation barriers.

Updating the Foreclosure Resource Centers and revising the Foreclosure Mitigation Toolkit
In 2008, each of the Banks within the FRS created a Foreclosure Resource Center on its website, designed to
provide local constituents and consumers with easy access to information on foreclosure-related resources.
Throughout 2009, the MORE initiative worked to enhance these Resource Centers, increasing and improving
the content and improving the navigation of the websites. The Foreclosure Mitigation Toolkit, which provides
detailed steps and information for localities seeking to develop foreclosure prevention activities of their own,
was enhanced to include tips on how to create flyers and mailings to support borrower outreach events, links

* When a bank walks away from the foreclosure process and leaves the title in the name of the borrower.
2010 MORE Report


to regional and national resources, and a glossar y. A MORE working group also prepared
information on how individual Reserve Banks
can customize the website. In addition, a new
Foreclosure Recovery Resource Guide – which
seeks to assist consumers who have gone
through the foreclosure process – was developed
and distributed to the Federal Reser ve
Banks as a supplement to the toolkit. In June
2010, each Reser ve Bank incorporated and
customized this new information in their Foreclosure Resource Centers.

The Federal Reserve System’s regional Reserve Banks have worked
to enhance their Foreclosure Resource Center websites, increasing
and improving the content and navigation.

Training attorneys in foreclosure prevention
and mitigation
To expand the number of attorneys doing pro
bono work in foreclosure mitigation, the New
York Fed Legal Group helped launch the
Lawyers Foreclosure Intervention Network.
This pilot program, in partnership with the New
York City Bar Justice Center, trains attorneys in
foreclosure mitigation and matches them with
clients in need of pro bono services. Other local
bar associations and legal services groups
across the country are now copying this model
to set up similar programs.

The New York Fed Legal Group partnered with the New York City
Bar Justice Center to train lawyers in foreclosure mitigation.


Federal Reserve System

Section 2

Researching What is Happening on Main Street

The Federal Reserve has been working with communities for many years to combat foreclosures.

Undertaking a system-wide study of the federal Neighborhood Stabilization Program (NSP)
In 2009, Community Affairs researchers across the Fed System launched a study of the planning and early
implementation stages of the federal NSP. The NSP, established under the Housing and Economic Recovery
Act of 2008, provides funds to alleviate the negative spillover effects of abandoned and foreclosed properties
on communities. It was implemented quickly during a time of crisis, and program rules were revised several
times. In addition, the program is designed to be tailored to local conditions, meaning that grantees could and
did choose a wide range of intervention approaches. Because Community Affairs is regionally based and has
local connections in multiple regions, its research staff is well-placed to survey local NSP initiatives and analyze
the program’s implementation challenges and emerging best practices.
The research team conducted a series of interviews with more than 90 recipients of HUD’s NSP funds
in the fall of 2009, and will release a report based on these interviews and other data in the late fall of 2010. The
report will describe the range of experiences of the surveyed communities along a number of dimensions,
such as planning, targeting of funds, and implementation of specific program-eligible activities. It will also
consider how factors, such as local capacity, type of community, and scope of the foreclosure problem, may be
associated with program design and early program outcomes. To the best of our knowledge, this report will
provide the first nationwide examination of the early stages of the NSP and will help to support HUD’s efforts
to evaluate the impact of the NSP going forward.

2010 MORE Report


Produced a volume on real-estate-owned (REO) properties
and neighborhood stabilization issues
To help communities address the effects of concentrated foreclosures, the
Boston and Cleveland Feds produced a special volume of research that
examines important questions about lender-owned real estate. Chapters in
the book addressed questions, such as what factors can bring about stability
in a high-foreclosure neighborhood. How do “shadow inventories,” rental
properties, and vacant and abandoned homes influence the choice of strategies?
What are the incentives of the various parties to REO transactions? How are
nonprofits and municipalities using NSP funding to acquire and redevelop
REOs and stabilize neighborhoods? Seventeen researchers, practitioners,
and policy experts from around the country were commissioned to write
articles that shed light on these issues. The authors were drawn from
A new volume of research examines
national nonprofits, large holders or servicers of REOs, Fed researchers in
lender-owned real estate.
Community Affairs, and academics. The volume also includes an executive
summary of the FRS NSP case studies. The publication was released at a Federal Reserve Board conference
on September 1 and 2, 2010 (See page 11). It can be found at

