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These 3 housing markets have the highest risk of COVID-related downturns, ATTOM report finds

Here's what homeowners can do if they're facing possible foreclosure

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Some housing markets have higher risk of a downturn than others in the U.S. as homeowners owe more on their homes than they are worth, and incomes are being used to pay a higher percentage of housing costs. (iStock)

Three states feature housing markets with the highest risk of a downturn as a result of the COVID-19 pandemic, according to a new report from ATTOM Data Solutions.

New Jersey, Illinois and California had the highest concentrations of at-risk markets in the fourth quarter of 2021, the report found. The largest clusters of at-risk areas also remain in the New York City and Chicago areas. Outside of California, no other counties in the West were among in the top 50 said to be the most at risk.

"The U.S. housing market keeps powering on despite the Coronavirus pandemic that’s still raging across the country. Indeed, home prices keep rising in part because of the crisis," said ATTOM Chief Product Officer Todd Teta. "Nevertheless, the virus remains a potent threat to the broader economy and the housing market, with some of the same counties we’ve seen in the past continuing to look vulnerable to potential downturns. No immediate warning signs hang over any one part of the country, but pockets are more vulnerable to the market taking a turn for the worse."

Refinancing your mortgage could help you lower your monthly payments and make them more manageable. Use Credible's free online tool to research different mortgage refinance lenders and see what your loan options are.

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Homes face foreclosure in at-risk markets

ATTOM's report state that its measurement for risk was based on the percentage of homes facing a possible foreclosure process. In the highest-risk areas, there were more homes in which mortgage balances exceeded the estimated property values. The company said it also took into account the percentage of local wages required to pay for major homeownership expenses.

At least 10% of residential mortgages in the third quarter of 2021 were underwater, meaning homeowners owed more on the home than it was worth. This creates a higher risk because if a homeowner falls into financial struggles, they would likely be unable to sell their home. About one in 1,500 homes faced a foreclosure action in Q4 2021 in 36 of the most at-risk counties, the report showed. This is compared to an average of one in 2,446 homes nationwide.

"Foreclosure actions have risen over the past few months since the end of a federal moratorium on lenders taking back properties from homeowners who fell behind on their mortgages during the virus pandemic," the report stated. "The moratorium ended July 31 and foreclosures are expected to spike over the coming year."

If you are at risk of facing foreclosure, refinancing your home loan can help lower your monthly expenses and get your finances back on track. You can explore your mortgage refinance options in minutes by visiting Credible to compare rates and lenders. Check out Credible and get prequalified today.

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What you can do if you are facing foreclosure

There are several options available to homeowners that could help them avoid foreclosure proceedings, including government-sponsored programs put in place for those struggling due to the COVID-19 pandemic:

Enter mortgage forbearance

Homeowners who have mortgage loans backed by Fannie Mae and Freddie Mac have the option to obtain COVID-19 mortgage relief to avoid eviction or mortgage foreclosure. If they have been financially impacted by the virus, they can contact their mortgage servicer to enter into forbearance. After the forbearance period is over, borrowers will have several options to pay back the money, including paying it in a lump sum, loan modifications to pay it back in payments or adding it to the end of the loan.

Refinance your mortgage

Mortgage rates are currently holding in the upper-3% range, according to the latest data from Freddie Mac. Homeowners who want to lower their mortgage payment can refinance into a lower mortgage rate. Visit Credible to apply for a refinance in minutes and see how much you could save.

Sell your home

Home prices are rising at record rates – growing 15% annually, according to financial services company CoreLogic. While this could place a strain on homebuyers looking to enter the market, it can be beneficial for homeowners. Homeowners can tap into their home equity through a cash-out refinance. 

If you are facing foreclosure and are interested in learning more about your home loan refinancing options, visit Credible to speak to a home loan expert and get all of your questions answered. Credible can help you compare mortgage lenders and discover the best refinance rates available today so you can lower your monthly payments and meet your financial goals.

Have a finance-related question, but don't know who to ask? Email The Credible Money Expert at moneyexpert@credible.com and your question might be answered by Credible in our Money Expert column.