Slideshow: Fallout from Foreclosures

The effects of foreclosure stretch far beyond the walls of a bank-owned home. Each foreclosed property within an eighth of a mile is associated with a 0.9 percent drop in house values, with even greater negative consequences in low- and moderate-income communities. Even three to five years after a foreclosure liquidation, the spillover effect on properties within an eighth of a mile can exceed 4 percent.

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The negative impacts can be felt up to half a mile away and can persist for as long as five years after the foreclosure takes place. Vacant homes attract looters, and crime rates can rise in foreclosure-riddled areas. And everyone from sheriff's deputies to public health workers to lenders themselves must deal with the fallout of a subprime mortgage gone awry.

Both the Senate and the House have now passed neighborhood stabilization fund legislation, and bipartisan Senate action has moved forward legislation that will help safely refinance families at risk of losing their homes. Together, these offer the best opportunity to stabilize local housing markets by limiting further downward pressure on prices caused by large numbers of foreclosures.

To read CAP’s legislative proposals and policy analysis on the housing crisis, please go to the Housing page of our website.