Upgrading the New York Fed’s credit conditions website
Recognizing the need for more data on the foreclosure crisis, the Federal Reserve Bank of New York has been
working since 2008 to make data on mortgage credit conditions available to the public. The resulting website,
U.S. Credit Conditions (, provides timely, detailed geographic
information that can help community groups and local governments understand the mortgage crisis in their
area. These data provide critical information to local stakeholders aiming to target their prevention foreclosure
resources. Although initially focused only on mortgage credit, the website now includes maps and data with
delinquency rates for credit card, auto, and student loans. Over 100 new data series were added, including
credit conditions information for prime, jumbo, Fannie Mae and Freddie Mac, FHA and VA, subprime, and
Alt-A mortgages. In addition, New York Fed staff have been working with the heads of the largest state housing
finance authorities to provide them with the information they need to best allocate the federal stimulus money
they are receiving. In August, the website was expanded with the addition of new household-based information
on credit conditions derived from Equifax credit reports.

Understanding the literature: Reviews of key topics in housing and mortgage markets
Recognizing the need for a solid understanding of the literature on foreclosure prevention and neighborhood
stabilization, the Federal Reserve commissioned/produced four literature reviews. These reviews are:
1. Mortgage Defaults – A Situation Analysis;
2. Foreclosure Neighborhood Spillover Effects;
3. Foreclosure Prevention Efforts; and
4. The Effectiveness of Financial Literacy and Counseling. The four reviews are accessible at:,,


Federal Reserve System,
These literature reviews analyze existing literature, document the strengths and weaknesses of previous research
efforts and methodologies, and identify gaps in knowledge. These literature reviews are critical to building a
foundation of knowledge about housing and mortgage markets, which can then inform future research.

Launch of RADAR
RADAR is the Risk Assessment, Data Analysis,
and Research Group. One of the critical areas
for reform to emerge out of the foreclosure
crisis has been the recognition that researchers
and examiners within the Federal Reserve need
access to more detailed data on mortgage
and credit markets. A key task for the MORE
initiative has been to acquire, centralize and
make available large databases for Fed staff,
such as consumer credit data from one or more
of the credit repositories and mortgage data
from the largest vendors of such data, Lender
Processing Services Analytics, Inc., and CoreLogic. The launch of RADAR in 2010 has greatly
A key task for the MORE initiative has been to acquire and centralize
the ability of Fed staff to produce
the availability of large datasets.
timely reports and research papers that can
inform monetary policy, bank supervision and regulation and community development, as well as assist in
macroprudential supervision as part of regulatory reform. Whereas in the past each Bank would have had to
devote resources to cleaning and handling the data, this is now done in one centralized location, saving time
and money and, more importantly, ensuring that the data are of the highest quality. RADAR also has a separate
securities evaluation group that has developed the capability to conduct surveillance on all parts of ABS/MBS*
markets and evaluate securities in investment portfolios at banks and other systemically important institutions.

* Asset-backed securities/Mortgage-backed securities.
2010 MORE Report


Section 3

Convening Experts to Develop the Right Policy Responses

The Federal Reserve Board of Governors hosted a conference in September 2010 to share the findings of two reports on
foreclosure-related topics. See the next page for more information.

“Understanding the Housing and Mortgage Markets: What Data Do We Have, What Data Do We Need?”
Philadelphia Fed, June 2009
A lack of data affected the Fed’s ability both to predict the scope of the mortgage crisis and its spillover effects
and to respond to that crisis. In recognition of this situation, the Community Affairs Department and the Payment
Cards Center of the Philadelphia Fed jointly sponsored a conference on data needs and how to meet them.
Approximately 100 attendees from the FRS and from the academic, government, nonprofit, and for-profit sectors
participated in the conference. The first day of the conference was open to both Fed and non-Fed participants.
It included a session on state and local data needs and another on federal data efforts related to the housing and
mortgage markets. The second day was an in-house event limited to FRS employees. The first session considered
what data are already available within the FRS and how the data might be used more effectively, while the second
considered what additional data are needed for FRS functions. A long-term goal identified during the second
day’s sessions was improved collaboration in the acquisition and use of databases across the System. The
conference led directly to a collaborative effort between the Board of Governors and Freddie Mac to develop
and field a survey of mortgage borrowers to be linked to a comprehensive database on mortgage loan features
and performance.

“Financial Literacy, Financial Education and the Federal Reserve: Strategies for Success,”
Chicago Fed, September 2009
The Chicago Federal Reserve hosted a conference on the effectiveness of financial education and the methods
that are needed to evaluate the impact of financial education programs. Presenters provided the results from

Federal Reserve System

evaluations of both mandatory and volunteer financial counseling programs, and discussed the econometric
difficulties that the studies posed.

