Foreclosure begins – that is, when the first public foreclosure notice occurs – has reached pre-pandemic levels nationwide, with lenders beginning the foreclosure process on 23,952 US properties in August 2022, up 12% from the previous month and up 187% from a year ago according to data from ATTOM, a real estate data company. (You can find the lowest mortgage rates you can get here.)
But why are foreclosure rates so much higher right now than they were a year ago? “Foreclosure statistics were artificially low during the pandemic due to foreclosure moratoriums and mortgage forbearance options. Now that these have expired and foreclosures have resumed, this only seems significant due to the artificially low levels of a year ago, as the current level of foreclosures has only returned to levels of before the pandemic,” says Greg McBride, chief financial analyst at Bankrate.
Other factors, such as high inflation eating away at household budgets, have also contributed to higher foreclosure rates, says Jacob Channel, senior economist at LendingTree. “It is important to note that foreclosure rates are only increasing to the extent that they were so low for much of 2020 and 2021. Currently, foreclosure levels are still lower than they were in 2019, even in the face of recent negative developments like high inflation,” explains Canal.
The number of foreclosure completions has also increased, with lenders repossessing nearly 4,000 properties in August 2022, up 59% from the same period last year. But adds Rick Sharga, executive vice president of market intelligence at ATTOM: “Most importantly, more than 90% of foreclosure borrowers have positive equity in their homes and would benefit from selling those properties for a profit rather than risk losing everything at a foreclosure auction. or repossession by the lender. » (You can find the lowest mortgage rates you can get here.)
What to know if you’re considering buying a foreclosure
Foreclosed homes can be good affordable investments for many buyers. But at the end of the day, buyers shouldn’t let a low price on a foreclosed property convince them to rush in and make an offer without doing any research. “Before you do anything, make sure you have a good idea of the state of the house and whether it’s occupied or not,” says Channel.
Indeed, “a home that has found itself in foreclosure may have been vacant for several months or may have had neglected routine upkeep and maintenance for the past two years. Insist on a thorough inspection to uncover any issues that may not may not be immediately apparent,” says McBride.
To find foreclosure listings, visit HomePath.com, a site owned by Fannie Mae that offers listings of thousands of homes in foreclosure, or HomeSteps.com, a site owned by Freddie Mac. Realtor.com and Zillow also offer a foreclosure search filter to find pre-foreclosure homes and those already owned by a bank. Some bank websites, such as Wells Fargo and Citi, also list properties in foreclosure, although interested parties should contact the listing agents associated with the properties they are interested in.
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