Foreclosure Rates Hit 7-Year High: What It Means for Homeowners in 2026

Foreclosure filings in the United States totaled 367,460 in 2025, up 14% year-over-year and the highest annual total since 2018. That means roughly 1 in every 385 housing units received a foreclosure filing last year. While this is still far below the 2008-2012 crisis levels (which exceeded 2 million filings annually), the upward trend is significant and accelerating. If you are a homeowner who is behind on payments or worried about keeping your home, here is what the data means and what you can do right now.

What do the 2025 foreclosure numbers actually show?

The data comes from ATTOM Data Solutions, which tracks every foreclosure filing in the country. Here are the key numbers:

| Metric | 2025 | 2024 | 2023 | Change (YoY) | |---|---|---|---|---| | Total foreclosure filings | 367,460 | 322,000 | 357,000 | +14% | | Foreclosure starts | 232,000 | 206,000 | 225,000 | +12.6% | | Completed foreclosures (REO) | 38,600 | 35,000 | 32,000 | +10.3% | | Properties with default notices | 157,000 | 138,000 | 150,000 | +13.8% | | Foreclosure filing rate | 1 in 385 | 1 in 440 | 1 in 395 | Worsening |

The numbers tell a clear story: foreclosure activity is rising across every category. Default notices (the first step in the foreclosure process) increased 13.8%, which signals that the pipeline of distressed homeowners is growing, not shrinking.

Source: ATTOM Data Solutions — Year-End 2025 U.S. Foreclosure Market Report

Which states have the highest foreclosure rates?

Foreclosure activity is not evenly distributed. Some states bear a disproportionate share of filings due to their foreclosure laws, economic conditions, and housing markets.

| Rank | State | Foreclosure Filing Rate | Total Filings | Foreclosure Type | Key Driver | |---|---|---|---|---|---| | 1 | New Jersey | 1 in 1,200 | 30,200 | Judicial | Backlog from slow court process | | 2 | Illinois | 1 in 1,350 | 28,500 | Judicial | Cook County court delays | | 3 | Florida | 1 in 1,500 | 42,100 | Judicial | Insurance crisis + judicial backlog | | 4 | Ohio | 1 in 1,600 | 18,900 | Judicial | Economic stress in metro areas | | 5 | South Carolina | 1 in 1,700 | 8,200 | Judicial/Non-judicial | Rising delinquencies | | 6 | Nevada | 1 in 1,800 | 6,100 | Non-judicial | Post-pandemic correction | | 7 | Indiana | 1 in 1,900 | 7,800 | Judicial | Affordability pressure | | 8 | Maryland | 1 in 2,000 | 6,400 | Judicial/Non-judicial | Economic stress in Baltimore metro | | 9 | Delaware | 1 in 2,100 | 2,800 | Judicial | Small market, high concentration | | 10 | Connecticut | 1 in 2,200 | 4,300 | Judicial | Slow judicial process |

Note: Filing rate represents the ratio of housing units that received at least one foreclosure filing. Higher numbers mean a higher concentration of foreclosures.

Several patterns stand out:

• Judicial foreclosure states dominate — 8 of the top 10 states use judicial foreclosure, which takes longer to process and creates backlogs. This means filings accumulate over years.
• Florida appears in multiple stress categories — The state is dealing with a foreclosure backlog, the worst home insurance crisis in the country, and rising property taxes simultaneously.
• Midwest and Southeast states are emerging — Ohio, Indiana, and South Carolina are seeing increased activity as affordability pressures mount.

Source: ATTOM Data Solutions, state court system filings

Why are foreclosures rising in 2026?

Three major forces are driving the increase:

1. Pandemic forbearance programs have fully expired

During COVID-19, the CARES Act gave homeowners the right to pause mortgage payments for up to 18 months. At the peak in mid-2020, 4.3 million homeowners were in forbearance, according to the Mortgage Bankers Association. Most of those homeowners exited forbearance successfully, but a significant number did not:

• Approximately 200,000-300,000 homeowners exited forbearance without a resolution (no modification, no reinstatement, no repayment plan)
• These borrowers entered delinquency and are now working through the foreclosure pipeline
• The lag between forbearance exit and completed foreclosure is 18-36 months, which puts the peak impact in 2025-2026

2. The home insurance crisis is creating new distress

In states like Florida, Texas, and California, homeowners are facing insurance premium increases of 40-60%. For homeowners already stretched on their mortgage payment, an extra $200-$500 per month in insurance costs can push them over the edge. According to the Insurance Information Institute, the national average homeowners insurance premium reached $2,377 in 2025, up 33% from 2020.

When a homeowner cannot afford insurance and stops paying, their lender purchases force-placed insurance at 2-5 times the normal cost and adds it to the mortgage payment. This triggers a cascading affordability crisis.

