Without a traditional loan, these borrowers are often turning to the high-risk subprime lending market as their only recourse. But with high interest rates and deeply restrictive terms, subprime loans are only adding to the mortgage market’s problems. More and more people are forced to foreclose.
According to a 2019 Realty Trac study, foreclosure rates have increased from 323,000 filings in the first quarter of 2018 to over 437,000 filings in the first quarter of 2019. Furthermore, 87% of these cases are for single-family homes, townhouses, and condominiums.
Strategies to Avoid Foreclosure
This trend does not have to continue. Nobody wants homeowners to lose their homes, including the lenders. If you are concerned about a possible foreclosure or are going through one right now, there are many resources out there to help you through your situation.
Communication between lender and borrower goes a long way toward avoiding foreclosure. At the first sign of financial trouble, be sure to contact your lender and let them know about your situation. More options become available to you if you work with your mortgage company early on rather than later. For example, you can ask to reduce monthly payments by extending the term of your loan by one year or arrange a temporary suspension or reduction of payments if you qualify for forebearance.