“Mortgage Foreclosure Policy: Past, Present and Future,”
Chicago Fed, December 2009
In December 2009, the Chicago Fed hosted a conference on policies related to mortgage foreclosures and their
impacts in collaboration with The Chicago Community Trust, Neighborhood Housing Services of Chicago,
the MacArthur Foundation, and the Woodstock Institute. The conference brought together national experts
from the advocacy, academic, financial and government communities, and featured Federal Reserve Governor
Elizabeth Duke as the keynote speaker. The first day focused on what is and is not working and identified best
practices, models, and solutions to help address rising foreclosures. It featured panel discussions on lessons
learned from the crisis; foreclosure prevention and protection of homeowners and tenants; local government
options for dealing with the foreclosure crisis; post-foreclosure issues and land use options; and how to prevent
a future foreclosure crisis. The second day focused on alternatives to current practices and assessed various
policy proposals — including a discussion of the potential benefits, pitfalls, and tradeoffs.

“Vacant Property Strategies for Neighborhood Stabilization,”
Board of Governors, Washington, DC, September 2010
On September 1 and 2, 2010, the Federal Reserve Board of Governors hosted a conference to disseminate the findings of two FRS reports: the analysis of the early implementation of the NSP; and the series of papers commissioned
to examine the dynamics of REOs and the effects of concentrated foreclosures on neighborhoods. The conference
was held in partnership with NeighborWorks® and featured presentations by Fed researchers and other leading
private, public, academic, and nonprofit experts. Invited participants included nonprofit recipients of NSP funds, as
well as public officials dealing with foreclosures in their states, counties, or municipalities. Fed Governor Elizabeth
Duke provided opening remarks and HUD Secretary Shaun Donovan delivered the keynote address. Remarks
were also given by Presidents Charles Evans (Chicago), Sandra Pianalto (Cleveland) and Eric Rosengren (Boston).

“As delinquencies and foreclosures
continue to increase, we must think
creatively and focus our research,
outreach, and community development efforts on ways to help these
communities recover.”
— Elizabeth Duke
September 1, 2010, at the Board of Governors conference on
Strategies for Neighborhood Stabilization

Federal Reserve Governor Elizabeth Duke speaks
at the September conference.

2010 MORE Report


To maximize participation and help disseminate the research to a wider audience, the conference was
video simulcast to local audiences at some Reserve Banks and made available for viewing on the Internet.

“Mortgage Foreclosures and the Future of Housing Finance,”
FDIC Seidman Center, Arlington, Virginia, October 2010
The Federal Reserve System and the Federal Deposit Insurance Corporation (FDIC) are co-hosting a two-day
conference highlighting policy-oriented research focused on U.S. housing and mortgage markets. The first
day of the conference will be dedicated to mortgage foreclosures: the current situation and outlook, measuring
the adverse neighborhood spillover effects and evaluations of efforts to mitigate foreclosures, including loan
modification and financial education efforts. The second day of the conference will take a broader perspective
and evaluate the future of housing finance: an evaluation of the mortgage interest tax deduction, affordable
housing issues, the future role of government-sponsored securitization, the future of private-label mortgage
securitization, the viability and role of private mortgage insurance, mortgage-related consumer protection and
standards, and the role of the Community Reinvestment Act.


Federal Reserve System

Section 4

Summary of Foreclosure-Related Papers
Produced in Economic Research

A variety of foreclosure-related studies and working papers were created by economic research departments
and others throughout the Federal Reserve System.

Staff in Economic Research departments across the System produced 24 foreclosure-related studies in 2009,
as detailed below. The studies are listed in four categories:
Studies related to the functioning of housing and mortgage markets;
• Studies related to foreclosure neighborhood effects and interventions;
• Studies related to mortgage loan modifications and foreclosure prevention; and
• Studies related to consumer protection and financial education (with an emphasis on counseling).

Studies related to the functioning of housing and mortgage markets
(FRB-New York) Andrew Haughwout, Richard Peach, and Joseph Tracy. FRBNew York Staff Reports No. 418, December 2009. Accessible at

• “The Homeownership Gap.”

(FRB-Cleveland) Yuliya Demyanyk. Economic Commentary,
July 2009. Accessible at

• “Ten Myths about Subprime Mortgages.”

