Key facts
- U.S. foreclosure filings rose 21% in the first half of 2026 compared to the same period in 2025.
- A total of 227,548 properties received foreclosure filings in the first half of 2026.
- Foreclosure starts increased by 18% year-over-year, while completed foreclosures (REO) rose by 33%.
- The average foreclosure timeline decreased to 563 days in Q2 2026, the shortest since 2013.
- Florida, South Carolina, and Indiana had the highest foreclosure rates nationwide.
- Government-backed FHA and VA mortgages are identified as key drivers of the rising foreclosure activity.
U.S. foreclosure activity saw a significant increase in the first half of 2026, with filings up 21% from the previous year to 227,548 properties. This rise, also 28% higher than the first half of 2024, indicates a return to more typical market patterns after several years of unusually low foreclosure rates. Factors contributing to this trend include rising taxes, insurance, and general household costs, which are making it difficult for some homeowners to manage their finances once they fall behind on payments.
The data reveals that foreclosure starts, the initial stage of the process, increased by 18% year-over-year, signaling that more loans are entering the foreclosure pipeline. Concurrently, completed foreclosures, known as real estate-owned (REO) properties, surged by 33%, indicating that more of these cases are reaching resolution. The average time it takes to complete a foreclosure has also shortened, with properties taking an average of 563 days in the second quarter of 2026, the quickest timeline recorded since 2013.
Geographically, the risk is concentrated in certain states and metropolitan areas, with Florida, South Carolina, Indiana, Delaware, and Illinois showing the highest foreclosure rates. Florida, in particular, features prominently, with Punta Gorda and Lakeland posting the highest rates among major metros. Experts advise that mortgage servicers should tailor their strategies to these specific regional pressures rather than applying a uniform national approach.
A key driver identified for the increase in foreclosures is the performance of government-backed mortgages, specifically those insured by the Federal Housing Administration (FHA) and guaranteed by the Department of Veterans Affairs (VA). Changes in loss-mitigation programs, including the discontinuation of the Veterans Affairs Servicing Purchase (VASP) program and limited payment reduction options for VA borrowers, are pushing more veterans towards short sales or foreclosures. For FHA loans, a return to more normal activity after pandemic-era leniency, coupled with a high failure rate for trial payment plans and limited permanent loss-mitigation options, is also contributing to higher default rates.