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Living in the Ocean State.

Home Mortgage Rates in Rhode Island

Castle Hill Lighthouse.

Rhode Island's home loan industry provides traditional loan products to homebuyers. These loan products are regulated by foreclosure procedures that generally favor the borrower. As a result, individuals who are interested in purchasing a foreclosed property in Rhode Island should carefully study how Rhode Island's foreclosure procedures work to avoid potential pitfalls that exist.

Here is some background information about Rhode Island's home values, population trends and mortgage industry that can help readers understand how Rhode Island's foreclosure procedures work.

Rhode Island Real Estate

Metropolitan Areas

Providence is the sole metropolitan area of the state.

US Rank Metropolitan Area 2016 Pop 2010 Pop Change % △
38 Providence-Warwick, RI-MA Metro Area 1,614,750 1,600,852 13,898 0.87%

Rhode Island's February 2010 median home values tend to vary considerably around the national median price of $190,000. To demonstrate this point, here are the median home values for four of Rhode Island's well-known cities from lowest to highest:

  1. Providence ($169,900).
  2. Pawtucket ($179,900).
  3. Cranston ($220,000).
  4. Newport ($399,900).

There is one important reason why that this is true: Location, Location, Location!

Claiborne Pell Newport Bridge.

Rhode Island's geography tends to vary considerably. It includes seaports, beachfront settings and modern suburban cities. As a result, Rhode Island’s median home values tend to vary considerably based on the desirability of the area where the home is located.

Largest Cities

Providence (178,042): Providence is Rhode Island's state capital. It is also estimated to be the 2nd or 3rd largest city in the New England region. This city has two very different "sides" to it. On the good side, it is home to a creative class that features many well-known artists. Furthermore, many creative class residents are also employed by an educational industry that has brought many high paying jobs to the area. On the bad side, it also has had one of the ten worse poverty rates among cities with at least 100,000 residents. As a result, this city has been prone to more foreclosures than other cities in the New England region.

Providence Skyline.

Warwick (82,672): With a per capita income of just $23,410, many people have difficulty purchasing a home in Warwick. As a result, many federal programs are available to help Warwick residents purchase a home.

Cranston (80,387): Cranston was named one of the "100 Best Places to Live" in 2006. Furthermore, CQ Press reports that Cranston is one of the 25 safest cities to live in. These factors have helped Cranston's home values stay relatively stable.

Fastest Growing Cities:

Cranston: Cranston is a suburb of Providence. Cranston has seen amazing growth in the past few years because it has done a good job expanding its travel and tourism industry. Cranston has also grown because many New Englanders have taken advantage of the area's lower crime rates and wonderful quality of life.

Providence: Providence has grown rapidly due to an influx of immigrants from Mexico and Latin America. Furthermore, area residents have taken advantage of an increase in jobs in the hospitality and health care industries.

Coventry (35,014): town in Kent County located in the westcentral part of the state.

Cumberland (33,506): Town in the northeeasternmost edge of the state.

South Kingston (30,639): The largest town in the state by geographic area, which includes the villages of Kingston, West Kingston, Wakefield, Peace Dale, Usquepaug, Snug Harbor, Tuckertown, East Matunuck, Matunuck, Green Hill, and Perryville

Bristol (22,954): Bristol's family friendly setting has allowed the city to attract many young families into the area. Bristol has also seen a growth in jobs in the retail service and manufacturing trades. These two things have combined to make Bristol one of Rhode Island's fastest growing cities.

Rhode Island Census Data

According to the United States Census an estimated 1,056,426 people live in the state of Rhode Island. The state has 1,033.81 mi² of land area, which gave it a population density of 1,021.88 per mi². Here is a list of cities, towns & Census Designated Places across the state, with their estimated population as of June 2016 & the 2010 United States Census. For Census Designated Places (CDP) where there was no population estimate available for 2016, the 2011-2015 American Community Survey 5-Year Estimates data was used.