2010 MORE Report


(FRB-St. Louis) Geetesh Bhardwaj and Rajdeep
Sengupta. Working Paper 208-39B, revised May 2009. Accessible at

• “Did Prepayments Sustain the Subprime Market?”

(FRB-Phil) Ronel Elul. FRBP
Working Paper 09-21. Accessible at

• “Securitization and Mortgage Default: Reputation vs. Adverse Selection.”

• “The Incentives of Mortgage Servicers: Myths and Realities.” Larry Cordell, Karen Dynan, Andreas Lehnert,

Nellie Liang, and Eileen Mauskopf, (2009). Uniform Commercial Code Law Journal 41(4) 347-374. Accessible
• “Designing Loan Modifications to Address the Mortgage Crisis and the Making Home Affordable Program.”

Larry Cordell, Karen Dynan, Andreas Lehnert, Nellie Liang, and Eileen Mauskopf (2009). Uniform Commercial Code Law Journal 42(1).
(FRB-SF) John Krainer and Elizabeth
Laderman. Working Paper 09-22, September 2009. Accessible at

• “Mortgage Loan Securitization and Relative Loan Performance.”

(FRB-SF) John Krainer, Stephen LeRoy, and Munpyung O.
Working Paper 09-20, November 2009. Accessible at

• “Mortgage Default and Mortgage Valuation.”

(FRB-Phil) Wenli Li, Haiyong Liu,
and Rui Yao. FRBP Working Paper No. 09-7. Accessible at

• “Housing over Time and over the Life Cycle: A Structural Estimation.”

• “Did Bankruptcy Reform Cause Mortgage Defaults to Rise?” (FRB-Phil) Wenli Li, Ning Zhu, Michelle White,

and Ning Zhu, April 2010. Accessible at
(FRBSt Louis) Geetesh Bhardwaj and Rajdeep Sengupta. Working Paper 2008-36D, revised March 2010. Accessible

• “Where’s the Smoking Gun? A Study of Underwriting Standards for US Subprime Mortgages.”

(FRB-Phil) Wenli Li. FRB-Philadelphia Business Review
(Q2 2009). Accessible at

• “Residential Housing and Personal Bankruptcy.”

Andra C. Ghent and Marianna Kudlyak. FRB-Richmond Working Paper, 09-10, July 2009. Accessible at

• “Recourse and Residential Mortgage Default: Theory and Evidence from U.S. States.”

Studies related to foreclosure neighborhood effects and interventions
(FRB-Cleveland) Thomas J. Fitzpatrick, IV. Policy
Discussion Paper No. 25, 2009. Accessible at

• “Understanding Ohio’s Land Bank Legislation.”

• “Thy Neighbor’s Mortgage: Does Living in a Subprime Neighborhood Impact Your Probability of Default?”

(FRB-Chicago) Sumit Agarwal, Brent W. Ambrose, Souphala Chomsisengphet, and Anthony B. Sanders.
Accessible at


Federal Reserve System

Studies related to foreclosure prevention and mortgage loan modifications
• “Why Don’t Lenders Renegotiate More Home Mortgages? Redefaults, Self-Cures, and Securitization.”

(FRB-Atlanta) Manuel Adelino, Kristopher Gerardi, and Paul S. Willen. FRB-Atlanta Working Paper 2009-17,
August 2009. Accessible at
• “Designing Loan Modifications to Address the Mortgage Crisis and the Making Home Affordable Program.”

(FRB-Phil and Board of Governors) Larry Cordell, Karen Dynan, Andreas Lehnert, Nellie Liang, and Eileen
Mauskopf. Uniform Commercial Code Law Journal, Volume 42, No. 1, September 2009. Accessible at
Chris Foote, Jeff
Fuhrer, Eileen Mauskopf, and Paul Willen. Federal Reserve Bank of Boston Public Policy Brief, No. 09-1,
2009. Accessible at

• “A Proposal to Help Distressed Homeowners: A Government Payment-Sharing Plan.”

(FRB-NY) Andrew Haughwout,
Ebiere Okah, and Joseph Tracy. Staff Report No. 417, December 2009. Accessible at:

• “Second Chances: Subprime Mortgage Modification and Re-Default.”

(FRB-Phil). See Banking Legislation & Policy (Vol. 28, No. 1,
2009) and Consumer Compliance Outlook (Q3 2009). Accessible at
research-and-data/publications/banking-legislation-and-policy/2009/blpq109.pdf and

• “Home Affordable Modification Program.”

