But overall delinquency rates remain below historical levels, ICE says
The expiration of the Department of Veterans Affairs (VA) foreclosure moratorium has triggered a sharp increase in foreclosure activity, but broader housing market conditions suggest that distress levels remain relatively contained, according to a new report from Intercontinental Exchange (ICE).
Foreclosure starts surged by 30% in January, while foreclosure sales climbed 25%. Active foreclosure inventory also increased by 7% over the month. However, despite this spike, overall delinquency rates continue to improve. ICE data showed that mortgage delinquencies fell 24 basis points (bps) to 3.47% in January, remaining 33bps below pre-pandemic levels.
While delinquency rates have declined for borrowers impacted by hurricanes, falling from 58,000 to 41,000 in recent months, the financial strain from the Los Angeles wildfires is emerging. ICE estimated that 680 homeowners affected by the fires missed their January mortgage payments, and the firm expects delinquencies could exceed 2,800 by the end of February.
Additionally, prepayment activity (SMM) fell to 0.48%, marking its lowest level in nearly a year. ICE attributed this decline to modestly higher mortgage rates and the seasonal slowdown in home sales.
Zombie foreclosures
A separate report from ATTOM found that 1.4 million US residential properties remain vacant, accounting for 1.3% of all homes nationwide. This vacancy rate is unchanged from the previous quarter and has increased slightly from a year ago.
ATTOM also reported that 212,268 properties were in foreclosure during Q1 2025, representing a 1.5% quarterly decline and a 12.6% annual drop. Foreclosure activity has now declined for five consecutive quarters following the surge that occurred after pandemic-era protections were lifted in mid-2021.
Among these, 7,094 pre-foreclosure properties have been abandoned by owners, commonly referred to as "zombie foreclosures". This figure is virtually unchanged from the previous quarter but reflects a 3.3% year-over-year decline.
"You'd have to take a very long walk through most US communities to come across even one zombie foreclosure - and even then, you might not find any," said Rob Barber, CEO of ATTOM. "This marks a significant turnaround from the period following the Great Recession, when a collapsing housing market and abandoned properties posed serious risks to many neighborhoods."
Housing market stability
Despite the increase in foreclosure starts, most neighborhoods remain largely free of vacant distressed properties, according to ATTOM.
The ratio of zombie foreclosures to total homes stands at one in every 14,668 properties, an improvement from one in 14,591 in late 2024 and one in 13,905 in early 2024. This figure is also well below the peak of one in 11,412 in late 2023, making current levels among the lowest in the past five years.
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Barber noted that strong home equity levels and limited housing supply continue to buffer the market against widespread foreclosure risks.
"We have every reason to believe this will continue into the foreseeable future, given high levels of equity flowing from rising home prices and historically low supplies of homes for sale that make the few abandoned properties out there more likely to be snapped up by buyers," he said.
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