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How do we rebuild communities in the wake of the foreclosure crisis?

Preventing Foreclosures and Evictions

I said in the last section that if you can't pay your mortgage, the bank owns your home and you get evicted. That's the basic gist of it, but there are sometimes things that you can do to prevent it from happening in the first place. One of them is a mortgage or loan modification. When you get a loan to buy a house, that's a legal, binding contract -- the lender agrees to loan you the money at specific terms and you agree to pay it back. But sometimes you can change those terms. If you can't pay your mortgage, sometimes lenders are willing to work with you. Maybe it's reducing the principal or the interest rate, or changing an adjustable rate to a fixed one.

The theory is that they'd rather gamble on getting more of their money back than foreclose -- especially since they'll be sitting on the property for who knows how long and at this point won't come close to getting what's owed on it. Other than starting with your bank, there are numerous government and private organizations to help people work out loan modifications. Getting a mortgage can be confusing enough -- figuring out how to modify it can be challenging, too. One example is the HOPE Now Initiative, a joint effort by the Federal Housing Commission, counselors and lenders to help homeowners modify or otherwise work out their mortgages to avoid foreclosure. There's also the federal HARP (Home Affordable Refinance Program). All of these programs require you to meet specific criteria, and critics argue that lenders and the government just aren't doing enough to help. Banks might not be willing to modify a loan because they think it sends the wrong message to people who are sticking to the original terms of their mortgage.

In addition to those groups, there are also non-profits and community coalitions to educate people about their legal rights during and after the foreclosure process -- including both tenants of rental houses that go into foreclosure as well as the homeowners. Project No One Leaves was started in 2008 by some students at Harvard Law School, and while initially based in Boston, they have some chapters and partner with other organizations. They've helped homeowners in cases where lenders illegally processed foreclosures -- some people had no idea that they couldn't actually be foreclosed upon and would've lost their homes without free legal assistance.

Unfortunately, there's not always a way to keep people in their homes. Once they have been evicted, there are still things that communities can do. It just depends on how invested you are.