Rhode Island’s Rising Pre-Foreclosure Rates Signal Mounting Pressure on Homeowners

A Growing Crisis Quietly Returns

In Rhode Island, a subtle but unmistakable tide is beginning to rise again. A tide familiar to anyone who remembers the housing crash of 2008. This past September, 55 properties in the state entered pre-foreclosure, marking not just a number on a spreadsheet but lives teetering on the edge. While this figure represents a 20.3% decrease from August, when 69 properties were recorded, it’s a notable 22.2% increase from the same time last year.

To understand the implications of these numbers, it helps to move past the statistics and into the shoes of those they represent. People like Maria Alvarez, a 42-year-old single mother in Pawtucket, who fell behind on her mortgage payments after losing her second job. “I just never thought we’d be back to this,” she said. “I lived through 2008. I saw what it did to my parents. And now it’s happening to me.”

Maria isn’t alone and the broader data shows that pre-foreclosure activity in Rhode Island has been steadily climbing after a decade of decline.

Data Shows a Disturbing Reemergence

Let’s consider where we’ve been. In 2008, when the financial crisis reached its crescendo, Rhode Island saw 3,717 pre-foreclosures, the most it ever recorded. The next few years fluctuated but remained high, peaking again in 2012 and 2013, both years surpassing 3,500 cases. From there, the numbers dropped sharply. Between 2015 and 2021, pre-foreclosure activity nearly vanished from public radar, with little to no available data.

But in 2022, just seven cases were recorded. A year later, that number exploded to 899. And as of September 2024, Rhode Island has already seen 474 pre-foreclosure, with three months still left on the calendar.

That trajectory, while still far from the 2008 peak, is enough to ring alarms: it suggests a compounding problem stemming from persistent economic strain that continues to challenge low- and moderate-income homeowners.

Inflation, Insecurity, and the Squeeze on the Middle Class

Today’s mortgage distress is borne not out of risky subprime lending or adjustable-rate bombs, but out of more insidious modern pressures: inflation, job insecurity, and the relentless rise of housing costs against flat wages.

Despite a cooling job market, the cost of living remains elevated, and Rhode Islanders are finding it harder to balance their grocery bills with the mortgage at the end of the month. Property taxes have increased. So have utility bills. For working-class families, particularly those without financial buffers, the housing ladder has begun to resemble a treadmill, exhausting and immobile.

Retirees on fixed incomes are especially vulnerable. Take Robert and Linda Jameson of Warwick. In their early 70s, the couple chose to refinance during the pandemic to cover medical expenses after Linda’s breast cancer diagnosis. That lower-rate refinance helped, but rising insurance premiums and home maintenance costs have now placed them on the brink. “We’re house rich and everything else poor,” Robert says. “It feels like we’re being slowly evicted by inflation.”

What Pre-Foreclosure Really Means

Pre-foreclosure is often misunderstood. It doesn’t mean eviction is imminent. Instead, it’s a legal notice that the homeowner has missed several mortgage payments, triggering the start of the foreclosure process. It’s also a critical window, often the last chance for families to negotiate with lenders, seek financial assistance, or sell their homes before losing them to foreclosure entirely.

But these negotiations are harder now. Banks aren’t offering the expansive forbearance programs that were available during the pandemic. And with housing demand still hot, many homeowners are unaware of, or unable to utilize the equity they’ve built before it’s too late.

Community advocates worry about what’s to come. “We’re seeing more people walk in panic mode,” said Angela Torres, housing counselor at a Providence nonprofit. “They held on through COVID, deferred their loans, made it into 2023 and now they’re out of runway.”