When Maria Gonzalez bought her three-bedroom stucco house in Hillsborough County, Florida, in 2020, her total monthly payment was $1,480. She locked in a 3.1% mortgage rate and figured the biggest financial decision of her life was behind her. By early 2025, her payment had climbed past $2,100. The loan terms hadn’t changed. Her homeowners insurance premium had nearly tripled after her carrier left the state, and a property tax reassessment pegged her home’s value $160,000 higher than what she paid. Gonzalez is not a composite or an outlier. She represents a pattern now visible in national data.
Foreclosure filings across the United States jumped 28% year over year in the first quarter of 2025, reaching the highest level since 2020, according to ATTOM Data Solutions’ Q1 2025 U.S. Foreclosure Market Report. More than a year later, the trend those numbers revealed has only sharpened. The surge defies a basic rule of housing economics: when home values rise, foreclosures should fall, because owners can sell before they default. Values have kept rising. The Federal Housing Finance Agency’s house price index shows national prices still climbing, and most borrowers hold substantial equity. Something else is pushing people over the edge, and the evidence increasingly points to the bills that arrive alongside the mortgage, not the mortgage itself.
The costs that don’t show up in a mortgage rate
A mortgage payment is only part of what it costs to keep a house. Property taxes, homeowners insurance, and in many cases flood or windstorm coverage are typically bundled into a single monthly escrow payment managed by the loan servicer. When any of those components spikes, the total bill spikes with it.
Insurance has been the sharpest pain point. In Florida, where carriers have fled the market or collapsed into insolvency, the state-backed Citizens Property Insurance Corporation has grown into the largest insurer in the state. Policyholders across the private market have reported annual premium increases exceeding 40% in a single renewal cycle, according to data compiled by the National Association of Insurance Commissioners and corroborated by the Insurance Information Institute. In California, insurers non-renewed tens of thousands of policies in wildfire-exposed ZIP codes, forcing homeowners onto the state’s FAIR Plan, which often costs two to three times as much as standard coverage. Louisiana, Texas, and Colorado have seen similar dynamics after repeated catastrophic weather events.
Property tax reassessments have compounded the squeeze. In fast-appreciating metros like Tampa, Phoenix, and Boise, homes purchased five or six years ago are now assessed at values that reflect the pandemic-era price surge. Hillsborough County, Florida, for example, saw its median assessed home value rise more than 40% between 2020 and 2024, according to the county property appraiser’s office. For owners on fixed or slowly rising incomes, a reassessment of that magnitude can add $150 to $300 a month to the escrow payment with little warning.
When those increases hit at the same time, a household that budgeted carefully around a $1,400 principal-and-interest payment can suddenly face a total monthly obligation above $2,000. The mortgage itself hasn’t changed. Everything around it has.
Why equity alone isn’t saving people
A homeowner facing unaffordable costs should, in theory, be able to sell the property, pocket the equity, and move somewhere cheaper. That escape valve still works for many, and it is one reason foreclosure levels remain well below the 2008 to 2012 crisis. But selling takes time, costs money (typically 8% to 10% of the sale price once agent commissions, closing costs, and repairs are factored in), and assumes the owner recognizes the problem before falling behind on payments.
Escrow shortfalls can sneak up on borrowers. Servicers are required to conduct annual escrow analyses and notify homeowners of adjustments, but the scale and speed of recent premium hikes can outpace those timelines. A homeowner might receive a revised payment letter only weeks before a sharply higher bill is due, leaving little room to rearrange other expenses. Once a borrower misses two or three payments, the foreclosure clock starts, and the window to arrange a sale narrows fast.
Refinancing, the other traditional pressure valve, is largely shut for the borrowers who need it most. With 30-year fixed mortgage rates hovering near 7% through much of 2025, according to Freddie Mac’s Primary Mortgage Market Survey, owners who locked in rates in the 2% to 3% range have no financial incentive to refinance. Doing so would raise their monthly principal-and-interest cost, defeating the purpose. Cash-out refinancing remains technically available, and some owners have used it to cover escrow shortfalls, but the math is punishing: trading a 3% rate for a 7% rate to free up cash creates a larger long-term obligation. Home equity lines of credit are another option, though tighter underwriting standards and elevated borrowing costs have made them harder to qualify for than they were a few years ago.