Studies related to consumer protection and financial education
• “Subprime Mortgage Pricing: The Impact of Race, Ethnicity, and Gender on the Cost of Borrowing,”

(FRB-NY) Andrew Haughwout, Christopher Mayer, and Joseph Tracy. Federal Reserve Bank of New York
Staff Reports, No. 368, April 2009. Accessible at
• “Does Mandator y Counselor Involvement in the Mortgage Origination Process Affect Loan Choice and

Performance?” Formerly “Do Financial Counseling Mandates Improve Mortgage Choice and Performance? Evidence from a Legislative Experiment.” (FRB-Chicago) Sumit Agarwal, Gene Amromin, Itzhak

Ben-David, Souphala Chomsisengphet, and Douglas D. Evanoff. FRB-Chicago Working Paper, 2009-7.
Available at
• “Learning to Cope: Voluntar y Financial Education Programs and Loan Performance During a Housing

Crisis.” (FRB-Chicago) Sumit Agarwal, Gene Amromin, Itzhak Ben-David, Souphala Chomsisengphet, and
Douglas D. Evanoff. Charles A. Dice Center Working Paper No 2009-23. American Economic Review, Papers
and Proceedings, 100:2, May 2010. Accessible at
• “The Impact of Deregulation And Financial Innovation On Consumers: The Case Of The Mortgage Market.”

(FRB-Atlanta and Boston) Kristopher S. Gerardi, Harvey S. Rosen, and Paul S. Willen. March 2009. Accessible
at Journal of Finance, February 2010.

2010 MORE Report


Section 5

Summary of Foreclosure Work in Community Affairs

The St. Louis Fed partnered with its local PBS TV station to pilot “Facing the Mortgage Crisis,” which featured a wide variety
of foreclosure content. It became a national model introduced in nearly 50 additional PBS TV markets.

Initially created to support the implementation of the Community Reinvestment Act, Community Affairs
departments throughout the FRS seek to promote community and economic development in low- and moderateincome communities across the country. They do this through research, technical assistance and meetings
that bring together key local stakeholders around issues such as affordable housing, small business development,
access to credit, and neighborhood revitalization. When it became clear that foreclosures were on the rise,
Community Affairs departments at each of the Federal Reserve Banks developed local strategies to help
support local communities in their efforts to prevent foreclosures and stabilize neighborhoods. Critically, the
regional nature of Community Affairs allowed each Bank to tailor its foreclosure prevention activities to local
needs, with very different strategies emerging in cities such as Chicago, Detroit, Boston, Atlanta, Denver, and
Phoenix. The diversity of activities across the FRS makes it difficult to provide a comprehensive accounting of
all the activities that the Community Affairs function conducted in support of foreclosure prevention. Below,
we highlight some of these activities. To provide an indication of the specific impacts of each of these interventions,
each Reserve Bank provided a short description of the ways in which their events or analysis were used by
their constituents or the policy change that resulted.

Foreclosure-related events
Community Affairs sponsored or co-sponsored 287 separate foreclosure-related events in 111 cities across the
country. A breakdown of the types of events is included below, but in general these task force meetings, workshops, forums, seminars, and conferences brought together stakeholders involved in the foreclosure crisis


Federal Reserve System

such as servicers, housing counselors, financial institutions, government officials, nonprofit organizations, and
at times homeowners in order to understand the depth and reach of the local crisis, plan local responses to the
crisis (including borrower outreach events), and educate stakeholders about effective REO disposition and
new resources, such as the NSP and the Making Home Affordable Program.
Across the System, Community Affairs recognized that there was a distinct need to increase the scale
and reach of borrower outreach events. In 2009, Community Affairs co-sponsored 46 borrower outreach events,
which attracted more than 26,000 distressed borrowers. Importantly, building on their local knowledge of
communities affected by the foreclosure crisis, Community Affairs worked with national groups, such as NeighborWorks® and HOPE NOW to bring borrower outreach fairs to communities that did not have the same community
development capacity as cities that had long been struggling with foreclosure issues, such as California’s
Central Valley.
The rest of the events – 241 events, with 11,000 attendees in total – did not directly involve borrowers,
but instead were aimed at mobilizing local resources or educating key stakeholders. Of the 241 events that did
not directly involve borrowers, 80 were of a general nature, bringing together key stakeholders to examine
the impacts of the crisis and help mobilize the local response.

