Will There Be More Foreclosures In 2025?
By ERIN FLYNN JAY
Foreclosure activity could rise in 2025 but industry leaders say there likely won’t be a dramatic increase.
Last year, foreclosure activity declined. Foreclosure filings — default notices, scheduled auctions, and bank repossessions — were reported on 322,103 U.S. properties. That represented 0.23% of all housing units, down slightly from 0.25% in 2023, according to ATTOM’s Year-End 2024 U.S. Foreclosure Market Report.
But in January and February, foreclosure filings were up from the month prior.
“February’s rise in foreclosure filings suggests evolving market pressures,” Rob Barber, CEO at ATTOM, said in a statement.
“While some increase may reflect seasonal trends, the uptick in foreclosure starts both month-over-month and year-over-year signals potential shifts. We’ll continue monitoring how economic factors influence foreclosure activity moving forward.”
ATTOM’s Special Housing Risk Report shows that in Charlotte County, FL, where Punta Gorda is located, one in 198 properties is facing possible foreclosure.
In Cumberland County, NJ, where Vineland is, one in 484 properties is facing possible foreclosure. Kaufman County, TX, outside Dallas, has one in 562 properties facing possible foreclosure.
What do industry leaders think?
Donna Schmidt, managing director of DLS Servicing in Grand Rapids, MI, said that nationally foreclosures are likely to remain low in 2025 thanks to home equity gains by borrowers.
During the last few years there has been accelerated real estate appreciation, she explained.
“Also impacting the favorable outlook is the availability of streamlined loss mitigation options,” said Schmidt. “However, the strain of higher consumer debt could lead to higher defaults and the need for some borrowers to list their properties for sale.”
Rick Sharga, president and CEO of CJ Patrick Company, echoed Schmidt’s statements about home equity and talked about the availability of help from mortgage servicers.
He said servicers are going to extraordinary lengths to help borrowers who are seriously delinquent on their loans avoid foreclosure, often allowing financially distressed homeowners multiple loan modifications, forbearance, or other loss mitigation options before finally sending out a notice of default.
Sharga thinks there will be a modest increase in foreclosure activity in 2025, perhaps getting back to 2023 levels, but not approaching the number of foreclosure actions that were typically seen prior to the pandemic.
“Most of the increase this year will likely be in foreclosure starts – the first notice of default that a borrower receives,” he said. “Actual foreclosure sales and bank repossessions will probably continue to lag significantly for at least the rest of this year. Absent an unexpectedly severe economic downturn or recession, market conditions just don’t suggest a rapid increase in either mortgage delinquencies or defaults.”
Sharga said foreclosure activity will likely mirror population trends. The states with the highest number of residents and the highest number of homes with a mortgage will probably have the highest number of foreclosure actions: California, Texas, Florida, New York, and Pennsylvania.
“We’ll also see a bump in foreclosure activity in regions that have recently been impacted by disasters like the Los Angeles fires and Hurricanes Helene and Milton which devastated parts of North Carolina,” said Sharga. “Beyond that, both mortgage delinquencies and foreclosures correlate pretty closely to unemployment rates, so any areas that experience job losses are likely to see increased foreclosure activity as well.”
Leaders in some areas that are expecting job losses are hoping to help people who could face foreclosure.
Federal workers make up a large percentage of the population in Washington, DC, Maryland, and Virginia. Job cuts are likely to affect the housing market in the nation’s capital and these states.
WTOP News reported that on March 18 the Prince George’s County Council introduced a resolution calling on Governor Wes Moore to impose a residential mortgage foreclosure moratorium for Maryland’s federal employees.
Editor Kimberley Haas contributed to this report.