ICE data hints at stabilizing mortgage performance even as foreclosure inventory climbs
The national mortgage delinquency rate fell 16 basis points in July to 3.39%, with improvement recorded at every delinquency stage, according to the July 2026 ICE First Look at Mortgage Performance released by Intercontinental Exchange, Inc. (ICE).
New default inflow declined year over year in four of the past five months, a trend ICE analysts say may indicate the market is finding more stable ground.
"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 at ICE.
"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."
US home prices rose 2.1% year over year in Q2 2026, according to the Federal Housing Finance Agency (FHFA), but inflation continued to outpace appreciation, extending real-term home price declines despite positive nominal growth.https://t.co/7ilIElFiKx
— Mortgage Professional America Magazine (@MPAMagazineUS) August 25, 2026
Cures hit a nine-month high as new defaults ease
Serious delinquencies — loans 90 or more days past due but not yet in foreclosure — fell for a fifth consecutive month to 563,000, though that count remains 87,000 above the July 2019 pre-pandemic baseline, ICE reported.
Among borrowers entering serious delinquency, 102,000 did so in July, down 4% year over year.
Federal Housing Administration (FHA) loans led the improvement, recording 13% fewer new defaults than a year earlier.
That FHA pullback extends the trend MPA identified in June when data pointed to a turning point in FHA default activity, the largest annual decline in new FHA defaults in more than four years.
Cure activity also strengthened. Borrowers resolving seriously delinquent loans rose 7% to 64,100 in July, the best monthly reading since October 2025, while total cures across all delinquency stages climbed 12% to 464,000, the highest since March.
Foreclosure inventory keeps climbing despite the broader improvements
The foreclosure picture remains more complicated. Starts hit 38,600 in July, up 23% year over year, and active foreclosure inventory climbed 43% annually.
Completed foreclosure sales increased 14%, though total volume sits at just 59% of pre-pandemic levels. That trajectory aligns with what foreclosure data has shown throughout early 2026, and brokers who have been weighing whether the mortgage market is normalizing or showing warning signs will find the July numbers offer evidence for both readings.
Geographic stress remains concentrated. Louisiana (8.20%) and Mississippi (8.13%) recorded the highest non-current loan rates in the country as of July 31. Idaho (1.93%) and Montana (2.12%) registered the lowest.
Donna Schmidt, president and CEO of DLS Servicing, told Mortgage Professional America that years of deferred defaults are now moving through the system and that heavy FHA foreclosure pressure could persist for two to three years.
"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.
Prepayment speeds eased for a fourth straight month, with the single-month mortality rate slipping 2 basis points to 0.74% in July, the lowest reading since January, as elevated mortgage rates continued to suppress refinancing demand heading into the back half of the buying season.
Stay updated with the freshest mortgage news. Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