In 2003, the Federal Reserve Bank of Chicago helped Neighborhood Housing Services of Chicago (NHS)
and the City of Chicago Housing Department launch the Home Ownership Preservation Initiative (HOPI),
one of the country’s most successful foreclosure mitigation programs. Building on this success, in 2008 the
Chicago Federal Reserve partnered with The Chicago Community Trust and NHS to create and launch the
Regional HOPI initiative, which seeks to address metro area wide foreclosures and their effects through
multi-town reclamation/redevelopment cooperatives in the hardest hit suburbs; ongoing, large-scale counseling events, and a Web-based information clearinghouse ( to document
related research and best practices.

• The Richmond Federal Reserve helped establish a foreclosure task force in South Carolina in early 2009 and

supported its work through the provision of quantitative updates. The task force is self-sustaining and has
established a mortgage foreclosure information network for the state’s United Way hot line (dial 211), and
convenes leaders to collaborate and discuss solutions.

The St. Louis Federal Reserve partnered with their local PBS station to pilot “Facing the Mortgage Crisis,”
an initiative that included on-air, online, and in-person programming to address the foreclosure crisis. The
seminal work done by this affiliate is now a national model that the Corporation for Public Broadcasting has
introduced in nearly 50 additional markets.

Many of the other non-borrower outreach meetings had a specific focus, as follows:
• Thirty-four events focused specifically on issues around REO disposition and the implementation of the NSP,

bringing in experts to explore the best practices, challenges, and opportunities for the acquisition, rehabilitation, and repositioning of foreclosed homes, including through the application of NSP funds.
A Federal Reserve Bank of Kansas City forum on the disposition of REO properties in December
resulted in HUD officials reviewing and then easing an NSP policy that had required Community Development
Corporations (CDCs) to first complete environmental reviews before they could contract to buy foreclosed
homes. HUD’s new policy allows CDCs to contract to buy foreclosed homes, contingent on later completing
an environmental review, allowing the CDCs to buy higher-quality homes much more quickly, before the
homes are taken off the market by for-profit investors.

2010 MORE Report


“I am encouraging Boston Fed staff
to work to better understand how
foreclosures and REO can exacerbate
problems in troubled communities –
and to look for data that can better
determine which solutions work,
under which circumstances.”
— Eric Rosengren
September 2, 2010, at the Board of Governors conference on
Strategies for Neighborhood Stabilization
Federal Reserve Bank of Boston
President Eric Rosengren.


Twenty-nine events covered the administration’s Making Home Affordable Program and explored the
challenges for both servicers and counselors in modifying loans under the program.
As a result of a Minneapolis Reserve Bank Community Development Forum on Borrower Lender
Mediation, leaders from Minnesota’s main foreclosure mitigation counseling agency were able to ensure that
the services they offer to borrowers would be preserved and dovetail with any new legislation that would
create a new statewide system of borrower–lender mediation.


Twenty-nine events focused on combating foreclosure scams.
The Philadelphia Federal Reserve organized a meeting focused on prosecution trends for foreclosure
scams, mortgage fraud and forged deeds. As a result of the meeting, the U.S. attorney for the Eastern District
of Pennsylvania formed a broad-based Mortgage Fraud Community Advisory Committee.


Fifteen events delved into issues of assisting
borrowers post-foreclosure.
The Board of Governors organized a
meeting on tenants and foreclosure, focusing
on the steps that renters can take to mitigate
the impact of a landlord’s foreclosure on their
credit score and housing options. The forum
highlighted real-estate-owned rental policies
designed by Fannie Mae and Freddie Mac,
which were the first large-scale industry
efforts to address issues related to tenants.


Forty-one events were devoted to planning
specific borrower outreach events or debriefing
such events after they were held.
The Federal Reserve Bank of Boston partnered with HOPE NOW
on this foreclosure-prevention workshop.


Federal Reserve System


Finally, 12 different podcasts were released.
Partnering with the Center for Housing Policy, the Atlanta Reserve Bank released 12 podcasts featuring
interviews with experts on various facets of the foreclosure crisis. Each podcast received hits ranging from
300 to just over 1,200 (with a total of over 7,500 hits for the series) in the fourth quarter of 2009.

Empirical research papers
Community Affairs researchers also published
working papers and other research in 2009, as
detailed below. In total, 13 research papers
were published, and staff made 36 separate
presentations on these papers to key intermediaries at various seminars and conferences
and in a variety of academic settings:
• “The Accumulation of Lender-Owned Homes

During the U.S. Mortgage Crisis: Examining
Metropolitan REO Inventories.” (FRB-

Atlanta) Dan Immergluck, March 2009.
Accessible at
papers.cfm?abstract_id=1533772. Forthcoming,
Housing Policy Debate.

