Brenda’s niece was evicted because her landlord was a victim of foreclosure. Foreclosure occurs when the recipient of a loan is unable to comply with the terms of the loan. In these cases, the lender may claim the right to take and sell the property. As we see in the case of Brenda’s niece, foreclosure affects both homeowners and renters.

Why might a house be foreclosed on? The answer is not so simple. To understand foreclosure today, we need to look back to the 1990s.

In the 1990s, home mortgages started to become especially complex. Increasingly, it became common to bundle mortgages with other debts to be bought and sold around the world on the investment market. Financial deregulation, inflation, and predatory lending increased. Black and Latino borrowers were given sub-prime loans (with high interest rates and balloon payments) at much higher rates than White or Asian Americans—even when they qualified for better loans.

Fast forward to 2007. All at once, these factors coalesced into an economic crisis. Increasingly, people had trouble paying their mortgages. Black and Latino borrowers with sub-prime loans were especially affected. Banks responded with foreclosures.

Then, the housing bubble burst. As banks started to lose money, they started ramping up foreclosures. They even foreclosed on people fraudulently—people who were not actually behind on their loans. 

Despite widespread evidence of fraud, the government bailed out failing banks in 2008. Regulations were put into place by Dodd-Frank, but these regulations were weak.

As all of this was happening, people like Brenda’s niece were moving into new houses, hoping for stability.

Between 2007 and today, more than 5 million households have experienced foreclosure. This waterfall of foreclosures most adversely impacted working and middle class Americans, particularly Americans of color.

Do you know someone who has been impacted by foreclosure?