July delinquencies drop as ICE notes FHA performance pivot

Mortgage performance continues to improve in the third quarter, as delinquencies declined across all stages in July, a new industry report found.

The national delinquency rate dropped 16 basis points to 3.39% last month, Intercontinental Exchange's latest first look report found. The rate was still 12 basis points above last year but 46 basis points below July 2019 levels.

Serious delinquencies, loans 90 or more days past due, also fell for the fifth straight month, decreasing by 7,000 to 563,000, which was still up 97,000 from last year and 87,000 from July 2019.

Louisiana led all states in delinquency rate at 8.2%, while Mississippi produced the highest percentage of loans 90 or more days past due at 2.53%. Idaho, Montana and Washington all yielded sub-2.3% marks.

"July's data provided another indication that mortgage performance may be finding firmer footing beneath the surface," said Andy Walden, head of mortgage and housing market research for ICE, in a press release Tuesday. "While the national delinquency rate and serious delinquency inventory declined, the more telling trend is that new default activity has eased from last year's levels in four of the past five months and cure activity is improving."

Roughly 102,000 borrowers became 90 or more days delinquent in July, down 4% year over year. Federal Housing Administration loans headed the drop with 13% fewer new defaults than last year, according to the report.

Cures from serious delinquency rose 7% to 64,100 in July, the strongest month since October 2025. Total cures throughout all stages increased 12% to 464,000, the highest since March, ICE found.

The improvement comes after the Mortgage Bankers Association found the share of mortgages in the serious delinquent stage or in foreclosure spiked 49 basis points from a year earlier to 2.1% on a nonadjusted basis in the second quarter. The jump was driven by FHA and Department of Veterans Affairs loans, which surged 227 and 31 basis points, respectively.

Foreclosures continued to ascend

Despite positive showings for delinquent mortgages, active foreclosure inventory climbed 1.3% month over month and 43% on an annual basis, while foreclosure sales inclined 8.4% from June and 14.2% from last year. Foreclosure starts were up 23% year over year, but down 8.3% from the month prior, the report showed.

Prepayment speeds also slowed for a fourth consecutive month. Single-month mortality declined two basis points to 0.74%, the lowest percentage since January, as mortgage rates spiked in March and remained elevated throughout the spring buying season. July's single-month mortality was still seven basis points higher than last year, according to the report.

"The stabilization we're seeing in broad mortgage performance is encouraging, but the concentration of stress in FHA loans and rising foreclosure inventory means servicers can't afford to lose visibility into their portfolios," said Bob Hart, president of mortgage technology at ICE.