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I've been looking up the number of foreclosures in my area and I keep running into reports of the "foreclosure rate," but with very few articles defining what that means. In fact, the only complete definition I found was

The foreclosure rate is the share of mortgages in some stage of the foreclosure process. (link here)

However, some other half-definitions of "foreclosure rate" that I found seemed to indicate that the rate is normalized by the number of homes, not mortgages, in an area.

What, if anything, is the official definition of foreclosure rate?

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    I think you'd have to ask whomever generated the numbers you're looking at.
    – dwizum
    Feb 10, 2020 at 15:53

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There is no official definition for foreclosure rate, since it is just the result of a statistical calculation like "percent of people that lose money flipping houses". It depends on who is crunching the numbers.

The page you linked to states that the rate is the "share of mortgages". On the other hand, studies by Attom Data give the numbers with respect to total "housing units". I take this to mean any house, whether it is mortgaged or not.

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  • I think this is really the only possible answer, it depends on context. What population are you quoting a rate for? All homes? All mortgages? Mortgages held by a specific bank?
    – dwizum
    Feb 10, 2020 at 17:32
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    Second dwizum that it depends on context. A mortgage lender is probably more interested in the number of foreclosures compared to the number of mortgages (as that will, in part, define their risk)... a town/city council may be more interested in the number compared with all homes (as that is more likely to affect any social / welfare measures they have to provide / be aware of).
    – TripeHound
    Feb 11, 2020 at 8:26
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Traditionally in the US, banks speak of the foreclosure rate as the rate of foreclosure as a percentage of total loans. Historically in the US, this number has been around 4% to 6%. Some banks target riskier borrowers and their foreclosure would be higher.

In the 2008 crisis, some banks had foreclosure rates as high as 25% or higher. Some of those banks failed as a result.

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