Source: US News —
As a homeowner, homebuyer or aspiring real estate investor, you want to understand the housing market more. Median home prices, mortgage interest rates and average days on market are all valuable metrics to grasping current activity on the market.
But how homeowners are able to hold onto their existing properties is just as important. If you’re trying to understand whether we’re headed for a housing market crash, foreclosure rates are an imperative detail:
What Do Foreclosure Rates Mean?
Foreclosure occurs when a homeowner defaults on his or her mortgage due to inability to pay, and the lender takes possession of the property as a result.
The process for foreclosure varies slightly across the country based on state law, but it often begins with a foreclosure filing with the court system – the lender files a lawsuit to foreclose. There is a period to attempt to reconcile the defaulted loan, but if it is not, the lender will eventually take possession of the property via the local sheriff’s department, which carries out the eviction.
However, it’s important to distinguish whether the rate you’re looking at includes all actions taken in the foreclosure process, or if it’s in reference to initial foreclosure filings to start the process, default notices, scheduled auctions or the final process of bank repossession. When someone says a property is “in foreclosure”, it’s often in reference to a foreclosure filing, but a homeowner facing foreclosure can emerge from foreclosure without the bank taking the home.
“Typically, about 1% of mortgages are in foreclosure at any one point in time,” says Rick Sharga, executive vice president of market intelligence at real estate data company ATTOM, based in Irvine, California.
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