Creating homeownership is a central strategy of community developers, but the success that they have realized is threatened by a recent rise in the rate of mortgage foreclosures. Innovations in the mortgage industry, particularly automated underwriting, risk-based pricing and stratified securitization, have helped foster the development of mortgage products that are flexible and affordable, expanding homeownership opportunities to many households with poorer credit ratings and fewer savings for down payment. But these riskier "subprime" loans, often made with larger up-front fees and higher interest rates, are foreclosed upon at a much higher rate than are prime loans. Subprime lending has also been concentrated in low-income and high-minority areas, often the very places community developers are trying to revitalize.Community-based development organizations across the country have responded to the increase in foreclosures by providing counseling and loans and by working with local lenders to minimize the number of delinquent mortgages that go into foreclosure. Foreclosure-prevention programs are resource-intensive, however, and community organizations in locations with high foreclosure rates can be quickly overwhelmed by requests for assistance. Nevertheless, many affiliates of the NeighborWorks network have created successful programs. These programs have staff with a wide variety of experience, as they must negotiate with the lender and servicer staff, and also provide counseling and support to the homeowner. Counseling may be needed to cover a variety of topics, including financial education, household budgeting, job skills or family problems, and often requires partnering with other organizations. A number of the foreclosure-prevention programs also provide, or have access to, loans and grants to help homeowners restructure their debt and become current on their mortgages
