Foreclosure activity saw an uptick in October, marking the sixth consecutive month of annual increases, according to the October 2021 Foreclosure Market Report from ATTOM Data Solutions. After the federal foreclosure moratorium ended in July, and the eviction moratorium closed in September, the number of foreclosures has been growing.
Foreclosure filings – which include default notices, scheduled auctions or bank repossessions – rose 5% month-over-month in October. They also increased 76% from a year ago, according to the report.
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Homeowners still have time as mortgage foreclosure rates slow
Although foreclosures are increasing, data shows mortgage servicers are working with homeowners on solutions to avoid them. In fact, many of the foreclosed properties were just vacant homes.
"As expected, now that the moratorium has been over for three months, foreclosure activity continues to increase," said Rick Sharga, executive vice president at RealtyTrac, an ATTOM company. "But it’s increasing at a slower rate, and it appears that most of the activity is primarily on vacant and abandoned properties or loans that were in foreclosure prior to the [COVID-19] pandemic."
Across the U.S., about one home out of more than 6,675 housing units had a foreclosure filing as of October. The highest foreclosure rates during that month were seen in Illinois, Florida, New Jersey, Nevada and Ohio.
"Most foreclosure activity for the next few months is likely to be foreclosure starts since virtually nothing entered the foreclosure process during the past year," Sharga said. "The ratio of foreclosure starts to foreclosure completions will normalize over time as we get back to normal levels of activity."
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How homeowners can avoid foreclosure
Homeowners struggling to make their monthly payments have several options available to them, and foreclosure can be avoided in many cases. The first step is to contact their servicers to discuss their options. Servicers may have alternative solutions that can assist in getting the homeowner back on track:
Modify the home loan
Homeowners have several ways to change their loan payments, depending on their financial needs.
For example, if homeowners can no longer make their payments because of coronavirus-induced hardship, a mortgage forbearance program would temporarily put those payments on hold. Those struggling to make payments in full may qualify for a loan modification to permanently reduce the interest rate or lengthen the loan term to lower the payments.
Homeowners should contact their mortgage servicer to discuss their options for forbearance plans or modifications.
Refinance the mortgage
Refinancing can be a beneficial option for many homeowners, including those who are struggling to make their mortgage payment, or even those who simply want to pay less. The current average rate for a 30-year mortgage is 3.1%, according to the latest data from Freddie Mac.
If you are interested in refinancing, visit Credible to compare options from multiple lenders to ensure you receive the best rate without impacting your credit.
Sell the home
Homeowners with no other options available to them would benefit substantially from selling their home, rather than letting it fall into foreclosure. Home prices have risen at record rates over the past year, with many homeowners seeing close to a 20% gain in value as the housing market is flooded with demand for new homes. Those who sell their home could use the profits to determine their next steps, rather than lose the home to foreclosure because of past due balances.
If you are struggling to make your monthly payments and want to see what options are available to you, contact Credible to speak to a home loan expert and get all of your questions answered.
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