Lenders began foreclosure on far more homes in August than they did a year earlier, even though the pace eased from July. Intercontinental Exchange (ICE), the data company that tracks mortgage performance loan by loan, reported that foreclosure starts fell 6 percent from the month before but stayed 29 percent above August 2025. The number of homes in active foreclosure is 89,000 higher than a year ago, a 41 percent jump. That backlog barely grew during the month, so August reads as a split decision: more homes entering the process than last year, and a pile that is no longer swelling quickly.
For a homeowner who is already behind on payments, the figures raise a plain question about how much time is left. Federal rules bar a mortgage servicer from making the first notice or filing for foreclosure until a borrower is more than 120 days behind, so every start counted in August describes a loan that had gone at least four months without being brought current. Starts are a late signal, then, and the number says little about homeowners who have missed one payment. What it shows is how many borrowers ran out of options before a servicer and a borrower could agree on a fix.
The 120-day mark that opens the door to foreclosure is the first hard date a borrower in default faces, and ICE re-counts the starts every month.
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Starts fell 6 percent in a month and still outran 2025
ICE’s July report counted 38,600 foreclosure starts, up 23 percent from a year earlier. The 6 percent drop from that level in August still left starts 29 percent above August 2025, so the year-over-year gap widened by six percentage points even as the monthly count slipped. A year ago, in other words, the August decline from July was steeper than this one. The comparison shows a monthly dip that looks small against a base that was lower a year earlier.
Bob Hart, President of Mortgage Technology at ICE, put the pattern in one sentence: “While overall performance remains sound, the market isn’t moving uniformly.” The national delinquency rate was 3.53 percent in August, 35 basis points below August 2019. Seriously delinquent loans, the ones furthest behind, rose by 11,000 to 574,000, ending five months of declines, and sit 19 percent above last year. Foreclosure starts are the part of the report where stress is most visible.
A backlog that grew by only 2,000 homes
Active foreclosure inventory rose by 2,000 homes in August, ICE said, the smallest monthly build since November 2025. Even so, the total is up 89,000, or 41 percent, from a year ago. The share of active loans in pre-sale foreclosure, meaning loans in the process that have not yet reached a sale, held at 0.54 percent, matching its highest reading since February 2020. A small monthly gain on top of a large annual one is the shape of a backlog that has stopped accelerating without shrinking.
The reason the pile persists is on the exit side. Foreclosure sales dipped 2 percent in August and ran at 57 percent of the pace in August 2019, though they are up 12 percent from a year ago. Starts are growing more than twice as fast as sales on a yearly basis, 29 percent against 12 percent, which means homes are entering the process faster than they leave it. Sales still run well below the last normal housing market, and the gap between what goes in and what comes out is what keeps inventory elevated.
From firmer footing to a split market
The August report follows a more upbeat one. When ICE published its July data on August 25, Andy Walden, the company’s Head of Mortgage and Housing Market Research, said “mortgage performance may be finding firmer footing beneath the surface.” The national delinquency rate had fallen 16 basis points in July. In August it rose 14 basis points, though ICE says the figure was roughly flat once the calendar-driven July decline is adjusted out, so the headline rate is not what changed the tone.
The detail beneath the rate explains the tone. Loans 30 and 60 days past due rose in August but are down 21,000 from a year earlier, and the serious delinquency rate of 1.04 percent of active loans is in line with the 1.03 percent average of Augusts from 2017 through 2019. Early missed payments are not piling up. The strain is at the late end, where loans that never recovered are moving into foreclosure at a pace well above last year’s, and that is the market ICE describes as not moving uniformly.
Steps open to a homeowner who falls behind
The Consumer Financial Protection Bureau says that in most cases the worst move for a borrower who cannot pay is to do nothing. Its guide starts with a call to the servicer, whose number is on the monthly statement, to explain why a payment cannot be made and to ask for help avoiding foreclosure. If the servicer cannot meet the need, a HUD-approved housing counselor can build a plan and help deal with the lender, and the bureau lists the counseling line at (800) 569-4287.
Timing carries real protection. A servicer must tell a borrower about loss mitigation, the ways it can work to avoid foreclosure, and a complete application submitted early enough stops the servicer from starting foreclosure while the application is evaluated. In the bureau’s words, the earlier the application is complete, the more protections apply. Counselors are listed on the bureau’s housing counselor locator, where counseling is often available at little or no cost. The bureau warns that no one should have to pay upfront for foreclosure help and that anyone guaranteeing a result is a warning sign.
ICE’s September report will show whether August’s 6 percent drop in starts was a pause or a trend. The measures already on record leave little room for an early all-clear: starts 29 percent above a year ago, 89,000 more homes in active foreclosure, and a pre-sale rate of 0.54 percent that equals the highest since February 2020. The monthly build of just 2,000 homes is the one figure pointing the other way.
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This article was produced with AI assistance and reviewed by The Money Overview’s editorial team.
