Are Foreclosures Rising in 2026? Why This Is Not 2008 All Over Again

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Why everyone is asking about foreclosures

Welcome to Mortgage Mom Radio. I'm Debbie Marcoux, the Mortgage Mom, and today we're talking about foreclosures. Is your property going to fall in value? Is imminent doom on the way? I have been asked this repeatedly over the past week, so today's show is all about it. I'm going to give you numbers from the height of the Great Recession in 2010, compare them to 2019 — a very stable market, fully recovered, right before COVID — and then show you where things stand today.

So why are clients asking this right now? Two things are colliding in the headlines this week: foreclosure filings are up 21% year-over-year, and mortgage delinquencies just posted their first meaningful quarter-over-quarter increase, per the Mortgage Bankers Association's Q1 2026 National Delinquency Survey. I always tell you where I get my data so you know it's accurate. The headlines report the 21% without the base number behind it — so you hear “foreclosures are up 21%” and assume it's 2008 all over again. That is not what it means whatsoever. But the fear is understandable, and the honest answer has real nuance worth walking through.

Three eras, side by side

Let's do the three eras. The Great Recession peaked in 2010, but it really started in 2007. Filings climbed from about 1,285,873 properties in 2007 — up 75% from 2006 — and eventually hit the all-time record of 2,871,891 in 2010, per RealtyTrac, confirmed by Reuters. Foreclosure starts — the closest proxy to a formal notice of default — peaked in 2009 at over 2.1 million, and completed foreclosures (bank repossessions, or REOs) peaked at about 1.05 million in 2010. That wave was driven by subprime and adjustable-rate mortgages resetting to payments people couldn't afford — and because values were collapsing under the weight of all those foreclosures, borrowers couldn't refinance and couldn't sell to get out of the pickle they were in.

Now 2019, pre-pandemic — the most normal market in recent memory. Full-year filings: 493,066, down 83% from the 2010 high and the lowest level since tracking began in 2005. Foreclosure starts were 335,985.

And today: first-half 2026 filings sit at 227,548 through June. Double that for a full-year run rate and we land somewhere between 450,000 and 470,000. Compare that to 2019's 493,066 — we're right on target for a pretty normal market. Yes, the first half is up 21% year-over-year. It is also still down 86% from the 2010 peak. Last year, 2025, came in at 367,460 — still down 87% from the peak, though up 14% from 2024.

So no, this is not 2008. No, we are not heading into a massive crisis, and no, your house is not going to drop 50% in value come 2027. There's no crystal ball — something unpredictable could always happen — but if things continue the way they've been going, that is not the direction we're headed.

Why the numbers are rising: the COVID backlog

Why now, and not last year or the year before? Remember that during COVID, banks offered forbearances, moved missed balances to the back of the loan, and worked loan modifications to get people caught up — and foreclosure moratoriums legally prevented banks from foreclosing. That wasn't just 2020; it ran through 2021 and 2022, and plenty of people were still finishing modifications in 2023. The banks got the green light in 2024, so 2024 and 2025 have been the market building back to normal. And a normal market always has foreclosures — poor planning, a drastic life event, a home that burned without insurance. There will always be some, and it isn't a housing bust.

Here's a detail that proves we're not in a crisis: foreclosures are actually moving faster than ever. The average foreclosure timeline is down to 563 days as of Q2 2026 — a 13% improvement over last year. In 2008–2010, banks drowning in millions of defaulted loans didn't have the staff to send notices, work with borrowers, and get properties to market, which is what dragged the Great Recession out. Today's volume is small enough that the pipeline just flows.

One more comparison to drive it home. In 2010, one out of every 45 homes on the market across the nation was a foreclosure, per RealtyTrac's year-end report. As of 2026, it is 1 in 632 listings. That is a substantial, substantial difference. And understand why the headline exists: anybody doing a show is trying to get you to click, and “foreclosures up 21%” does that. Now you have the baseline behind it.

What actually caused 2008 — and what's different

The biggest structural difference between 2008 and 2026 is home equity. In the early 2000s people were buying properties as fast as they could get them — stated income loans, a huge subprime market, 100% financing through an 80% first mortgage and a 20% second, no income documentation at all. Most of those loans were fixed for five years and then adjusted. When rates jumped by 2008, a borrower whose start rate was 4.5 or 5% suddenly reset to around 7%, often going from interest-only to fully amortized at the same time. There were even negative-amortization loans — a product I haven't seen in ages. Values tanked because foreclosures were everywhere, the equity was gone, and people could neither sell nor refinance their way out.

Here's how the old 80/20 no-doc loan actually worked, because it explains everything. You ran an 80% first mortgage through the automated system, and because the system believed there was a 20% down payment, it would come back “no income, no assets, no verification required.” Then a 20% second was closed concurrently — and the second underwrote to the same guidelines as the first. So if the system said no income docs, neither loan required them. Money to close plus a credit score the system liked, and you got a mortgage. School teachers, waitresses, anyone with a W-2 could have any number typed into the application — which is fraud, but spread across hundreds of thousands of loan officers with the ability to nudge an income $500 a month to make a deal work, how many people really didn't qualify?

