	Introduction

The home mortgage foreclosure rate in the United States began to rise rapidly around the middle of 2006 and remained elevated for several years thereafter. Consequently, an issue before Congress was whether to use federal resources and authority to help prevent some home foreclosures and, if so, how to best accomplish that objective. Additional foreclosure prevention initiatives that were established in 2007 or after but ended prior to the end of 2016 are described in the Appendix . Impacts of Foreclosure

Losing a home to foreclosure can have a number of negative effects on a household. Some homeowners might have difficulty finding a place to live after losing their homes to foreclosure. If foreclosures are concentrated, they can also have negative impacts on communities. Federal Response to Increased Foreclosure Rates

As foreclosure rates began to increase rapidly in the years after 2006, there was broad bipartisan consensus that the rapid rise in foreclosures had negative consequences on households and communities. However, there was less agreement among policymakers about how much the federal government should do to prevent foreclosures. Supporters also suggested that preventing foreclosures could help stabilize the economy as a whole. Despite the concerns surrounding foreclosure prevention programs, and disagreement over the proper role of the government in preserving homeownership, the federal government implemented a variety of temporary initiatives to attempt to address the high rates of residential mortgage foreclosures. Some of these initiatives were enacted by Congress, while others were created administratively by the George W. Bush and Obama Administrations. Several of these initiatives remained active through at least 2016, including the following:
the Home Affordable Modification Program (HAMP), which provided financial incentives to mortgage servicers to modify certain mortgages; the Home Affordable Refinance Program (HARP), which allows certain homeowners with little or no equity in their homes to refinance their mortgages; the Hardest Hit Fund, which provides funding to certain states to use for locally tailored foreclosure prevention programs; the FHA Short Refinance Program, which allowed certain borrowers to refinance their mortgages into new loans insured by the Federal Housing Administration (FHA) while reducing the principal amount of the loan; and additional funding for housing counseling to assist people in danger of foreclosure. Other borrowers, such as those who were re-employed but at a lower salary, may have been able to qualify for a regular HAMP modification. First, Hope for Homeowners required that any second liens on the property be extinguished. Other challenges are more conceptual, and are related to questions of fairness and precedent. This section describes some of the most prominent considerations that were involved in developing programs to preserve homeownership in the years following the increase in foreclosure rates that began in 2006, as well as how some of these challenges were addressed in the years following the programs' establishment. Possibility of Redefault

A challenge associated with loan modification programs is the possibility that a homeowner who receives a modification will nevertheless default on the loan again in the future. Furthermore, modified mortgages that default again in the future can potentially harm borrowers.
The home mortgage foreclosure rate began to rise rapidly in the United States beginning around the middle of 2006 and remained elevated for several years thereafter. Losing a home to foreclosure can harm households in many ways; for example, those who have been through a foreclosure may have difficulty finding a new place to live or obtaining a loan in the future. Furthermore, concentrated foreclosures can negatively impact nearby home prices, and large numbers of abandoned properties can negatively affect communities. Finally, elevated levels of foreclosures can destabilize housing markets, which can in turn negatively impact the economy as a whole.
In the years that followed the increase in foreclosure rates, there was a broad consensus that there are many negative consequences associated with high numbers of foreclosures. There was less consensus over whether the federal government should have a role in preventing foreclosures and, if so, what that role should be. Nevertheless, in the years after the foreclosure rate began to rise, Congress and both the Bush and Obama Administrations created a variety of temporary initiatives aimed at preventing further increases in foreclosures and helping more families preserve homeownership. These efforts included several initiatives that remained active through 2016 or beyond, including
the Home Affordable Modification Program (HAMP), the Home Affordable Refinance Program (HARP), the Hardest Hit Fund, the Federal Housing Administration (FHA) Short Refinance Program, and the National Foreclosure Mitigation Counseling Program (NFMCP).
Two other initiatives, Hope for Homeowners and the Emergency Homeowners Loan Program (EHLP), expired at the end of FY2011.
Some of these federal foreclosure prevention initiatives were criticized as being ineffective or less effective than had been hoped. This led some policymakers to suggest that changes should be made to these initiatives to try to make them more effective, while other policymakers argued that some of these initiatives should be eliminated entirely. For example, in the 112th Congress, the House of Representatives passed a series of bills that, if enacted, would have terminated several foreclosure prevention initiatives (including HAMP and the FHA Short Refinance Program) prior to their intended end dates. However, these bills were not considered by the Senate.
While many observers agreed that slowing the pace of foreclosures was an important policy goal, several challenges have complicated such efforts. These challenges have included implementation issues, such as deciding who has the authority to make mortgage modifications, developing the capacity to complete widespread modifications, and assessing the possibility that homeowners with modified loans might default again in the future. Other challenges have been related to the perception of unfairness in providing help to one set of homeowners over others, the possibility of inadvertently providing incentives for borrowers to default, and the possibility of setting an unwanted precedent for future mortgage lending.