Michigan’s Pre-Foreclosure Crisis: A Slow Burn of Stability, But Pain Beneath the Surface

Families on the Edge: Why Pre-Foreclosures Are Still a Silent Struggle in Michigan

In a modest home on Detroit’s east side, Tonya Reynolds, a single mother of two, checks her mailbox with a lump in her throat. It’s not just bills and advertisements she’s expecting, it’s the notice she’s been dreading for weeks: a Letter of Intent to Foreclose. “I’ve been working overtime and still can’t keep up,” she says, eyes fixed on the stack of unopened envelopes. “The price of everything keeps going up and I feel like I’m treading water…”

Cases like Tonya’s remain far too common across Michigan in 2024. Although the state’s pre-foreclosure numbers suggest a relative calm following more volatile years, the economic underbelly tells a more difficult and complicated story. One that many vulnerable homeowners are living every day.

September 2024: Where the Numbers Stand

Michigan recorded 783 pre-foreclosure filings in September 2024, up nearly 10% from the previous month. In August, that figure was 712, marking a noticeable increase in homeowners entering the initial stages of foreclosure proceedings.

Despite the month-over-month rise, the year-over-year trend paints a more optimistic picture. In September 2023, Michigan saw 1,000 pre-foreclosure filings, meaning this month’s figure represents a 21.7% decrease.

But behind these data points lies a tension that is harder to quantify. While the numbers show decline, the pain is not evenly spread. For many low and middle-income families, especially in cities still emerging from the shadows of deindustrialization and rising cost of living, even one missed mortgage payment can feel like the edge of a cliff.

The Echoes of the Past

Michigan’s current numbers are modest compared to the tsunami of foreclosures that overwhelmed the state during the housing crash over a decade ago. In 2009, at the height of the recession, foreclosures surged to a staggering 99,374. The following year marked the historical peak at 115,329 pre-foreclosures statewide.

Since 2012, the numbers have been in steady decline, dropping from 61,596 in 2012 to just 4,653 in 2016. After a data gap in subsequent years, totals in 2023 saw a modest uptick to 12,267, and 2024 has logged 6,391 pre-foreclosure as of September.

But if the past decade was marked by a bursting housing bubble and widespread over-leverage, today’s foreclosures stem from different roots: inflation, income stagnation, rent pressure, and declining affordability.

Economic Forces Tearing at the Seams

In recent years, inflation has crept into every corner of working-class life, from utilities to groceries to insurance premiums. A gallon of milk or a tank of gas costs more than it did a year ago. And for many Michigan families, wages haven’t kept up. In rural areas and legacy cities like Flint, Saginaw, and parts of Grand Rapids, once-reliable manufacturing jobs have either disappeared or stagnated, replaced by service-sector positions with less stability and weaker benefits.

Mortgage rates, too, remain stubbornly elevated. After the Federal Reserve’s successive rate hikes beginning in 2022, monthly mortgage payments jumped for both new buyers and those refinancing. For homeowners on adjustable-rate mortgages, monthly payments climbed beyond what they had budgeted.

For families like the Reynoldses, even temporary setbacks, a medical bill, a car repair, a reduction in hours at work, can push them toward default. “I missed one payment because my son had an asthma attack,” Reynolds explains. “Then it was two. Now I’m three months behind. I don’t know how I’m going to fix it.”