After the Great Recession came the reform: the Dodd-Frank Act — around 2010 — the CFPB, mortgage licensing, disclosure rules, and above all the ability-to-repay (ATR) requirement every lender must underwrite to. Since then, I'd say 94–95% of all loans underwritten, approved, and funded have been full-documentation loans — W-2s, pay stubs, debt ratios in line. FHA and VA always were. And the products that sound like exceptions still have to prove ability to repay:

A bank statement loan is only available if you're self-employed — if you don't own a business, you cannot get one. We gather 12 months of business bank statements and count only the genuine income deposits, then cut the total in half to allow for the running expenses of the business. A DSCR loan (debt service coverage ratio) can only be done on an investment property: the appraiser documents market rents, and those rents have to cover the principal, interest, taxes, and insurance. That's the ability to repay, either way. We simply no longer offer the loans that got everyone into trouble — and this underwriting has been in place for about 16 years now.

Where the stress actually is

Foreclosures are up, and there are places feeling it — so let's talk about where. Underwater borrowers are up 44% year-over-year — honestly, I'm shocked that isn't the headline — to about 813,000 nationally, across all 50 states. It's concentrated among FHA and VA borrowers who bought between 2022 and 2025: they closed at higher rates with very low down payments, in markets that have since given back some price. It's heavily concentrated in Texas and Florida, which together account for 39% of all underwater homes nationwide, per ICE's August 2026 Mortgage Monitor.

The hardest-hit metros: Cape Coral, Florida, where 11.4% of homeowners are underwater; Lakeland, Florida at 7.5%; San Antonio at 6.9%; and Austin at 6.6%. These are the markets that saw the biggest pandemic-era price run-ups — the places people fled to in 2020 and 2021, which pushed values up too high, too fast. Now prices are readjusting, and the 2021–2022 low-down-payment buyers there have the least cushion.

Quickly through the states I'm licensed in: Arizona — not among the high-stress states. California — pockets exist, but the state overall is not in negative equity. Colorado — one of only two states, with Louisiana, posting negative-equity readings above 3% outside the primary underwater states. Florida — one of the two big underwater states, home to the country's highest-stress metros, and it also posted the highest June 2026 foreclosure rate of any state — yet even there we're talking about one foreclosure per couple thousand listings, versus one in 45 during the Great Recession. Georgia, Hawaii, Idaho — not flagged. Illinois — elevated, at about one in every 2,624 properties. Nevada — elevated but in the same order of magnitude. North Carolina, Oregon, Tennessee — not flagged (Tennessee surprises me; I did a lot of loans there for people leaving California). Texas — the other big underwater state, and it led REO completions nationally with 3,322 in early 2026. Washington — not flagged.

One recent bright spot: Florida is seeing the biggest uptick in purchase closings of any state in 2026 — from what I've seen, a lot of it people relocating from New York. And to answer a good chat question: everything here is residential — single family, condo, townhome, 2-to-4 unit — not commercial.

The take-home

The foreclosure headlines are real — the 21% is real — but there was no baseline behind them, and now you have it. We are in a market that is normalizing, not repeating 2008. The one group hurting is FHA and VA buyers from 2022–2023 who closed at the highest rates with little down. If that's you and you're slightly upside down but need the payment down: on both FHA and VA we can do a streamline refinance — no appraisal required, and we don't care what your loan-to-value is. Being a little underwater does not stop you from dropping your rate.

And if you're struggling to make a payment: I don't prepare loan modification packages, but I've watched the short sale, modification, and foreclosure processes for a very long time, and I'm always happy to talk through your options and point you in the right direction. We want everybody to keep their home. Prices are normalizing after the pandemic ran everything up — some of that had to come back. Do not walk away because you're $10,000 or $15,000 upside down. Real estate is for the long haul; every cycle ends higher than the last, and nobody can make you move from a home you own.

One last number I promised: mortgage-holder equity nationwide hit $18 trillion in Q2 2026, with $11.7 trillion of it tappable. What's the difference? Loan-to-value guidelines — on most programs, about 80% of the home's value is the most you can borrow against, so not every dollar of equity is reachable. But that cushion is exactly why I don't see 2008 happening again: outside that small window of zero-to-3%-down buyers from 2022–2023, almost everyone in trouble could sell, pay off the mortgage, and avoid the foreclosure entirely.

I'll be back next Wednesday at 3:00 p.m. Pacific on YouTube and Facebook. If you want a text when I go live, text the word LIVE to 844-935-3634 — that's also the office number if you'd like to talk through your own numbers. Have a fabulous rest of your week. Bye-bye.