Community Affairs researchers published numerous foreclosure-related
working papers and research in 2009 and 2010.

• “Intrametropolitan Patterns of Foreclosed

Homes.” (FRB-Atlanta) Dan Immergluck.

Community Affairs Discussion Paper No. 01-09, April 2009. Accessible at
(FRB-New York) Kausar Hamdani.
Facts and Trends, Vol. 2, No. 1, April 2009. Accessible at

• “A Look at Upstate New York’s Subprime Mortgages in Foreclosure.”

• “The Myth of the Irresponsible Investor: Analysis of Southern New England’s Small Multifamily Properties.”

(FRB-Boston) Jeffrey Greenberg, Ren Essene, and Kai-yan Lee, New England Community Developments,
Issue 1, 2009. Accessible at
(FRB-Chicago) Robin Newberger and Daniel DiFranco.
Profitwise News and Views, June 2009. Accessible at

• “Nonprime Loans: A View from the Local Level.”

(FRB-Cleveland) Lisa Nelson. A Look Behind the Numbers, December 2009.
Accessible at

• “FHA Lending in Ohio.”

(FRB Dallas)
Wenhua Di, James Murdoch, and Jeilai Ma. Networks Financial Institute Working Paper No. 2009-WP-05,
June 2009. Accessible at Journal of Policy Analysis and Management,
Vol. 29, No. 4, pages 682-697, Fall 2010.

• “An Analysis of the Neighborhood Impacts of the Mortgage Assistance Program in Dallas.”

(FRB Dallas) Elizabeth Sobel Blum, September 2009. Accessible

• “Neighborhood Stabilization Program.”

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(FRB Richmond)
Community Affairs Office Staff, Marketwise, Fall/Winter 2009. Accessible at

• “Community Perspectives: Implementing the Neighborhood Stabilization Program.”

(FRB-Kansas City) Kelly D.
Edmiston. Economic Review, March 2009. Accessible at

• “Characteristics of High-Foreclosure Neighborhoods in the Tenth District.”

Elizabeth Laderman and Carolina Reid. Revisiting the
CRA: Perspectives on the Future of the Community Reinvestment Act, a joint publication of the Federal
Reserve Banks of Boston and San Francisco, February 2009. Accessible at

• “CRA Lending During the Subprime Meltdown.”

• “The Untold Costs of Subprime Lending: Examining the Links among Higher-Priced Lending, Foreclo-

sures and Race in California.” (FRB-SF) Carolina Reid and Elizabeth Laderman. Federal Reserve Bank of

San Francisco Working Paper presented at “Challenges and Opportunities for Homeownership in a Changing
Financial Environment,” sponsored by the Federal Reserve Bank of San Francisco in cooperation with the
Greenlining Institute, May 6, 2009. Revised November 2009. Accessible at
Laura Choi. Federal Reserve Bank of San Francisco Working Paper 2009-07, September 2009. Accessible at

• “Bank Accounts and Youth Financial Knowledge: Connecting Experience and Education.”

Data and analysis
Utilizing its research and analytic resources, Community Affairs staff also produced publications focused on
foreclosures and/or REO issues, regularly produced data and analysis on foreclosure and other real estate
trends for key stakeholders and constituents, and provided direct technical assistance to key stakeholders.
• One hundred and eleven separate analytical presentations were created and posted on the Internet, and staff

made 98 separate presentations utilizing this data and the accompanying maps to local constituents and other
key stakeholders.
The Boston Reserve Bank created an analytical tool called the “Stabilization Opportunity Score (SOS)”
that helps localities choose the appropriate stabilization tools and areas to combat the distress caused by
REOs. The SOS tool is used by key stakeholders in the region for their stabilization work and has specifically
been employed to strengthen their NSP2 applications.
The New York Reserve Bank produced a series of reports analyzing mortgage distress in low- and
moderate-income neighborhoods. Identifying and analyzing patterns in geographical concentration of
delinquencies, foreclosures, and REOs enables housing program administrators and local agencies to anticipate
and more efficiently provide counseling and related services to distressed home owners. The reports were
distributed to over 500 counselors and community leaders in the Second District, accompanied by outreach
and technical assistance.
A policy discussion paper on Ohio’s land bank legislation by the Reserve Bank of Cleveland led to
consultations with Ohio’s Environmental Protection Agency, the governor’s office, and the state legislature.
Legislative amendments to the Land Bank Act arose directly from the author’s recommendations.
The Reserve Bank also provided technical assistance to counties and municipalities interested in starting
and working with land banks.