All table columns are sortable. Click on the column headers to sort by that column. Click again to sort low to high. Cities with higher levels of population growth typically see the increased demand drive faster real estate price appreciation.

Rank Geography County 2016 Pop 2010 Pop Change % △ Land mi² Pop Den mi²
1 Providence Providence 179,219 178,042 1,177 0.66% 18.4 9,740.16
2 Warwick Kent 81,579 82,672 -1,093 -1.32% 35.04 2,328.17
3 Cranston Providence 81,034 80,387 647 0.80% 28.34 2,859.35
4 Pawtucket Providence 71,427 71,148 279 0.39% 8.68 8,228.92
5 East Providence Providence 47,337 47,037 300 0.64% 13.24 3,575.30
6 Woonsocket Providence 41,406 41,186 220 0.53% 7.74 5,349.61
7 Coventry Kent 34,996 35,014 -18 -0.05% 59.05 592.65
8 Cumberland Providence 34,694 33,506 1,188 3.55% 26.45 1,311.68
9 North Providence Providence 32,494 32,078 416 1.30% 5.62 5,781.85
10 South Kingstown Washington 30,791 30,639 152 0.50% 56.45 545.46
11 Johnston Providence 29,230 28,769 461 1.60% 23.43 1,247.55
12 West Warwick Kent 28,780 29,191 -411 -1.41% 7.79 3,694.48
13 North Kingstown Washington 26,142 26,486 -344 -1.30% 43.14 605.98
14 Newport Newport 24,779 24,672 107 0.43% 7.67 3,230.64
15 Westerly Washington 22,651 22,787 -136 -0.60% 29.52 767.31
16 Bristol Bristol 22,305 22,954 -649 -2.83% 9.82 2,271.38
17 Smithfield Providence 21,774 21,430 344 1.61% 26.31 827.59
18 Lincoln Providence 21,709 21,105 604 2.86% 18.12 1,198.07
19 Central Falls Providence 19,347 19,376 -29 -0.15% 1.2 16,122.50
Westerly CDP Washington 17,957 17,936 21 0.12% 15.82 1,135.08
20 Portsmouth Newport 17,344 17,389 -45 -0.26% 22.98 754.74
21 Burrillville Providence 16,341 15,955 386 2.42% 55.03 296.95
22 Barrington Bristol 16,272 16,310 -38 -0.23% 8.22 1,979.56
23 Middletown Newport 15,973 16,150 -177 -1.10% 12.72 1,255.74
24 Tiverton Newport 15,738 15,780 -42 -0.27% 29.05 541.76
25 Narragansett Washington 15,605 15,868 -263 -1.66% 13.89 1,123.47
26 East Greenwich Kent 13,111 13,146 -35 -0.27% 16.39 799.94
27 North Smithfield Providence 12,352 11,967 385 3.22% 23.8 518.99
Valley Falls CDP Providence 12,088 11,547 541 4.69% 3.5 3,453.71
Newport East CDP Newport 11,091 11,769 -678 -5.76% 5.74 1,932.23
28 Scituate Providence 10,566 10,329 237 2.29% 48.16 219.39
29 Warren Bristol 10,490 10,611 -121 -1.14% 6.12 1,714.05
30 Glocester Providence 10,035 9,746 289 2.97% 54.18 185.22
Wakefield-Peacedale CDP Washington 8,862 8,487 375 4.42% 4.88 1,815.98
Cumberland Hill CDP Providence 8,439 7,934 505 6.37% 3.2 2,637.19
Greenville CDP Providence 8,419 8,658 -239 -2.76% 5.16 1,631.59
31 Hopkinton Washington 8,116 8,188 -72 -0.88% 42.95 188.96
32 Charlestown Washington 7,773 7,827 -54 -0.69% 36.45 213.25
33 Richmond Washington 7,613 7,708 -95 -1.23% 40.29 188.96
Tiverton CDP Newport 7,407 7,557 -150 -1.98% 4.18 1,772.01
Kingston CDP Washington 6,969 6,974 -5 -0.07% 1.56 4,467.31
34 Exeter Washington 6,552 6,425 127 1.98% 57.47 114.01
35 West Greenwich Kent 6,148 6,135 13 0.21% 50.26 122.32
36 Jamestown Newport 5,460 5,405 55 1.02% 9.45 577.78
37 Foster Providence 4,671 4,606 65 1.41% 50.8 91.95
Pascoag CDP Providence 4,583 4,577 6 0.13% 5.01 914.77
Narragansett Pier CDP Washington 3,957 3,409 548 16.08% 3.57 1,108.40
38 Little Compton Newport 3,504 3,492 12 0.34% 20.52 170.76
Harrisville CDP Providence 1,833 1,605 228 14.21% 0.81 2,262.96
Hope Valley CDP Washington 1,733 1,612 121 7.51% 3.3 525.15
Chepachet CDP Providence 1,656 1,675 -19 -1.13% 5.47 302.74
Melville CDP Newport 1,327 1,320 7 0.53% 2.09 634.93
Bradford CDP Washington 1,158 1,406 -248 -17.64% 1.82 636.26
Ashaway CDP Washington 1,108 1,485 -377 -25.39% 2.38 465.55
39 New Shoreham Washington 906 1,051 -145 -13.80% 9.08 99.78
Harmony CDP Providence 876 985 -109 -11.07% 2.92 300.00
Greene CDP Kent 863 888 -25 -2.82% 6.07 142.17
Carolina CDP Washington 787 970 -183 -18.87% 2.46 319.92
Quonochontaug CDP Washington 558 333 225 67.57% 1.31 425.95
Weekapaug CDP Washington 430 425 5 1.18% 1.16 370.69
Misquamicut CDP Washington 349 390 -41 -10.51% 1.17 298.29
Foster Center CDP Providence 325 355 -30 -8.45% 2.17 149.77
Watch Hill CDP Washington 184 154 30 19.48% 0.8 230.00
Clayville CDP Providence 159 300 -141 -47.00% 1.72 92.44
Wyoming CDP Washington 96 270 -174 -64.44% 0.83 115.66

