Foreclosure in Montana: A Slow Recovery, But New Risks on the Horizon

Helena, Mont. — A few years ago, Margaret Thompson thought she had everything figured out. She and her husband bought their first house in Billings in 2018, a modest three-bedroom with a backyard big enough for summer barbecues and their two kids to play. They had scraped together just enough for a down payment, benefiting from historically low interest rates. “It felt like we had finally made it,” she said.

Then, life happened. First, her husband was laid off. Then, inflation pushed their grocery and utility bills beyond what they had budgeted. By the time their adjustable mortgage rate ticked up last year, Margaret found herself in a place she never imagined—sitting at the kitchen table, staring at a foreclosure notice.

Her story is not unique.

While Montana’s pre-foreclosure numbers remain significantly lower than in previous decades, there are signs of stress brewing beneath the surface. In June 2024, there were 24 new pre-foreclosures in the state—a 20% increase from May. However, compared to June 2023, when 50 families were facing the same predicament, that’s a 52% decline. This year-over-year drop suggests a continued recovery from the chaotic housing market of the early pandemic years, but the monthly uptick is a reminder that uncertainty still lingers, particularly for lower-income homeowners like the Thompsons.

The Long Road Down from Crisis

To understand where Montana’s housing market stands today, it’s helpful to look back at its turbulent past.

During the 2008 financial crisis, foreclosures in Montana surged, peaking at over 2,000 pre-foreclosures in both 2009 and 2011. Families lost homes at unprecedented levels as the housing market collapsed nationwide. Many never recovered.

After that, foreclosure activity steadily declined. By 2016, the state recorded just 312 pre-foreclosures, and by 2023, that figure had dropped to 431 pre-foreclosures statewide, a fraction of the peak but still enough to leave a lasting impact on many Montana families.

The trend so far in 2024 suggests the downward trajectory continues, with only 102 pre-foreclosures reported between January and June. If this pace holds, the total for the year may end up lower than 2023’s, potentially making it one of the least active foreclosure years of the past two decades. But that doesn’t mean struggling homeowners have much cause to celebrate.

The Hidden Pressures on Montana’s Housing Market

Despite the overall decline in pre-foreclosures, economic pressures are mounting. Inflation, rising interest rates, and stagnant wages have combined to squeeze families who were already on the edge.

• Rising Mortgage Costs: Many Montanans bought homes during the ultra-low interest rate era of 2020-2021. Now, as rates climb back up, monthly mortgage payments can suddenly spike—an issue that disproportionately affects families with adjustable-rate mortgages or those who need to refinance.
• Cost of Living Pressures: Even for homeowners who secured fixed-rate mortgages, the costs of maintaining a home—utilities, insurance, property taxes—have risen sharply.
• Job Market Uncertainty: While Montana’s unemployment rate remains relatively low, certain sectors, like retail and hospitality, have yet to bounce back from pandemic disruptions. Many homeowners who lost jobs or saw reduced hours are still playing financial catch-up.

This convergence of factors leaves families like Margaret Thompson’s in an impossible bind. “We’re not spending money on anything extra,” she said. “No eating out, no vacations. And still, it’s hard to keep up.”

A Slow Recovery or a Warning Sign?

So, what does the future hold for Montana’s pre-foreclosure numbers?

If the first six months of 2024 are any indication, we may see foreclosure cases remain low relative to past decades. However, the 20% month-to-month increase between May and June suggests that some homeowners are beginning to feel the squeeze—especially as inflationary pressures linger.

Historically, foreclosure activity lags behind economic downturns. If layoffs increase or wages remain stagnant while mortgage costs rise, Montana could see foreclosure rates creep back up in 2025. That risk could escalate if new homebuyers, who entered the market in the past few years with little financial cushion, find themselves struggling to make payments.

For now, the situation remains mixed—a recovery that appears steady but fragile beneath the surface.

What Comes Next?

Housing advocates stress that one of the best ways to prevent a foreclosure crisis is early intervention. Homeowners who fall behind on payments often wait too long before seeking help, either out of shame or misunderstanding their options.

“There are resources available, but people need to act quickly,” said Emily Carter, a foreclosure prevention counselor in Missoula. Programs like loan modifications, financial counseling, and state-level assistance can sometimes help homeowners regain control of their finances before it’s too late.

For now, Margaret Thompson and her family are still fighting to save their home. They’ve applied for a loan modification, cutting back on every expense they can. “I don’t know what the future holds,” she admitted. “But we love this house. We built a life here. I just want to find a way to keep it.”

It’s a story playing out quietly across Montana, where the numbers say one thing—that foreclosures are historically low—but the people behind them tell another.