What Mortgage Delinquencies Reveal About the Outlook for Foreclosures
You may have noticed recent headlines suggesting that foreclosures are on the rise. If that has you concerned about another housing market crash, here’s some perspective.
Data from ATTOM shows that during the housing downturn from 2007 to 2011, more than nine million homeowners went through some form of distressed sale. By contrast, last year’s total was just over 300,000.
So, while foreclosure activity has ticked up lately, the figures remain far below crisis levels. But what does that mean for the road ahead? Are we facing a new wave? The short answer: no.
Why Experts Track Mortgage Delinquencies
Industry professionals monitor mortgage delinquencies (loans more than 30 days overdue) as a leading signal for possible foreclosures. The encouraging news is that current delinquency data suggests stability in the market overall.
At present, delinquency levels are roughly in line with where they stood at the close of last year. That means there’s no broad surge indicating major trouble ahead.
Still, there are important details worth noting. Marina Walsh, Vice President of Industry Analysis at the Mortgage Bankers Association, highlights:
“While overall mortgage delinquencies are relatively flat compared to last year, the composition has changed.”
Right now, FHA borrowers represent the largest share of new delinquencies (see graph below).
Why FHA Loans Show More Stress
Borrowers with FHA-backed loans can be more vulnerable to economic pressures. With concerns about inflation, job market fluctuations, and recession fears, this group may be experiencing more challenges. However, this doesn’t mean a housing collapse is on the horizon.
Looking at the data, FHA delinquencies have increased, but other loan categories remain low and steady. During the housing crash, delinquency rates spiked across all loan types.
That distinction is critical. It shows that the broader mortgage market is far more resilient today than it was in 2008. As ResiClub explains:
“The recent uptick in mortgage delinquency seems to be concentrated among FHA borrowers, however, mortgage performance remains very solid when viewed in light of the twenty-year history of our data.”
Regions with Higher FHA Loan Concentrations
Here’s another factor to keep in mind: FHA loans account for only about 12% of all mortgages nationwide. But regional differences matter. Some parts of the U.S.—especially in the South—have higher concentrations of FHA financing.
The map below doesn’t show delinquent FHA loans specifically. Instead, it highlights where FHA loans are most common across states (see map below).
As the Federal Reserve Bank of New York points out:
“Looking at geographic concentrations of loans, recent data indicate that a higher proportion of mortgage balances are delinquent in many of the southern states . . . we see that higher delinquency rates coincide with a higher share of FHA loans across states.”
Even so, today’s delinquency rates remain far below what the market endured in 2008. That means we’re not looking at signs of another collapse, though experts will continue to monitor trends closely.
If You’re Facing Financial Struggles
No homeowner wants to deal with foreclosure. If you’re having difficulty making payments, remember you’re not alone—and you have options.
Start by contacting your mortgage servicer. They may be able to arrange a repayment plan or adjust loan terms. In addition, many homeowners now have substantial equity, which could allow you to sell and avoid foreclosure entirely. For many, that equity provides a safety net that didn’t exist during the last crash.
Final Thoughts
Yes, foreclosure numbers are slightly higher, but they’re still nowhere near the levels of 2008. Current delinquency trends don’t suggest a looming crisis.
Experts will keep a close watch, but for now, the market remains stable. If you’d like to stay informed about the latest housing insights, let’s connect.