Meanwhile, mortgage delinquency rates overall remain historically low, according to the Mortgage Bankers Association’s National Delinquency Survey. That detail actually reinforces the core problem: the broad borrower population is not struggling with its loan terms. The distress is concentrated among a subset of owners whose non-mortgage carrying costs have outrun their ability to pay.
The pandemic safety net is gone
Part of the current spike reflects the full unwinding of pandemic-era protections. The CARES Act moratorium on foreclosures of federally backed mortgages ended on July 31, 2021. To prevent a cliff, the Consumer Financial Protection Bureau issued a temporary safeguard rule that ran through the end of 2021, requiring servicers to exhaust loss-mitigation options before initiating proceedings. Streamlined loan modifications, payment deferrals, and forbearance extensions kept many borrowers in their homes during that transition.
But those tools were designed to address temporary income disruptions caused by COVID-19, not permanent increases in the cost of homeownership. A borrower who received a six-month forbearance in 2021 and then resumed payments may have been fine until a 2024 insurance renewal doubled the escrow portion of the bill. The moratorium bought time. It did not fix the structural cost problem that emerged afterward.
ATTOM’s data shows that foreclosure starts, the initial legal filings, climbed steadily from 2022 through early 2025 as the last moratorium-era cases cleared the pipeline. By Q1 2025, the pipeline backlog was no longer the main driver. New filings were being generated by current economic conditions, a signal that the foreclosure trend had shifted from pandemic hangover to something more persistent.
FHA and VA borrowers deserve particular attention here. These loan programs serve first-time buyers and veterans who often purchase with minimal down payments and thinner financial cushions. Because FHA and VA loans almost always require escrow accounts, those borrowers absorb insurance and tax increases directly through their monthly payment with no option to self-manage. Data from the MBA’s delinquency survey consistently shows FHA delinquency rates running roughly two to three times higher than conventional loan delinquency rates, a gap that widens when carrying costs spike.
A data gap that slows the policy response
No federal dataset currently isolates the share of foreclosure filings triggered specifically by insurance or tax escrow shortfalls versus traditional income-driven delinquency. The FHFA tracks prices. The CFPB oversees servicing rules. The MBA tracks delinquencies. But none of them publish a breakdown that separates cost-driven defaults from wage-driven ones. State-level court and county recorder systems could fill that gap, but those filings have not been aggregated into a single public source.
That vacuum makes it harder for policymakers to design targeted responses. If a significant share of new foreclosures stems from escrow-driven payment shocks rather than job loss, the remedies look different from traditional foreclosure prevention: more gradual phase-ins of property tax increases, targeted insurance subsidies for high-risk areas, or revised federal servicing rules that spread large escrow shortages over longer repayment periods instead of demanding lump-sum catch-ups.
Some states have already started moving. Florida passed SB 2-A in late 2022 to stabilize its insurance market, and California launched its Sustainable Insurance Strategy in 2023 to encourage carriers to return to wildfire zones. Whether those efforts translate into lower premiums for individual homeowners remains to be seen. In the meantime, local governments facing their own budget pressures have little incentive to slow property tax reassessments, especially when rising home values make higher levies politically easier to justify.
One question that rarely gets asked in foreclosure proceedings but matters enormously to the families involved: what happens to the equity? In most states, when a foreclosed property sells at auction for more than the outstanding debt, the surplus belongs to the former owner. But recovering that money requires navigating a claims process that varies by jurisdiction, often with tight deadlines and minimal guidance. Advocacy groups like the National Consumer Law Center have documented cases where homeowners lost tens of thousands of dollars in surplus proceeds simply because they didn’t know to file a claim.
What owners sitting on low rates need to understand
The numbers from early 2025 told a story that has only grown louder in the months since. Homeowners are not underwater on their mortgages. They are being squeezed out by the bills that surround them. As long as insurance markets remain volatile, climate-driven losses keep repricing risk, and local governments lean on property taxes to balance budgets, the gap between what a home is worth and what it costs to keep will continue to widen.
For the millions of owners sitting on sub-4% mortgage rates and assuming they are insulated from housing stress, the data delivers an uncomfortable message: the rate you locked in protects you from one cost. It says nothing about insurance, taxes, HOA assessments, or the next escrow adjustment letter in your mailbox. And increasingly, those are the costs forcing people out of homes they technically can afford to own but can no longer afford to keep.
