Late-stage delinquency trend suggests higher consumer stress

Mortgage delinquencies eased in the second quarter, but compared to a year ago, the numbers showed many of today's homeowners are still struggling beneath the weight of financial strain, the leading industry trade group said. 

The delinquency rate for single-family residential units jumped 44 basis points from a year ago to a seasonally adjusted 4.37%, according to the Mortgage Bankers Association's national survey. At the same time, loans in the foreclosure process climbed 19 basis points to 0.67%. 

On a quarter-to-quarter basis, delinquencies headed down 7 basis points from 4.44%, but foreclosures edged up 3 basis points from 0.64% over the first three months of this year. The quarterly pullback comes after a steep rise in MBA's prior survey, driven by changes in pandemic-era servicing policies for Federal Housing Administration-backed mortgages. 

"Mortgage delinquencies decreased slightly across all loan types in the second quarter of 2026. Nonetheless, the broader trend is that both delinquencies and foreclosures have increased over the past year," said Marina Walsh, MBA's vice president of industry analysis, in a press release. 

Mortgages 90 days past due or already in foreclosure increased for a fourth straight quarter, she pointed out. 

"FHA serious delinquencies are becoming pronounced, increasing more than 225 basis points from the previous year."

MBA noted that borrowers of other types of consumer debt, including credit cards along with auto and student loans, are also showing signs of stress. Such factors suggest the potential for continued household mortgage challenges, which lead  to more delinquencies when viewed altogether, as affordability pressures further strain homeowner finances.

Delinquency rates by time and type

By loan type, delinquency rates decreased across the board between the first and second quarters but headed up on a year-over-year basis. 

The seasonally adjusted rate for conventional mortgages inched down 3 basis points from the first quarter to 2.72%. For FHA loans, the number fell 9 basis points to 11.79%, while for Department of Veterans Affairs-backed liens, it similarly stepped back 10 basis points to 4.89%.

Compared to year-ago numbers, though, the delinquent share increased 12 basis points in the conventional category. Among government programs, delinquencies jumped 122 basis points for FHA-backed mortgages and 57 basis points for VA-guaranteed loans. 

The share of mortgages in either the 90-day plus seriously delinquent stage or in foreclosure surged 49 basis points from a year ago to 2.06% on a non-adjusted basis. While conventional loans saw a 6-basis-point year-over-year rise in serious distress, the rate for FHA and VA loans accelerated even faster by 227 and 31 basis points, respectively. 

In other research published this month, ICE Mortgage Technology similarly found potential trouble in pockets of the government-backed segment, with a growing number of FHA and VA borrowers going underwater.  

The number of loans 30 days past due fell back 3 basis points to 2.21% from the prior quarter. Sixty-day mid-stage delinquencies also decreased 5 basis points to 0.73%, but the 90-day late bucket grew by a single basis point to 1.43%.