Foreclosures in May decrease after early-year surge

Following a steady rise in filings in the first few months of the year on the heels of federal policy changes, total foreclosure numbers eased in May, even as a key metric continued trending upward. 

A foreclosure filing appeared in one out of every 4,009 U.S. properties last month, representing a total of 35,498 units nationwide, according to Attom's monthly report. 

The total decreased 1.5% from the 36,033 homes in April with a default notice, scheduled auction or repossession filed against it. On a year-over-year basis, though, May numbers were higher by 8.8%, up from 32,621.    

"Foreclosure activity in May reflected a mixed picture with fewer starts but a continued rise in completed foreclosures," said Attom CEO Rob Barber in a press release. "This suggests that while fewer new defaults are being initiated, lenders may still be working through a backlog of existing cases."

What may be behind rising foreclosure completions

The latest numbers arrive after researchers at several housing data groups regularly reported activity surging throughout the first quarter after a Department of Veterans Affairs foreclosure moratorium expired at the end of last year. Starts, auctions and completions on VA loans all posted noticeable spikes to start 2025 following termination of the relief measure, with some volumes growing by their fastest pace in decades. The end of the moratorium was followed by full dissolution of the Veterans Affairs Servicing Purchase loss-mitigation program in May. 

Last month, though, lenders started the foreclosure process on 24,165 properties compared to 25,265 in April, a drop of 4.4%. Despite the monthly decrease, May starts were still higher by 8% from 22,385 one year earlier. 

On the other end, foreclosed properties repossessed by lenders accelerated 7.4% to 3,844 from 3,580 in April. Total completions in May also leaped 33.5% from 12 months prior, when it came in at 2,879.

The May pullback in starts may indicate servicers have managed to successfully make their way through the sudden increase of new cases, with future numbers likely to reflect normalized conditions. An ongoing uptick in completions, though, would present worrying signals of economic stress to homeowners, including military veterans. 

Negotiations to introduce a new partial-claims program that would succeed VASP are currently underway in Congress, but the elimination of foreclosures is not featured in the proposal. 

Recent reports from ICE Mortgage Technology point to growing stress among borrowers in other lending segments that move foreclosure rates higher as well. 

"We'll be watching closely in the months ahead to see how these trends evolve," Barber said. 

Where are foreclosures occurring most frequently?

Delaware led the country with its foreclosure rate of one in every 2,313 properties. Florida, where one out of every 2,536 homes had a foreclosure listing, came in second, followed by Illinois, Nevada and Indiana with rates of one in 2,668, 2,747 and 2,983 units, respectively.

When comparing metropolitan areas with populations of 500,000 or more, Florida accounted for the three cities with the highest rates of foreclosure: Lakeland, Cape Coral and Jacksonville. 

The three states with the most starts in May were Texas, Florida and California. 

Texas and California also topped the list in the number of lender repossessions last month, with Pennsylvania in the third spot.