Wednesday, October 16, 2019

How are Foreclosure Activity and Consumer Confidence Related?

Does consumer confidence have anything to do with foreclosure activity or the foreclosure rates in a particular area? According to a recent article in, “consumer confidence appears to be easing,” meaning that consumers in the U.S. have less confidence in the economy than they did at this same time last year. As a result, consumer spending has slowed. Indeed, consumer spending in 2019 has been “at its second weakest pace since . . .2013.” To put it another way, consumers are more stressed about finances than they were previously. But does this mean that foreclosure rates are also likely to rise?

By and large, the report indicates that foreclosure activity remains low, but emphasizes that it is important to keep an eye on foreclosure activity in the coming months.

Foreclosure Rates Continue to Decline
According to the article, despite an increase in consumer financial stress, foreclosure rates remain low. Based on data from CoreLogic, only 3.8% of home mortgages were in some stage of foreclosure as of July 2019, which represents a decline from 4.1% in July 2018. In other words, foreclosure activity continues to decline nationwide. In addition, “the share of all delinquent mortgages at least one payment past due is down 21 basis points per year.”

Moreover, although we have seen a downturn in consumer financial stress, the article emphasizes that “consumers remain on good footing despite some recent dips in confidence.” However, just because most consumers are able to pay their mortgages now does not mean that we should take this as a given. As the article underscores, it is important to keep a close watch on consumer financial stress and to analyze it in relation to “weak growth in real disposable income, falling demand for credit card loans, and a softening global outlook.”

Generally speaking, the fact that consumer financial stress is on the rise is not an immediate reason for worry. At the same time, however, rising consumer financial stress could signal shifts in foreclosure activity if the current trend continues.

Ways to Prevent Foreclosure
While the article clarifies that most homeowners should not be concerned about foreclosure rates at this point, it is nonetheless important to make clear that some homeowners are still struggling with the threat of foreclosure. What can those homeowners do to prevent foreclosure if they are not part of the large number of consumers benefiting from “historically low unemployment” and “rising household net worth”?

An article in The Balance cites a number of options for avoiding foreclosure that struggling homeowners should consider:
  • Ask for forbearance from your lender;
  • Seek a mortgage loan modification;
  • Refinance your mortgage;
  • Sell the house through a short sale;
  • Sign a deed-in-lieu of foreclosure; or
  • File for Chapter 13 bankruptcy.
Contact an Oak Park Foreclosure Defense Attorney

If you have questions about avoiding foreclosure, or if you are struggling with repaying your mortgage, you should speak with an Oak Park foreclosure defense lawyer as soon as possible. There may be options available that would allow you to keep your home. Contact the Emerson Law Firm to learn more about the consumer protection services we provide to residents of the Chicago area.

See Related Blog Posts:

Consumer Bankruptcy and Foreclosure: Get the Basics

“Zombie” Vacancy Rates Decline in the Midwest

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