ABSTRACT

The post-2006 foreclosure crisis has been a signal moment in US urban history, and in many cities the long-term effects are only now becoming apparent. For instance, the city of Chicago experienced 128,596 foreclosure filings between 2008 and 2015, of which 66,868 went to fore-closure auction and 61,726 ended up transferred to the lender as a ‘real-estate owned’ (REO) property (Woodstock Institute 2016). Concentrated foreclosures are not new in many urban neighbourhoods, and some cities have extensive experience managing abandoned properties through the tax foreclosure process. However, during the housing boom from 2002 through 2007 distressed owners could avoid losing their homes by selling or refinancing their troubled mortgages; this kept vacant, bank-owned properties to a minimum. Since the onset of the fore-closure crisis, the proliferation of REO properties, and the corresponding eviction of occupants, has brought with it new forms of blight in the form of vacant, boarded homes. Collapsing housing values trap other property owners who face few short-run options beyond digging in or walking away. Economic costs to residents are magnified by strains on localities, including increased service costs, a declining property tax base, as well as new demands for social welfare services for those losing their homes to banks (Apgar et al. 2005).