10 States With The Highest Foreclosure Rates [June 2022]

Going through a foreclosure can be devastating, and many communities have still not recovered emotionally or financially from the years of unusually high numbers of foreclosures following the financial crash of 2008.

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The good news is that foreclosure rates in the United States have been steadily declining since 2011. The bad news is that after the moratorium on pandemic-related foreclosures ended on July 31, 2021, the rate of foreclosures is steadily increasing d month to month. .

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What causes foreclosure?

Causes of foreclosure include items that reduce income or increase mandatory expenses for three consecutive months such that the homeowner cannot make their mortgage payment for three months.

These reasons include sudden medical bills, divorce or death of an adult at home who was earning a salary, credit card debt or other debta large unexpected expense such as a new roof or a tax bill, a natural disaster that damages the home or results in loss of income, or loss of employment.

Two new factors in the past two years that may affect the ability to repay mortgages are related to COVID-19. Hospitalizations due to COVID-19 and the effects of long COVID can reduce income and increase expenses enough to push a homeowner into foreclosure.

Sometimes a homeowner will move to another house and, instead of selling the house, simply stop paying the mortgage and allow the property to be foreclosed. Foreclosure has a negative impact on your credit and can thwart all your efforts to boost your credit.

Labor market affects foreclosures

While job loss is a leading reason for foreclosures, official unemployment rates by state since the Bureau of Labor Statistics are not strongly correlated with foreclosure rates currently. Given that current official employment rates are so high in the United States, it is reasonable to assume that underemployment is a bigger cause of foreclosures than complete unemployment in this specific economy.

The job market has undergone massive changes during the pandemic, and one of them is people who voluntarily leave the workforce or work casually or part-time by choice. People who choose not to look for work or be underemployed are at a higher risk of foreclosure than those in full employment, and they are also not reflected in unemployment figures.

Another cause of work-related foreclosures that is not reflected in unemployment figures is the effect that the artificial withholding of the minimum wage has had on the labor market and on home buying behavior.

Without cost-of-living (COL) increases in the minimum wage and corresponding COL increases in higher-paying jobs, buyers are less likely to have a down payment saved before buying a home, so they are more likely to make bigger and bigger deals. riskier mortgage contracts at higher interest rates. This increases market insecurity and mortgage default rates, leading to foreclosures.

Based on ATTOM data, these are the 10 states with the highest foreclosure rates in the first three months of 2022.

10. Georgia

One in 1,702 homes was foreclosed in Georgia in Q1 2022, or 0.06%. That’s 2,592 units seized.

9.Michigan

One in 1,426 homes was foreclosed in Michigan in the first quarter of 2022, or 0.07%. That’s 3,205 units seized.

8. Florida

One in 1,211 homes was foreclosed in Florida in Q1 2022, or 0.08%. That’s 8,147 units seized.

7.Indiana

One in 1,210 homes was foreclosed in Indiana in Q1 2022, or 0.08%. That’s 2,415 units seized.

6.Delaware

One in 1,163 homes was foreclosed in Delaware in the first quarter of 2022, or 0.09%. That’s 386 units seized.

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5. Nevada

One in 1,090 homes was foreclosed in Nevada in the first quarter of 2022, or 0.09%. That’s 1,175 units seized.

4. South Carolina

One in 1,081 homes was foreclosed in South Carolina in Q1 2022, or 0.09%. That’s 2,170 units seized.

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3.Ohio

One in 991 housing units was foreclosed in Ohio in the first quarter of 2022. That’s 0.1%, a total of 5,289 units

2. New Jersey

One in 792 homes was foreclosed in New Jersey in the first quarter of 2022. This represents 0.13% of all properties, or a total of 4,752 units.

1.Illinois

One in 791 homes was foreclosed in Illinois in the first quarter of 2022. This represents 0.13% of all properties, or a total of 6,861 foreclosed properties.

How to avoid seizure

Foreclosure is emotionally traumatic and financially devastating and damages your credit score for years. Fortunately, there are alternatives to foreclosure that homeowners can apply to their mortgage lender that can keep them in their homes and keep their credit ratings intact.

Options include a loan modification, in which the lender gives the borrower smaller monthly mortgage payments by extending the term of the loan. These mortgage modifications are common practice, albeit unsecured, and you have every right to request a modification from your lender.

Other options to avoid foreclosure by changing the arrangement with your lender are a payment suspension, which is a pause in monthly payments for a month or more, or a repayment plan, which temporarily increases your monthly payments to that you have caught up. late payments.

By staying in communication with your lender even when you can’t make payments, you may be able to avoid foreclosure and stay in your home.

Owners who have suffered a seizure and wish to repair their credit can go through the best credit repair companies to increase their credit ratings.

Bankruptcy is an option

It may also be possible to stay out of foreclosure by filing Chapter 13 bankruptcy, which stays foreclosure proceedings. However, bankruptcy has ramifications for your entire financial life and legal rights and requires five years of regular mortgage payments and any other debt you owe.

So if your mortgage is the only payment you haven’t been able to make, it’s worth keeping things simple by working with your lender for a loan modification instead of filing for bankruptcy.

At the end of the line

Analysts expect foreclosure rates to continue to rise each month for the rest of the year. The lag between the moratorium on foreclosures and the first half of 2021 will ripple through the system and people will continue to feel the effects of the labor disruptions of 2021. However, there are ways to eliminate financial stresseven in this volatile economy.

High employment rates at the moment may give some foreclosure owners a chance to catch up, but those effects won’t be visible in official foreclosure figures for several months.

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