At the lowest annual total since 2006, is the last of the housing crisis complete?
Year-end data on the housing market is coming in and according to a report from RealtyTrac the housing market took some of the last steps needed to return to normal after the real estate market collapse in 2008. The report shows foreclosure filings hit a low that hasn’t been seen since just prior to the first signs of the crash in 2006.
Last year, just over 1 million foreclosure filings were reported in the U.S. At 1,083.752 filings, it’s the lowest number since 2006 when just 715,522 properties were dealing with foreclosure filings nationwide. That low number means less than 1 percent (0.8 percent) of all housing units in the U.S. were in some stage of the foreclosure process in the past year.
Foreclosure actions continue to fall, giving real estate professionals encouragement that 2016 will be an even better year for both the market and homeowners. For instance, foreclosure filings in December were down 30 percent from the previous year. At the same time though, U.S. bank repossessions were up in December – by about 65 percent from a year ago. It was the tenth consecutive month of increases.
Foreclosure vs. repossession
You may be confused by those two terms and how they differ. In fact, U.S. bank repossession is really the last step in the foreclosure process. It’s when the bank officially takes over a home and the occupants must move out. Prior to that, a family could live in a home even throughout the foreclosure process.
This means that the repossessions happening now are mostly the result of clearing out foreclosure inventory that resulted from the market collapse in 2008. Daren Blomquist, vice president at RealtyTrac explains…
“In 2015 we saw a return to normal, healthy foreclosure activity in many markets even as banks continued to clean up some of the last vestiges of distress left over from the last housing crisis. The increase in bank repossessions that we saw for the year was evidence of this cleanup phase, which largely involves completing foreclosure on highly distressed, low value properties.”
What does this mean for homeowners?
If you’re a homeowner and you haven’t yet taken advantage of programs like the Home Affordable Refinance Program (HARP) and the Home Affordable Modification Program (HAMP), you should take action quickly in 2016 to ensure you can benefit from these programs. Consolidated Credit Housing Director Joseph Cvelbar explains how outreach for these programs is expected to taper off over the next year…
“As the economy continues to improve and the demand created by the recession tapers off, save my home events will continue to be held but on a much smaller scale throughout. Eventually things will go down to a strictly one-on-one basis where a homeowner’s primary path to finding relief will be through a housing counseling. While programs like HAMP have been extended twice by the Treasury, if the need continues to decrease at the rates we’re seeing now then they are unlikely to extend it a third time.”
Programs like HAMP and HARP are designed to help homeowners address mortgage challenges, such as negative equity and adjustable interest rates that can fluctuate widely with market conditions. Even homeowners who are not struggling and faced with foreclosure can benefit from seeing if they’re eligible to refinance or modify their existing mortgage under these programs.
However as the market continues to recover and improve HAMP, HARP and other state and federally run mortgage relief programs are likely to be phased out. So from a homeowner who’s not in a distressed situation but simply wants better terms on their mortgage to a homeowner verging on foreclosure and looking to make a graceful exit, these programs may be able to help.
“HAMP has even a provision for unemployed homeowners who need an exit strategy,” Cvelbar continues, “If a borrower is unable to make payments and it looks like there is no chance for recovery, HAMP can allow a borrower to make a graceful exit and even obtain some money for relocation costs.”
To schedule a free, confidential mortgage and budget consultation with a HUD-certified housing counselor, call us today at 1-800-435-2261.