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Saturday, August 27, 2011

Foreclosure Rate: Up or Down and Why?

Is the Foreclosure Rate Up or Down, and Why?


My wife and I house shopped on and off for several years until recently purchasing another home. Almost every real estate agent we met during that time period declared “The housing market is rebounding” or “We’re past the worst of it”. I didn’t bother to argue, but I always wondered how ongoing foreclosures, lower home sale prices, less sale activity, teachers being fired by the hundreds, libraries closing, and potholes in the road not being fixed were indicators of improvements in process or improvements right around the corner. Of course, general economic conditions impact the rate of foreclosures, and the rate of foreclosures in turn affects general economic conditions. So what is the foreclosure rate now, compared to what it was the last few years, and why?


Let’s take a look at the United States foreclosure rate since January, 2008. Please be advised that all statistics are approximate, and that there are many sources of information for such data, not all of which agree.



















































Month, Year



 Foreclosures Started This Month



Foreclosures Completed This Month



Jan., 2008



107,000



47,000



July, 2008



110,000



78,000



Jan., 2009



100,000



67,000



July, 2009



136,000



88,000



Jan., 2010



105,000



90,000



July, 2010



98,000



93,000



Jan., 2011



75,000



76,000



May, 2011



62,000



68,000



 


What do these statistics tell us? They tell us that the rate of foreclosure is actually lessening. Why? There are several reasons, one primary reason being that the rate of mortgage loan modifications is increasing. Now let’s compare the foreclosure rate versus the rate of initiating mortgage loan modifications since the Government modification programs were initiated in 2009. Please be advised that all statistics are approximate, and that there are many sources of information for such data, not all of which agree.




































Month, Year



Cumulative Foreclosures Completed Since April, 2009



Cumulative Mortgage Modifications Initiated via Govt. Programs Since April, 2009



July, 2009



300,000



800,000



Jan., 2010



800,000



2,150,000



July, 2010



1,300,000



3,300,000



Jan., 2011



1,850,000



4,300,000



May, 2011



2,100,000



4,900,000



 


As you can see, in the first 5 months of 2011, there have been approximately 600,000 mortgage loan modifications initiated via Federal Government programs versus “only” 250,000 foreclosures completed.  The increased availability to mortgage loan modifications has helped to slow the tide of foreclosures. This is good news, but we’re not through the storm yet.


If you have challenges related to your mortgage loan, or are otherwise interested in a mortgage loan modification, please don’t hesitate to contact McGrath & Spielberger, PLLC: contact us.