While Vermonters often hear about the state's housing affordability crisis, comparatively few homeowners are actually losing their homes to foreclosure.
In fact, Vermont had the lowest foreclosure rate in the country in August, according to ATTOM, a real estate data and analytics company that tracks housing markets nationwide. Its data showed Vermont’s foreclosure rates declined in August, with just one foreclosure for every 67,808 housing units.
Nationally, foreclosure activity is moving in the opposite direction. Foreclosure filings were up 13% from a year ago, with one foreclosure filing for every 3,569 housing units, according to ATTOM.
South Carolina, Nevada and Florida recorded the highest foreclosure rates. Vermont, South Dakota and Rhode Island had the lowest.
Aaron Ferenc, deputy commissioner of banking with the Vermont Department of Financial Regulation, said the state does not track how many people have completed foreclosure in Vermont.
But as of the end of September, state data shows 426 people in the state had begun the process this year, which is down 14% compared to last year.
After the housing crash and recession of 2008, Vermont lawmakers created a foreclosure mediation program that gives homeowners the opportunity to meet with their lender or mortgage servicer and explore alternatives before losing their home.
"It's designed to give the borrower an opportunity to come up with a new approach to repaying the mortgage that prevents foreclosure," said Christopher D'Elia, president of the Vermont Bankers Association.
The process can benefit lenders, too.
"The last thing any lender wants to do is go through foreclosure," D'Elia said, noting the financial costs and lengthy legal process involved. "Foreclosure is not a good outcome for anyone."
Another factor helping keep foreclosures low is the amount of equity Vermonters have built up as home values have climbed over the past several years.
Vermont leads the nation in so-called "equity-rich" homeowners, according to ATTOM. About 79% of mortgaged homes in the state carry loan balances that are no more than half of their estimated value, compared with 41% nationally.
“When you have conditions like that, there's a lot more incentive to try and work to, you know, save that equity and not lose it,” said Fenenc. He said that equity also provides Vermont homeowners with a financial cushion if they run into trouble. Rather than face foreclosure, they may be able to sell their home, pay off the mortgage and walk away with money in their pocket.
That doesn't mean Vermonters aren't struggling with housing costs.
The 2026 Vermont Public Poll found that one in five Vermonters had been late or fallen behind on rent or mortgage payments during the previous year because of other financial pressures. Another 12% said they had nearly fallen behind.
Still, D'Elia says homeowners who have built up substantial equity during Vermont's housing boom generally have more options than borrowers in many other states.
Those options may be becoming less attractive, however. Many homeowners locked in mortgage rates of 3% or less during the pandemic. With interest rates now much higher and housing inventory still scarce, selling, refinancing or moving can be difficult.
"People aren't going to refinance their mortgages, even if they need to pull equity out, unless it's an absolute dire circumstance," D'Elia said.
His advice for homeowners who are struggling is simple: don't wait.
"They should absolutely approach their lender right away," he said. "Chances are your lender is going to find a way to work with you to take some of that pressure off."
