Reducing Foreclosures and Environmental Impacts through Location-Efficient Neighborhood Design

While the nation continues to grapple with a troubling housing market and a rash of mortgage defaults, new research has emerged drawing a direct linkbetween “location efficiency”—a measure of the transportation costs in a given area—and mortgage foreclosure rates. The study shows that factors such as neighborhood compactness, access to public transit, and rates of vehicle ownership are key to predicting mortgage performance and should be taken more seriously by mortgage underwriters, policymakers, and real estate developers. With transportation costs accounting for roughly 17 percent of the average American household’s income, the need for better land use planning and better lending practices has never been more clear. NRDC recommends changes both to planning-related policies and mortgage underwriting procedures that can reduce transportation costs and risk of foreclosure while offering significant environmental benefits.