Surge in Foreclosures: More Homeowners at Risk of Losing Properties

Foreclosure filings in the United States market are once again rising, putting many homeowners at risk of losing properties. As per the latest report, foreclosure starts have seen a 15% increase in the first half of this year, bringing the numbers close to pre-COVID-19 levels. This means that near about 186,000 properties across the country have received foreclosure filings during this period.

It's really important to understand that this surge in foreclosures doesn't necessarily indicate another Great Recession. Many of these foreclosures were actually delayed due to foreclosure moratoriums implemented at federal, state, and local levels during the pandemic. 

These moratoriums were put in place to protect homeowners who faced financial hardships due to widespread job losses. While the overall foreclosure activity is still below historical norms, the recent spike in foreclosure starts suggests that we may witness an increase in foreclosures in the coming years.

• Unlike the Great Recession, where many homeowners struggled to afford their mortgage payments, the current situation stems from a backlog of foreclosures that would have occurred during the pandemic. Lenders are now catching up, resulting in a rise in foreclosure numbers. 
• In fact, the average length of the foreclosure process has reached an all-time high of 1,212 days, which is equivalent to over three years. However, one significant difference between now and the Great Recession is that many homeowners facing foreclosure today are not left empty-handed. 
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• Thanks to the substantial increase in home prices over the past few years, struggling property owners who can no longer afford their mortgages have the option to sell their homes rather than go through a foreclosure process. This choice helps them avoid the damaging impact on their credit and also allows them to pocket a profit from the sale, providing them with some financial relief and a fresh start.

When examining specific states, there are variations in the rise of foreclosures. However, it's important to note that the overall foreclosure rates are still relatively low. States like Maryland, Oregon, Alaska, West Virginia, and Arkansas have experienced notable increases, but the foreclosure rate in these states remains modest, ranging from 0.20% to 0.25%. Analyzing metropolitan areas, some have seen higher foreclosure rates as well, although it's worth mentioning that these rates are still relatively low compared to historical levels.

While the recent surge in foreclosure filings may be cause for concern, it's essential to recognize that the current situation differs from the Great Recession. Homeowners today have more alternatives, such as selling their homes, to mitigate the impact of foreclosure. Nevertheless, the increase in foreclosures serves as a reminder of the ongoing economic challenges faced by many Americans.

Hello! I'm Jay Thomas, a REALTOR in Houston, Texas. Chances are you and I share a similar passion, Real Estate! I also have a passion for building businesses, working out, inspiring others, technology, sports, and people. Connect with me onFacebookandInstagram!