Assessment of the Impact of the Mortgage Crisis on New Hampshire Mortgage Holders

An Overview of the National Mortgage Settlement and its Impact
PRS Briefs
PRS Policy Brief 1213-11
Monday, May 13, 2013

This project analyzed the impact of the national mortgage crisis on New Hampshire, specifically looking at foreclosures. We did an in-depth comparison of three states—New Hampshire, Vermont, and Maine—and found that New Hampshire was impacted most negatively. Though we cannot draw a definitive link between these negative impacts and fraudulent banking practices, it is clear that sub-prime lending and mortgage loan securitization played a large role in New Hampshire’s late 2000s housing problems.

In addition to macroeconomic stresses such as the housing bubble and interest rate hikes, fraudulent banking practices exacerbated the mortgage crisis. Robo-signing and dual tracking were the most illegal activities, followed by subtler, irresponsible acts such as losing paperwork or giving only partial disclosure of loan terms. The national settlement provides short-term fixes in the form of monetary relief, as well as servicing standards reforms that will pan out over the next few years. The settlement ensures its own efficacy in two ways: incentives and accountability. First, banks will be motivated to provide substantial amounts of direct relief because it is credited towards their criminal fees. Second, the National Monitor requires quarterly progress reports from the banks and can pursue legal recourse if he feels the settlement is not being honored.

This project also attempted to place New Hampshire into a national comparative state analysis of the impact of the mortgage crisis and the policy response stemming from the settlement. Analysis of both consumer relief allocation and the efficacy of state supported programs nationally demands more time for services to be fully implemented. So far New Hampshire has been successful in both endeavors. Further, New Hampshire is one of a small group of states to use the entirety of its direct state allocation for housing and foreclosure-related issues. A more accurate determination can be made by the middle of next year after consumer relief has been fully distributed and New Hampshire’s state programs, as well as those of other states, have taken effect.