Foreclosure Filings Are On The Rise, Placing More Stress On Servicers

Foreclosure activity continued to climb on an annual basis in January, even as filings declined from the prior month, according to a report released Wednesday by property data firm ATTOM.

ATTOM’s January 2026 U.S. Foreclosure Market Report found that there were a total of 40,534 U.S. properties with foreclosure filings — including default notices, scheduled auctions or bank repossessions — during the month. That figure was down 10% from December but up 32% from January 2025.

“Foreclosure activity in January rose year over year for the eleventh straight month, continuing a trend that has now carried into early 2026,” Rob Barber, CEO of ATTOM, said in the report. “Foreclosure starts were up 26% from a year ago, while completed foreclosures increased nearly 59%.

“Although foreclosure activity has been rising steadily, overall levels remain well below historic peaks, suggesting that most homeowners are still on stable footing even as higher housing costs and broader economic pressures create stress in certain pockets of the market.”

Nationwide, one in every 3,547 housing units had a foreclosure filing in January.

States with the highest foreclosure rates were Delaware, with one in every 1,612 housing units affected; Nevada, at one in every 1,983; Florida, at one in every 2,067; South Carolina, at one in every 2,351; and Maryland, at one in every 2,430.

Among metropolitan areas with populations of at least 200,000, Trenton, New Jersey, posted the highest foreclosure rate, with one filing for every 1,087 housing units. It was followed by Punta Gorda, Florida (one in every 1,187 housing units); Fayetteville, North Carolina (one in every 1,257); Lakeland, Florida (one in every 1,262); and Vallejo, California (one in every 1,287).

Lenders initiated the foreclosure process on 26,369 properties nationwide in January, down 7% from the previous month but up 26% from a year earlier.

Florida recorded the highest number of foreclosure starts with 3,523, followed by Texas (3,116), California (2,790), Georgia (1,351) and New York (1,304).

Among metro areas with populations above 200,000, New York City had the most foreclosure starts at 1,295, followed by Chicago (1,053), Houston (1,040), Miami (851) and Los Angeles (781).

Mortgage servicers that face higher volumes of foreclosure activity will need to adjust their operating models, said Mirza Hodzic, managing director and founder of BlackWolf Advisory Group.

“An 11-month run-up in foreclosure activity is exactly the kind of slow-building wave that stretches servicer capacity, not just in foreclosure departments but across the entire default ecosystem,” Hodzic said in a statement. “As foreclosure referrals rise, pressure ripples into borrower outreach, loss mitigation reviews, default management, and every handoff becomes a potential bottleneck if workflows are not tight.”

He added that strain typically first appears in compliance-driven transitions.

“Servicers do not need a bigger queue. They need a smarter operating model for elevated defaults, including earlier triage and segmentation, tighter controls around data quality and timelines, and automation for routine steps,” he said.

“When volumes rise, small process gaps such as missing documents, timeline misses and vendor delays, quickly turn into backlogs that drive higher costs, greater risk and slower resolution times,” he added.

Lenders repossessed 4,714 properties in January through completed foreclosures, or real estate-owned (REO) actions. That was down 21% from December but up 59% from a year earlier.

Texas led the nation in REOs with 573, followed by California (415), Florida (327), Pennsylvania (311) and Illinois (267).

Among large metropolitan areas, Chicago recorded the most completed foreclosures with 248 REOs. Philadelphia followed with 165, Houston with 152, Dallas with 122 and New York with 114.