Annual Estimates of the Resident Population: April 1, 2010 to July 1, 2016
Source: U.S. Census Bureau, Population Division
Release Date: May 2017.

Rhode Island Mortgage Types

As of 2017 the conforming loan limit across the United States is set to $424,100, with a ceiling of 150% that amount in areas where median home values are higher. Local affordability makes the $424,100 ceiling apply across most the state for single unit homes. Dual unit homes have a limit of $543,000, triple unit homes have a limit of $656,350 & quadruple unit homes have a limit of $815,650. People buying properties in the Providence-Warick metro areas have higher conforming mortgage thresholds.

County Metropolitan Designation 1 Unit Limit 2 Unit Limit 3 Unit Limit 4 Unit Limit
Bristol Providence-Warwick, Ri-Ma $426,650 $546,200 $660,200 $820,500
Kent Providence-Warwick, Ri-Ma $426,650 $546,200 $660,200 $820,500
Newport Providence-Warwick, Ri-Ma $426,650 $546,200 $660,200 $820,500
Providence Providence-Warwick, Ri-Ma $426,650 $546,200 $660,200 $820,500
Washington Providence-Warwick, Ri-Ma $426,650 $546,200 $660,200 $820,500

Home buyers who are borrowing more than the above amounts will likely need to obtain a jumbo mortgage. Jumbo loans typically have a slightly higher rate of interest than conforming mortgages, though spreads vary based on credit market conditions.

Rhode Island's lenders provide a traditional mix of home loan products for consumers. These home loan products include:

  1. ARM's that vary in maturity from one year to five years.
  2. Fixed rate mortgages that vary in maturity from 10, 15, 25, 30 and years.
  3. FHA 30 year fixed rate mortgages.
  4. VA 30 year fixed rate mortgages.
  5. Refinance loans,
  6. Second mortgages, and
  7. Reverse mortgages.