Federal Reserve System

“We have learned a harsh lesson
about the dire consequences a
financial crisis has for ordinary
Americans in the form of lost jobs,
lost homes, lost wealth, and lost
businesses, and those of us charged
with overseeing the financial system
should always keep this human
cost in mind.”
Federal Reserve Bank of San Francisco
President Janet Yellen

— Janet Yellen
July 15, 2010, before the U.S. Senate

In 2009, the Federal Reserve Bank of San Francisco posted quarterly presentations on foreclosure
data for the nine states within its district, including local maps that detail the severity and extent of the
foreclosure crisis at the neighborhood level. These presentations received more than 500 website hits per
month and served as the catalyst for the creation of foreclosure prevention task forces in Oregon, Arizona,
Nevada, and Utah.
In 2009, the Federal Reserve Bank of Chicago produced a series of maps for each state in the Seventh
District. The maps identify the zip codes (and communities) in the Seventh District facing foreclosure
challenges. The maps illustrate the situation in each of the five states (Illinois, Michigan, Iowa, Indiana, and
Wisconsin) and separately depict foreclosures, delinquency, and vacancy rate information from six sources
of data.

Publications/Public Service Announcement
• Six regular publications were devoted to foreclosure and REO issues, with these publications reaching 37,000

constituents in print and another 11,000 via e-mail; at the same time, 51 articles in regular publications were
devoted to foreclosure and REO issues, and these publications reached 44,000 constituents in print.
• The Reserve Banks also produced 16 different brochures on foreclosure and distributed 39,000 of them in 2009.

Reserve Banks also supported the Board of Governors’ efforts to produce a public service announcement
(PSA) video shown in movie theaters across the country.
The Dallas Federal Reserve modified the Board’s PSA by adding their local partners – the Texas Foreclosure Prevention Task Force and “Dial 211” – to the video, and the task force then raised funds to run the ad
in six Texas cities. The Dallas Reserve Bank also produced take-away cards to place in the movie theater lobbies.

2010 MORE Report


Foreclosure Resource Center websites

The Reserve Banks’ Foreclosure Resource Centers were updated regularly with information for borrowers,
research reports, and critical links for constituents and were viewed 237,000 times in 2009.

A sample of some Federal Reserve Banks’ foreclosure-related websites.

Technical assistance on foreclosure issues
Finally, Community Affairs staff provided technical assistance – usually through the provision of data or
maps – on foreclosure or neighborhood stabilization issues to over 500 different government agencies or
nonprofits in 2009.

The Board of Governors
of the Federal Reserve System
The Board’s Division of Consumer and Community
Affairs (DCCA) has primary staff responsibility for
carrying out the Board’s consumer protection
program. In 2009, DCCA assembled a crossfunctional team to address the issues related
to foreclosure and neighborhood stabilization.
In addition to Community Af fairs, the team
included representatives of Regulation, Consumer
Compliance, Policy, and Consumer Education and
Research functions. DCCA:
The Board of Governors of the Federal Reserve System
in Washington, D.C.



Conducted tests of disclosures to evaluate the
effectiveness of the Division’s rule writing and
regulatory changes with consumers;

Federal Reserve System


Developed targeted information campaigns and messages on foreclosure scams and consumer protection
activities that alert consumers early to risky products and services related to foreclosure mitigation options;

• Organized sessions with policymakers to recommend effective strategies for deploying the initial $3.9 billion

allocation in the NSP based on field research conducted by Reserve Banks’ Community Affairs offices;

Sponsored a series of rental housing forums to identify strategies to stimulate Low Income Housing Tax
Credit participation and other financing methods for affordable rental housing in response to current weaknesses in the housing market;


Issued several supervisory comment letters related to improving consumer protection, including guidance
on the Protecting Tenants at Foreclosure Act passed on May 20, 2009, Truth in Lending disclosures, and the
announcement of a compliance review of non-bank subsidiaries’ loan modification activities; and


Provided training on the Home Affordable Mortgage Program for the System’s Bank Supervision and
Regulation staff, featuring Treasury’s chief homeownership policy advisor.

2010 MORE Report


The 12 Districts of the Federal Reserve System









1. Boston
2. New York
3. Philadelphia
4. Cleveland
5. Richmond
6. Atlanta
7. Chicago
8. St. Louis
9. Minneapolis
10. Kansas City
11. Dallas
12. San Francisco

Federal Reser ve System






Kansas City


New York



San Francisco

St Louis