U.S. foreclosure activity increased in 2025 as the housing market continued to normalize after several years of unusually low levels following the pandemic. According to ATTOM’s Year-End 2025 Foreclosure Market Report, foreclosure filings rose 14% from 2024 to 367,460 properties, though activity remains below pre-pandemic levels and dramatically lower than the 2008–2010 housing crisis. Overall filings are still 25% below 2019 levels and 87% lower than the 2010 peak.
Foreclosure completion and bank repossessions also increased. Lenders initiated foreclosure proceedings on nearly 289,000 properties, and REO activity rose 27% year over year post-pandemic. Despite these gains, industry leaders note the uptick reflects market recalibration rather than widespread homeowner distress, supported by strong homeowner equity and more disciplined lending.
Geographically, foreclosure rates varied widely. Florida, Delaware, and South Carolina saw the highest rates, while metro areas such as Lakeland (FL), Columbia (SC), Cleveland (OH), and Cape Coral (FL) experienced the greatest concentration of distress. Foreclosure timelines shortened in late 2025, signaling faster resolution of cases, although some states continue to experience very lengthy processes.
Key Insights- Donna Schmidt
Donna Schmidt, President and CEO of DLS Servicing, offered a more cautionary forward-looking perspective. She warned that foreclosure activity—particularly related to FHA loans—is expected to rise sharply in the second and third quarters as new FHA loss mitigation restrictions end what she described as a “perpetual workout cycle.” According to Schmidt, this policy shift could force a significant backlog of distressed FHA loans into foreclosure, with as much as five years’ worth of inventory moving through the system in a condensed time frame. While current foreclosure levels remain manageable, upcoming regulatory changes could materially increase volume and operational strain in the future.
DLS Servicing is positioned to assist banks, credit unions, and mortgage servicers as they prepare for and navigate this anticipated increase in foreclosure activity.