USDA loans can help people with low incomes in rural parts of the state qualify for a subsidized low-interest loan.

In Rhode Island, these home loans are recognized as either mortgages or deeds of trust. However, as a general rule, most notes for home loans are converted into mortgages unless the lender and borrower agree to terms of a deed of trust contract. In addition, most modern Rhode Island home loans have a "Power of Sale" clause that aids in any foreclosure proceeding. These "Power of Sale" clauses usually give the lender the ability to conduct a non-judicial foreclosure to repose a defaulted property.

Most home loans made in Rhode Island have recourse privileges. However, most borrowers have up to three years to redeem a property. This makes obtaining a deficiency judgment very difficult. Furthermore, it is technically possible for the borrower to bid on his own foreclosed home in Rhode Island. As a result, most deficiency lawsuits can take a long time to settle.

Providence at Night.

Natural Disasters

The state of Rhode Island has a very low risk of wildfires, tornadoes & earthquakes. Bristol, Providence & Washington counties have a low risk of hail, while other counties have a very low risk of hail.

Flood Insurance

Homeowner's insurance policies typically do not cover flooding. Here are counties across the state which have a risk profile above very low for either flooding or hurricane storm surges.

  • Low risk of flooding: Providence
  • Moderate risk of flooding: Kent, Newport, Washington
  • High risk of flooding: Bristol
  • Moderate risk of hurricane storm surges: Bristol, Kent
  • High risk of hurricane storm surges: Washington
  • Very high risk of hurricane storm surges: Newport

Home buyers with mortgages in high-risk areas are required to buy flood insurance. Most flood insurance policies are sold by the United States federal government through The National Flood Insurance Program. Under-priced flood insurance in high-risk areas act as a subsidy to wealthy homeowners.

The NFIP does not charge nearly enough to cover the expected costs of its liabilities. The assessments are not sufficient to build any buffer to cover an extraordinary year, such as what occurred with Hurricane Katrina in 2005 or Hurricane Sandy in 2012. Because homeowners don€™t incur the full cost of building in a flood zone we end up with more houses there than if homeowners incurred the full cost of the flood risk, which exacerbates the government€™s costs in the next disaster.

Typically, homes built after 2002, when building code regulations tightened, are subject to lower insurance rates than older homes. On the other hand, homes without hurricane straps, with roofs that do not meet current standards for wind, with older plumbing or with outdated electrical systems may be difficult €“ or very expensive €“ to insure.

Homeowners who live in lower risk areas & are not required to purchase flood insurance heavily cross-subsidize homeowners who are in areas where floods are more common.

Rhode Island's Foreclosure Processes

Rhode Island recognizes at least four procedures (source) that can be used to foreclose on a property:

  1. A judicial foreclosure procedure
  2. A non-judicial foreclosure procedure
  3. Voluntary surrender by the borrower to the lender
  4. Or peaceably entering and obtaining possession of the house.

As a general rule, the non-judicial foreclosure is the most common procedure that is used to foreclose on a property in Rhode Island.

Here is a brief synopsis of how Rhode Island's foreclosure procedures work:

How Rhode Island's judicial foreclosure process works:

It is used only when there is no valid power of sale clause in the mortgage or deed of trust. Whenever there is no valid power of sale clause in the loan instruments, lenders must follow these procedures to obtain a judicial foreclosure order:

  1. First, the lender must go to the county courthouse where the home resides to sue for the right to foreclose on the borrower.
  2. If the court agrees that the borrower is in default, the lender must send a letter to the borrower that "warns" the borrower he is in danger of defaulting on his loan.
  3. The borrower may contest the letter in court. There is no known time frame that sets forth how long the borrower has to contest this letter. This can create headaches for lenders who use this process.
  4. Once the borrower does contest the letter, the court may give the borrower up to three years to redeem the property. Rhode Island law gives borrowers up to three years to redeem a foreclosed property. To do this, the borrower must pay off the entire amount due on the note plus any interest that has accrued while in foreclosure. This person may be the borrower, an heir or a representative appointed by the borrower to manage the proceedings. As a result of these guidelines, most lenders these days will insist on inserting a power of a sale clause on any mortgage note or deed of trust issued in Rhode Island.
  5. Once the redemption period has expired, the lender may proceed with selling the house at auction.
  6. The sale of the house is governed by these guidelines:
    • The lender must first publish a notice of the sale in a local county newspaper where the home resides at least once a week for three continuous weeks before the sale.
    • The first appearance of the notice must be published at least 21 days before the proposed date of the sale.
    • The lender must mail a valid copy of the notice to the borrower at least 20 days before the first publication date.
    • This notice must contain the following information:
      1. The names of the borrower and lender,
      2. The original mortgage date, the amount due to the lender,
      3. A legally valid description of the property
      4. The time and place of the sale.
    • The time and place of the sale are not governed by Rhode Island's laws. This makes it possible to have the sale at any place and time that is convenient for the lender.
    • The home is sold for cash (or cash equivalent) to the highest bidder.
    • There are no minimum bid requirements.
      This means a bidder may bid $1.00 on the home if he so chooses.
    • There is also no minimum floor for a winning bid.
      This means a home could technically sell for $1.00 to the first person who bids a dollar. This puts borrowers in a very compromising position because they are on the hook for a deficiency judgment for any difference between the winning bid and the original loan amount.
    • Furthermore, anyone may also bid at the auction. This means that the lender and even the borrower could technically bid on the house.
    • Finally, once the home has been sold, the winner must wait up 60 days for a deficiency judgment before taking final possession of the home.

How the non-judicial foreclosure procedure works in Rhode Island:

The non-judicial foreclosure procedure works in Rhode Island only if there is a legally binding power of sale clause included in the mortgage note or deed of trust document. If there is such a clause, the lender must do the following things to foreclose on a home in Rhode Island:

  1. First, the lender must go to the county court where the home resides to verify that a legally binding power of sale clause was included in the mortgage note or deed of trust document.
  2. If the court agrees that such a clause exists, the lender must first see if there is sale procedure included in the power of sale clause. (Source: http://www.foreclosurelaw.org/Rhode_Island_Foreclosure_Law.htm.)
  3. If there is a sale procedure in the power of sale clause, that procedure will govern the sale of the house.
  4. If there is no such sale procedure, the lender must use the same procedure outlined above that is used to invoke a judicial foreclosure procedure.

Borrowers may also voluntarily surrender a home. Instead of going through the heartache of a foreclosure process, many borrowers voluntarily surrender their homes to lenders. To do this, borrowers must do the following:

  1. They must write and sign an affidavit that tells the lender that they are voluntarily surrendering the home to the lender using their own free will.
  2. This affidavit must be notarized by a notary republic.
  3. Once this is done, the notarized notice is sent to the lender.
  4. Once the notice is in the lender's hands, the title to the home is surrendered to the lender.
  5. Once this is done, the borrower must leave the property. The borrower has no redemption rights if he chooses to surrender the property to the lender.

Finally, a lender may also foreclose by simply taking peaceful possession of the property. To do this, the lender must do these things:

  1. Take possession of the property peacefully.
  2. Bring two witnesses along who will attest that the lender is the legal owner of the home.
  3. Ask that the witnesses sign a Certificate of Possession that attests that the lender is the legal owner of the home
  4. Have the Certificate of Possession notarized by a notary republic
  5. Retain physical possession of the home for at least one year. Once these things are done, the home is legally in the lender's possession. The borrower has no redemption rights if the lender chooses to foreclose a home this way.