Increasing homeownership among households of color is critical to eliminating the broader racial wealth gap. Much of the activity around closing the racial homeownership gap has focused on helping households get into a home. But helping them keep their home is key as well. Arithmetically, the change in the number of homeowners is a factor of both the inflow of new households into homeownership and the outflow of households exiting homeownership.

Foreclosure is one critical piece of the outflow factor. A mortgage foreclosure occurs when the servicer takes possession of a property after the homeowner misses several consecutive months of missed payments. A foreclosure is not only the loss of homeownership but a penalty that stays on a credit report for seven years, impeding one’s ability to access credit or purchase another home for that period. And foreclosure can have important health implications.

This fact sheet explores the causes of foreclosure and its implications for racial wealth disparities and health, and the policy levers that have been and can be leveraged to prevent it.