Over the past few years, a lot of homeowners who fell behind on their mortgages didn’t end up in foreclosure right away.

Why?

Because during and after COVID, the government rolled out a series of relief programs that gave people extra time and multiple chances to catch up. Payments were paused, modified, or moved to the back of the loan. In many cases, homeowners were helped more than once.

And for a while, that worked.

But those programs officially ended on September 30, 2025.
As of October 1, 2025, the rules became stricter—and that’s when things started to shift.

A Lot of Loans Were “Held Together” for Years

During the COVID period, FHA loans (which are often used by first-time or lower down payment buyers) were given a lot of flexibility.

Many homeowners got multiple chances to modify their loan. They didn’t always need strong proof they could repay. And they were able to stay in their homes even after falling behind more than once.

Over time, that created a large group of loans that were still struggling, even after help.

To give you a sense of scale, about 70% of FHA borrowers had received some kind of help in the past 5 years. Nearly 40% of borrowers getting help in 2025 were on their third round, and many of those loans fell behind again.

In fact, a significant number of borrowers had been late multiple times.

Now That the Programs Ended… The Backlog Is Showing Up

Once those relief options expired, lenders had fewer ways to keep delaying the process.

So now, we’re starting to see the results.

As of late 2025, about 37,000+ FHA loans are already in foreclosure. Roughly 426,000 loans are seriously behind (90+ days late), and thousands more are entering foreclosure each month.

That’s a noticeable jump—and it’s the highest level we’ve seen since around 2020.

Even though FHA loans make up a smaller portion of the overall market, they're driving a large share of current foreclosure activity.

What This Means 

Here’s the simplest way to think about it:

For several years, foreclosures were delayed—not avoided.

Now that the delay is over, those loans are starting to move through the system.

And there’s a lot of them.

Some analysts believe we’re looking at several years’ worth of delayed foreclosures working their way out over a shorter period of time.

What Happens Next?

We're likely to see more foreclosure filings through 2026. We'll also see more pre-foreclosure and short sale opportunities, along with a gradual increase in bank-owned (REO) properties.

In some areas, this could put downward pressure on prices, especially in certain price ranges or neighborhoods.

That said—this is not 2008 all over again.
Overall foreclosure levels are still much lower than they were during the housing crash.

The Bottom Line

The COVID-era programs didn’t eliminate foreclosure risk—they pushed it down the road.

Now that those programs have ended, we're seeing more FHA loans falling into foreclosure, a growing pipeline of distressed properties, and a shift back toward more "normal" market behavior.

Are you seeing this in your area?  Please let me know.