Foreclosures: Filings vs Auctions

Rob Gavin’s Wednesday article on the rate of foreclosures in May made the important point that not all foreclosure filings result in actual foreclosure sales.

But what’s not widely known is that the ratio between those two events fluctuates significantly depending on the relative health of the housing market.

The documentary bookends of a Massachusetts foreclosure are the order of notice and the foreclosure deed. One gets recorded at the very beginning of the process, the other a month after the auction occurs.

During the collapse of the early 1990’s, the ratio approached 1 to 1, meaning that nearly every new foreclosure action resulted in an auction and the loss of the borrower's home. But in boom times, say 2003, that ratio stretched to 6 to 1. These days, we’ve slipped below 2 to 1 as financially distressed homeowners find fewer and fewer escape routes from oppressive mortgages.