U.S. Foreclosure Activity Increases Annually in Q3 2025

ATTOM's Q3 2025 U.S. Foreclosure Market Report reveals a continued upward trend in foreclosure activity, with total filings increasing 17% year-over-year to 101,513 properties and foreclosure starts rising 16%. Bank repossessions surged 33% annually, while the average time to foreclose significantly decreased by 25% to 608 days. This persistent rise, particularly in states like Florida, Nevada, and Texas, suggests emerging borrower strain and a gradual shift in the housing market, which could impact real estate-backed assets and lending portfolios.

Analysis

ATTOM's Q3 2025 report reveals a significant acceleration in U.S. foreclosure activity, with total filings rising 17% year-over-year to 101,513 properties and foreclosure starts increasing 16% annually. This upward trend is further evidenced by a 33% year-over-year surge in bank repossessions (REO) to 11,723 properties. The CEO of ATTOM notes this consistent pattern as an "early indicator of emerging borrower strain."

Geographically, Florida (one in every 814 housing units), Nevada (one in every 831), and South Carolina (one in every 867) exhibit the highest foreclosure rates, with specific metros like Lakeland, FL, showing particularly acute distress (one in every 470). Concurrently, the average time to foreclose has decreased by 25% year-over-year to 608 days, continuing a downward trajectory since mid-2020, suggesting a more efficient, albeit concerning, processing of distressed assets.

While overall foreclosure levels remain historically reasonable, the sustained year-over-year increases across key metrics signal a gradual shift in housing market dynamics. This trend, coupled with reduced foreclosure timelines, implies potential pressure on housing supply in affected regions and increased asset recovery for lenders, impacting real estate-backed securities and credit portfolios.

Key Decisions for Investors

• Investors should closely monitor regional housing markets, particularly in Florida, Nevada, and South Carolina, for potential increases in distressed property supply and price adjustments.
• Evaluate exposure to mortgage-backed securities (MBS) and real estate investment trusts (REITs) with significant holdings in affected geographies, considering the implications of rising REO properties and faster foreclosure timelines.
• Assess the credit quality of lending portfolios, especially those with consumer exposure in regions showing elevated borrower strain, as indicated by the persistent rise in foreclosure starts.