Housing affordability challenges intensified during the Great Recession and since, but those challenges have been building for several decades. Several factors contributed to the decline of affordable housing in the U.S., including stagnant wages, high unemployment, the housing boom and bust, and a shift by consumers to rental housing.

The Consumer Financial Protection Bureau (CFPB)*released today the “Ability-to-Repay” rule, which is designed to assure the reliability of mortgages – making sure that lenders offer mortgages that consumers can actually afford to pay back. According to CFPB, features of the new rule include:

The foreclosure crisis has touched every state and continues to be a drag on the national economy. House prices have fallen nationally an average of 33 percent from their 2006 peak, resulting in about $7 trillion in household wealth losses. At the same time, an unprecedented number of households have lost their homes to foreclosure or are close to losing their homes.The most recent data available from RealtyTrac shows that one in every 706 housing units in nationwide received a foreclosure filing in October 2012.

On November 26, I had the opportunity to present to the 2012 Kentucky House Task Force on Foreclosures in Frankfort, Kentucky about the steps other states are taking to mitigate the damage of the foreclosure crisis and, if possible, prevent another one from occurring.  Representative Joni Jenkins, who chairs the Task Force, explained that the group was designed to explore the effects of foreclosures on Kentucky households and what is happening nationally.

Stateline Midwest ~ November 2012

Illinois Sen. Jacqueline Collins remembers when her legislative district on Chicago’s South Side had plenty of grocery stores and family restaurants.

States - excluding Oklahoma - received $2.5 billion as a part of the $25 billion National Mortgage Settlement with the country’s five largest loan servicers. Most of the money is intended for homeowner relief and programs aimed at preventing future foreclosure abuse. Some states, however, are using the settlement money to offset existing costs rather than creating new programs to aid homeowners.

Since the Great Recession, states have been hit hard by high foreclosure rates and those higher rates continue to hamper economic recovery. But those rates have varied significantly over the past several years, depending upon which state you are discussing. For example, more than 6 percent of Nevada housing units (one in 16) had at least one foreclosure filing in 2011, giving it the nation’s highest state foreclosure rate for the fifth consecutive year. Arizona and California are also still seeing extremely high rates, despite a significant drop in foreclosure activity over 2010. On the other end of the spectrum, foreclosures in North Dakota are much less common: just one in 39,687 units were in the foreclosure process in April. Check the map from RealtyTrac below to see the most recent foreclosure rates for your state. 

The National Mortgage Settlement is a landmark joint state-federal settlement with the country's five largest loan servicers – Ally/GMAC, Bank of America, Citi, JPMorgan Chase, Wells Fargo. The settlement will provide as much as $25 billion in relief to distressed borrowers and direct payments to states and the federal government. The states have received $2.5 billion as a direct payment to "purposes intended to avoid preventable foreclosures, to ameliorate the effects of the foreclosure crisis, [and] to enhance law enforcement efforts to prevent and prosecute financial fraud."