Mortgage Delinquencies and Foreclosures are Rising, a Worrisome Sign
Industry Update
June 9, 2026
Source: USA Today
From her office in Painesville, Ohio, just north of Cleveland, Patricia Kidd has a front-row seat for the ups and downs of the housing market.
The area was often considered the ground zero of the 2010s foreclosure crisis, but since then, soaring housing costs have had many residents struggling with the same affordability issues as the rest of the country.
Kidd is the executive director of the Fair Housing Resource Center, an agency certified by the Department of Housing and Urban Development to provide all kinds of services, from counseling that helps people achieve homeownership to complaints about civil rights abuses by landlords.
But when President Donald Trump took office in 2025 and his administration made wide-reaching cuts to federal funding, Kidd’s budget was slashed. She had to lay off four full-time and 12 part-time workers, and subsequent policy changes have meant that the remaining staff can’t offer many of the services Ohioans have counted on for years.
“Folks don’t have the financial resources, and they’re falling behind,” Kidd said. “Their budgets are tighter than they were, and there’s nowhere for them to call.”
A HUD spokesperson responded to a USA TODAY request for comment for this piece with an email saying, “HUD has focused on strengthening housing programs and supporting households most reliant on federal assistance. This has resulted in approximately 1.5 million Americans getting FHA-insured single-family mortgages, over 80% of whom are first time homebuyers.”
Despite the bullish sheen of the official economic data, many Americans are struggling. Delinquencies are rising on everything from student loans to credit cards. But there may be no metric more carefully watched than mortgage distress, perhaps because of the outsize role home loans played in bringing the financial system to its knees in 2008.
We are nowhere close to that, observers say. But the economy of 2026 has its own challenges that couldn’t have been imagined just a few years ago. And as observers like Kidd help average Americans navigate the housing market, it’s sometimes hard to remember all the careful post-2008 planning that went into anticipating the next downturn.
As of March, the share of mortgages nationwide in any stage of delinquency, meaning they are 30 or more days past due, was 3%, a 0.2 percentage point increase from March 2025, according to real estate analytics firm Cotality. The national foreclosure inventory rate, or the percent of homes in active foreclosure among all homes with a mortgage, rose to 0.4%, the highest level in six years.
That’s to be expected, said Selma Hepp, Cotality’s chief economist. Once the distress of the subprime bubble worked its way out of the system, delinquencies and foreclosures hovered near rock-bottom lows for several years. Lending tightened up drastically after the bubble burst, and later, policies enacted at the height of the COVID-19 pandemic gave homeowners some grace in paying their mortgage during a difficult time.
Now, delinquencies are still low relative to history, Hepp said. But the fact that they are concentrated among buyers who generally have to stretch to buy a house – those with loans backed by the Federal Housing Administration and the Veterans Administration, among others – suggests more distress could lie ahead.
Even more worrisome is that it’s recent borrowers – those who bought from 2022 on – who are having the most trouble. That suggests that the combination of high home prices and elevated interest rates may be proving to be too much for many recent entrants into the market.
Cuts to agencies like Kidd’s are hitting at precisely the wrong time, she said in an interview. As the overall cost of living surges, homeowners in her area are increasingly having trouble paying the mortgage.
The cuts to both funding and programming mean she and her staff have to turn away people seeking help. Kidd says that “breaks my heart.”
Are rising foreclosures a sign of worse things to come?
“This is sort of a canary in a coal mine,” said Sharon Cornelissen, director of housing for the Consumer Federation of America, a national nonprofit advocacy group. “We’ve come from historically low levels of distress, and recently we had historically low interest rates, which gave a boost to affordability.”
But as the metrics by which lenders evaluate borrowers have relaxed slightly, conditions have eroded. “People are really at the edge of even affording a home,” Cornelissen said. It feels uncomfortably like the key lesson of the subprime bubble – that lenders must ensure borrowers have an “ability to repay,” may have been sidelined in the well-intentioned push to get people into homeownership, she said.
It’s almost always the case, even post-financial crisis, that the overwhelming majority of borrowers become distressed because something has happened to tip them into trouble: job loss, a natural disaster, a death in the family.
From what can be seen in Cotality’s data, Hepp suspects it’s largely a similar situation now. For example, the destructive 2024 hurricanes may be leading to defaults in South Carolina and Georgia, she says, while surging insurance costs may be pressuring borrowers in California and Florida.
Despite those exogenous factors, however, the distress among borrowers who bought homes relatively recently and could afford only a handful of monthly payments – or perhaps none at all – hints at something more troubling, Hepp says. Many of those owners may have bought with the assumption that they’d be able to refinance to a lower rate quickly, only to get stuck when that didn’t happen.
Housing crisis guardrails have eroded
Whatever the reasons for defaults, housing observers are most concerned that the guardrails put in place after the housing crisis are no longer there to help. It’s not just the housing counseling programs that have been gutted: The Consumer Financial Protection Bureau has axed staff, deleted online resources and dropped regulation enforcement actions.
“In 2026, this is exactly the wrong time to make it harder for homeowners in distress to get help,” Kidd said. “Access should be easier, not harder. When someone is struggling, the first question should be, ‘How can we help?’ not, ‘Which funding category do you fit into?’”
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