Keep your checkbook handy: A tsunami of foreclosures is about to hit the market.
Although we’ve heard these rumors before, this time it may be different. That’s because President Donald Trump ended a key Biden-era foreclosure protection program was designed To help struggling homeowners stay in their homes.
The continued increase in foreclosures may be a sign of things to come. With small landlords and flippers driven out of the market by corporations, interest rates and high prices, this could mark the beginning of a very different landscape for acquisitions.
What’s changed in Washington right now—and why it matters
A federal subsidy that allows distressed homeowners to reduce or temporarily cover mortgage payments. was injuredThe wall street journal Informed. The subsidies introduced during the Biden administration in the wake of the COVID-19 crisis served as a backstop to prevent recapture. Experts predict a wave of foreclosures is set To follow.
“The story here is that people have been distressed over the last five years, but loss mitigation stopped the natural clearing cycle,” told John Comiskey, founder of Reverse Engineering Finance, which tracks the performance of 7 million of the 8 million outstanding FHA loans captured in Ginnie Mae’s mortgage-backed securities data. magazine. “The flood behind the dam has to be released.”
Foreclosures are at their highest level in six years
That release has probably already started. magazine Foreclosure filings are reported to have reached their highest level in six years, with some 119,000 properties receiving some a kind of Foreclosure notices in the first quarter of 2026, which represents a 26% increase in foreclosures year over year, according to data and analytics provider ATTOM.
A confluence of factors is driving the figures, including high property taxes and insurance, as well as other non-mortgage-related factors related to the cost of living crisis.
“Foreclosure activity increased in the first quarter, with solid year-over-year gains recorded in both initiations and completed foreclosures,” said Rob Barber, CEO of ATTOM. realtor.com. However, foreclosure levels remain around pre-pandemic levels not expected To continue for a long time, magazine Report.
“Although volumes remain below historical peaks, continued growth, particularly in starts and bank repayments, suggests that financial pressures are building for some homeowners and may signal a change in housing market dynamics,” Barber said.
Where foreclosures are having the biggest impact
Unlike the 2008 financial crash, where overleveraged homes made foreclosure headlines in Sunbelt cities like Las Vegas, Florida, and Atlanta, the Midwest is also seeing REO activity, with Indiana currently experiencing the highest foreclosure rates in the country. There, 1 in every 739 housing units received a filing in the first quarter (nationally, it’s 1 in every 1,211 units), followed by South Carolina and Florida.
According to ATTOM, completed foreclosures (REOs) are up 45% year over year compared to the first quarter, showing that more properties are moving through the foreclosure process. be repossessed. bad news for flippers Or BRRRR Investors seeking to refinance believe that the deeper the foreclosure trough, the more home values can fall.
Realtor.com’s January 2026 Housing Report 30 of the 50 largest housing markets saw price declines by May 2025 numbersAlthough decline not specifically attributed For affordability rather than foreclosure, which is due to houses to stay Long time in the market. Downtrend may accelerate after additional REO properties are added For mixing.
“The thing to keep in mind about these foreclosure rates is foreclosure was imposed remained artificially low throughout the pandemic,” said Jeff Ostrowski, housing market analyst at Bankrate. Scripps News. “Foreclosure is certainly financially devastating for the homeowner who goes through it. But it is also a normal and healthy part of the housing market.”
Another 2008-style housing crash could happen card
Experts fear that the decline in home prices will continue until 2026 until affordability balances out, which will have devastating consequences.
Housing analyst Melody Wright explained, “We’re going to have a recovery all the way to the point where the median household income matches the median home price. And so it’s going to be worse than 2008.” Yahoo! finance.
with Government bans big investors from buying bank-owned propertiesAs was the case after the 2008 crash, an opportunity may await small investors in the next few years.
Wright told newsweek In November 2025:
“I see this happening over several years, with the potential for steeper declines than in previous cycles. For example, during the last cycle prices did not bottom until 2012. I believe “We could start to see a serious decline in prices next year and historically speaking we could see a big decline, but it still looks like it may take several years to come down.”
Rising mortgage debt adds to homeowner woes
Another factor intrinsically linked to the impending increase in foreclosures is homeowners’ increasing mortgage debt. tied to the saddle with. Interestingly, debt is growing at the highest rates in more “affordable” states like Alaska, Delaware, Maine, Kentucky, Arkansas and Alabama, rather than in expensive coastal centers, according to an analysis of WalletHub data. newsweek And realtor.com, It shows where the next foreclosure hot spots may be.
John Kiernan, editor of WalletHub, said report: :
“Mortgage rates are the highest they have been in nearly a decade, and home prices have also seen huge increases in recent years. Even small increases in home prices can result in thousands of dollars in additional mortgage interest costs for homeowners, so it’s important to choose wisely when deciding where and when to buy a home.”
Small homeowners are also being affected by government cuts to federal programs.
Homeowners who rely on the Trump administration’s latest budget proposal, which includes cuts to rental assistance programs and other HUD funding lines, could be hurt. Section 8 Vouchers and renters add to the potential foreclosure pile.
in July 2025 Letter Led by the House and Senate Appropriations Subcommittees on Transportation, Housing, and Urban Development, the National Association of Realtors (NAR) requested full funding for the Housing Choice Voucher Program, Fair Housing Initiatives Program, and Fair Housing Assistance Program, as well as adequate staffing of HUD’s Fair Housing Office. NAR argues that additional housing programs help leverage private sector investment.
Final Thoughts: How Small Investors Can Set Themselves Up
The devil is in the details—and in this case, the details are the data. As foreclosures increase, investors should analyze which markets are most affected based on actual foreclosures filed, rising ownership costs and increasing mortgage debt. Cross-referencing these areas – mostly in the Midwest and South – is where you’re likely to see an increase in foreclosures.
Foreclosure does not happen alone. Usually several people are involved – the bank loss mitigation department, lawyers, REO Real Estate Agents and BrokersAnd even the cleaning crews.
The standard approach would be to contact REO agents first. If you can prove that you can close one of their deals faster, more deals are likely to follow. Being known as an operator who delivers will get people talking, bankruptcy and foreclosure attorneys will be more likely to take your call and possibly give you information about upcoming deals.
Additionally, “We Buy Houses” bandit signs, door knocking (based on prior foreclosure filings), and all the usual skip-tracing methods to reach property owners in danger will now apply as they did in 2008 – as well as new AI-enhanced search tools to speed up the process.
