U.S. foreclosure filings rose 26% year over year in the first quarter of 2026 to 118,727 properties, the highest quarterly total since early 2020, as the expiration of pandemic-era mortgage relief programs converges with rising insurance premiums, property taxes, and homeowner association fees to push a growing number of borrowers into default. The sustained climb — now spanning more than a year of consecutive annual increases — reflects a delayed reckoning rather than a sudden crisis, with industry analysts warning that the trajectory is unlikely to reverse in the near term.
Key Takeaways
- ATTOM reported 118,727 U.S. properties with foreclosure filings in Q1 2026, up 26% from the same period in 2025 and the highest quarterly figure since early 2020.
- Bank repossessions surged 45% year over year to 14,020 properties, while foreclosure starts rose 20% to 82,631, according to ATTOM.
- The Federal Housing Administration restricted borrowers to one loan modification every 24 months starting in October 2025, and a new three-month trial payment requirement took effect in February 2026, contributing to a 28% jump in FHA foreclosures in Q1, American Banker reported.
- Rising homeowners insurance, up 12% to an average of $2,948 annually in 2025 per Insurify, and property taxes averaging $4,427, up 3% per ATTOM, are compounding mortgage stress even for borrowers with sub-4% interest rates.
- Despite the increases, foreclosure volumes remain well below the peaks of the 2008–2012 crisis and sit below pre-pandemic 2019 levels on a projected first-half basis.
Why Are Foreclosure Filings Rising Now?
The surge traces directly to the unwinding of pandemic-era protections that suppressed foreclosure activity for roughly five years. The CARES Act foreclosure moratorium, extended multiple times during the pandemic, froze nearly all foreclosure proceedings. Federal forbearance programs allowed borrowers to pause payments without penalty. Those protections are now fully expired, and the backlog of distressed borrowers they deferred is entering the pipeline.
Donna Schmidt, CEO of DLS Servicing, told HousingWire that five years of delayed foreclosures could produce a concentrated wave over the next 12 to 24 months. Ted Tozer, former president and CEO of Ginnie Mae and a fellow at the Urban Institute’s Housing Finance Policy Center, put it more directly: the country spent years allowing borrowers to avoid confronting their inability to make mortgage payments, and the consequences are now arriving.
The Federal Housing Administration accelerated the timeline with two policy changes. In October 2025, the FHA began restricting borrowers to one loan modification every 24 months, closing a relief valve that some borrowers had used repeatedly. In February 2026, the FHA introduced a mandatory three-month trial payment period before finalizing any modification, requiring borrowers to demonstrate repayment capacity. American Banker reported that foreclosures on FHA-backed loans jumped 28% in Q1 2026 as a result. The Federal Reserve’s May 2026 financial stability report flagged “some distress” in FHA and Department of Veterans Affairs loans, particularly among borrowers who purchased homes with low down payments in recent years.
What Is Driving Defaults Beyond Mortgage Rates?
The foreclosure increase cannot be attributed solely to elevated borrowing costs. A large share of existing homeowners locked in mortgage rates below 4% before 2022 and are not facing rate-driven payment shocks. The pressure is coming instead from the non-mortgage costs of homeownership that have escalated sharply.
| Cost Category | Recent Figure | Year-Over-Year Change |
|---|---|---|
| Homeowners insurance (avg. annual) | $2,948 (2025) | +12%, per Insurify |
| Property taxes (avg. annual) | $4,427 | +3%, per ATTOM |
| Average monthly mortgage payment (all outstanding) | $2,005 (Q4 2025) | New record, per Realtor.com |
In states prone to severe weather, insurance costs have in some cases doubled within a few years. HOA fees are climbing as aging communities pass repair and reserve-fund costs to residents through higher monthly dues and special assessments. The cumulative effect means homeowners who can afford their mortgage payment are defaulting because total ownership costs now exceed household capacity. Mortgage rates have remained above 6% since September 2022 after staying below that threshold for approximately 13 years.
Which States and Cities Are Hit Hardest?
The geographic pattern concentrates in the Sun Belt and parts of the Midwest. ATTOM’s Q1 2026 data showed Indiana leading all states with one in every 739 housing units carrying a foreclosure filing, followed by South Carolina at one in 743, Florida at one in 750, Delaware at one in 757, and Illinois at one in 833. The national average was one in every 1,211 housing units.
By raw volume, Texas led with 10,617 filings, followed by California and Florida. Among metro areas with populations above 200,000, two Florida cities — Lakeland and Punta Gorda — posted the highest foreclosure rates in the country, followed by Columbia, South Carolina; Fayetteville, North Carolina; and Macon, Georgia. Schmidt attributed the Sun Belt concentration partly to surging insurance rates that have pushed some homeowners to abandon properties entirely.
Georgia stood out for the pace of acceleration. The state recorded 4,549 foreclosure filings in Q1 2026, a 77.8% year-over-year increase that far outpaced the national 26% gain. Atlanta alone accounted for 2,520 foreclosure starts, more than half of the state total.
How Does This Compare to the 2008 Foreclosure Crisis?
The current numbers, while climbing, remain a fraction of crisis-era levels. ATTOM data shows that Q1 2026 foreclosure activity is roughly one-eighth of the peak experienced during the 2009–2011 foreclosure crisis. The structural conditions are also different: the subprime lending practices that fueled the 2008 collapse have been curtailed by post-crisis regulation, and homeowner equity positions are substantially stronger after years of price appreciation.
ATTOM CEO Rob Barber described the trend as a “gradual normalization” rather than a systemic breakdown, noting that foreclosure volumes remain below pre-pandemic levels even with the sustained annual increases. However, the trajectory — 11 consecutive months of year-over-year gains through January 2026, and annual increases persisting through May — suggests the normalization process has further to run, particularly as FHA policy changes work through the system and insurance costs continue to escalate.
U.S. foreclosure filings have reached their highest level since the pandemic froze the housing market in 2020, driven not by a single cause but by the compounding effect of expired federal relief, tightened FHA modification rules, and non-mortgage ownership costs that are rising faster than household incomes can absorb.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Readers should consult a qualified financial professional before making decisions related to real estate or mortgage matters.
FAQs
How many foreclosure filings were there in Q1 2026? ATTOM reported 118,727 U.S. properties with a foreclosure filing in Q1 2026, a 26% increase from the same period in 2025 and the highest quarterly figure since early 2020.
Why are foreclosures rising if mortgage rates haven’t changed dramatically? Many homeowners locked in low rates before 2022 but are being squeezed by non-mortgage costs. Homeowners insurance rose 12% to an average of $2,948 in 2025, property taxes averaged $4,427, and HOA fees have increased as communities pass repair costs to residents.
What role did the FHA play in the increase? The FHA restricted borrowers to one loan modification every 24 months starting October 2025 and added a mandatory three-month trial payment requirement in February 2026. Foreclosures on FHA loans jumped 28% in Q1, American Banker reported.
Is this another 2008 crisis? No. Current foreclosure volumes are roughly one-eighth of the 2009–2011 peak, and the subprime lending conditions that caused the prior crisis are not present. Analysts describe the increase as a delayed normalization after five years of artificially suppressed activity.
Which states have the highest foreclosure rates? Indiana led in Q1 2026 with one in every 739 housing units in foreclosure, followed by South Carolina, Florida, Delaware, and Illinois, according to ATTOM.
Will foreclosures keep rising? Industry analysts expect continued increases through at least late 2027 as the backlog of deferred pandemic-era distress works through the system and insurance and tax costs continue to climb.