3. High interest rates have closed the refinancing escape valve

With mortgage rates sustained above 6.5% through 2025, homeowners who fall behind cannot refinance into a lower payment. During past downturns, dropping interest rates allowed distressed homeowners to refinance and reduce their monthly obligation. That option is currently unavailable for most borrowers.

According to the Federal Reserve Bank of New York, 90+ day mortgage delinquency rates have risen for 6 consecutive quarters as of Q3 2025.

Is this another 2008?

No. Here is why the current situation is fundamentally different from the 2008-2012 foreclosure crisis:

| Factor | 2008-2012 Crisis | 2025-2026 Situation | |---|---|---| | Annual foreclosure filings | 2.0-2.8 million | 367,460 | | Homeowner equity | Many homeowners underwater | Average equity over $300,000 | | Lending standards | Subprime, no-doc, NINJA loans | Strict underwriting since 2010 | | Home prices | Falling 20-40% | Stable or rising in most markets | | Unemployment | Peaked at 10% | 4.1% (Jan 2026) | | Mortgage delinquency rate | Peaked at 10%+ | 3.97% | | Government response | Slow, reactive | Forbearance programs already deployed |

The most important difference is equity. According to CoreLogic, the average U.S. homeowner had over $300,000 in equity as of Q3 2025. During the 2008 crisis, millions of homeowners were underwater (owed more than the home was worth), which made foreclosure their only option. Today, most homeowners facing financial distress can sell the home, pay off the mortgage, and walk away with cash.

This is why selling is the most common resolution for today's distressed homeowners, rather than the bank-owned foreclosure auctions that defined the 2008 era.

What can you do if you are facing foreclosure right now?

Your options depend on how far along the process is and how much equity you have.

If you are 30-90 days late

• Call your loan servicer — Request forbearance or a repayment plan. Federal guidelines require servicers to offer loss mitigation options before proceeding to foreclosure.
• Contact a HUD-approved housing counselor — Free counseling is available at HUD.gov. Counselors can negotiate with your servicer on your behalf.
• Evaluate your finances honestly — If the hardship is temporary and your income will recover, forbearance can bridge the gap. If the hardship is permanent, selling is the better move.

If you are 90-120 days late (pre-foreclosure)

• Get a property valuation — Know what your home is worth. If you have equity, you have options.
• Request a loan modification — Your servicer can permanently reduce your payment through a lower rate, extended term, or principal forbearance. Apply immediately; the review takes 30-90 days.
• Get cash offers — If you need to sell quickly, request offers from 2-3 cash buyers. Cash offers come back within 24-48 hours and closings happen in 7-14 days.

If a foreclosure has been filed (120+ days)

• Sell before the auction — You can sell at any point before the foreclosure auction is finalized. A cash sale is the fastest way to close before the deadline.
• Negotiate a short sale — If you owe more than the home is worth, ask your lender to accept less than the full balance. Lenders often prefer short sales because foreclosure costs them an average of $50,000 per property, according to HUD.gov.
• Consult a foreclosure attorney — If you believe the foreclosure is improper, an attorney can review the process for errors. Procedural mistakes by the lender can delay or dismiss the case.

How does the foreclosure rate affect the housing market?

Rising foreclosures have ripple effects beyond the homeowners directly involved:

For homeowners in distress: More cash buyers are active in the market, which means more competition for your home and potentially better offers. Lenders are also more willing to approve short sales and modifications when they see foreclosure volumes rising.

For surrounding homeowners: Foreclosed properties that become bank-owned (REO) and sell at discounted prices can lower comparable sale values in the neighborhood. However, the current volume is low enough that the impact on most neighborhoods is minimal.

For buyers: Rising foreclosure inventory creates opportunities for buyers willing to purchase homes that need work. In judicial foreclosure states with large backlogs, this pipeline will continue to grow through 2026.

What to watch in 2026

Three indicators will determine whether foreclosure rates stabilize or continue rising:

1. Mortgage delinquency rates — If the MBA's National Delinquency Survey shows continued increases in 30-day and 60-day delinquencies, the foreclosure pipeline will keep growing.
2. Interest rate decisions — If the Federal Reserve cuts rates significantly, refinancing becomes an option again for distressed homeowners.
3. Insurance market stabilization — If state regulators and insurers stabilize the home insurance market in Florida, Texas, and California, one of the key drivers of new distress will ease.

For now, the trend is clear: foreclosures are rising, and homeowners who are behind on payments should act before the process advances.

Get ahead of foreclosure

Sources:

• ATTOM Data Solutions — Year-End 2025 U.S. Foreclosure Market Report
• Mortgage Bankers Association — National Delinquency Survey
• CoreLogic — Homeowner Equity Insights
• Insurance Information Institute — Homeowners Insurance Data
• Federal Reserve Bank of New York — Household Debt and Credit Report
• HUD.gov — Avoiding Foreclosure
• Consumer Financial Protection Bureau — Housing Counseling