Fewer Filings This Month, But Trouble’s Brewing: The Hidden Story in Q3 2025 Foreclosure Data
At first glance, September’s foreclosure numbers might not look too alarming. ATTOM’s latest data shows 35,602 U.S. properties with foreclosure filings last month — a slight 0.3 % dip from August. But step back, and the bigger picture tells a different story: foreclosure activity is still up nearly 20 % from a year ago, and the quarterly totals are holding steady at some of the highest levels we’ve seen since before the pandemic.
In other words, the pressure on distressed homeowners hasn’t let up — it’s just shifting shape.
A Cooling Rate, Not a Cooling Market
By early October, 30-year fixed mortgage rates eased to around 6.30 %, their lowest point in about a year. For most borrowers, that offered a breath of relief after years of tightening conditions. Refinances ticked up slightly, giving some homeowners a way to restructure debt before slipping too far behind.
But lower rates can’t undo months of accumulated strain. Inflation, stagnant wages, and pandemic-era savings depletion have all left a mark. For many households already delinquent, a few tenths of a point in interest relief won’t be enough to catch up.
Zooming out to the full third quarter of 2025 paints the picture more clear
That last number is especially telling. A rise in REO completions signals that fewer homeowners are finding workout options before the bank takes title. It’s a late-stage symptom — one that often hints at a growing backlog in loss-mitigation pipelines.
What’s Causing the Tug-of-War?
The housing market is currently caught in a strange balance:
• Softening rates encourage loan modifications and make refinancing slightly more achievable.
• But higher overall debt loads and reduced household liquidity mean fewer borrowers can actually qualify to refinance.
• Meanwhile, home prices in many markets remain flat or slightly down, leaving less equity to absorb financial shocks.
The result? A nationwide picture where the surface looks calm — filings barely down month-over-month — but the undercurrent is gaining speed.
Short Sales Step Back Into the Spotlight
For homeowners who owe more than their property’s worth or can’t sustain modified payments, short sales are once again becoming the practical middle ground between foreclosure and walking away.
We’re now seeing more real estate agents and investors revisit this strategy — particularly in states like Florida, Georgia, Illinois, and Texas, where foreclosure activity has been climbing steadily through 2025.
Short sales give lenders a faster resolution, help sellers minimize credit damage, and often leave both parties better off than a drawn-out foreclosure. With filings up year-over-year and rates just starting to ease, this fall could mark the start of another wave of short sale opportunities.
The Bottom Line
September’s slight monthly dip in filings might look like a cooling trend — but the quarterly data suggests otherwise. Borrower stress is still climbing, even as interest rates fall.
That tug-of-war means short sales will likely become the go-to solution for underwater or delinquent borrowers heading into 2026. For agents and investors who know how to navigate them, this is the time to prepare, connect, and act.
Ready to help a homeowner avoid foreclosure? Our team specializes in managing every step of the short sale process — from lender negotiations to closing — so your deal actually makes it to the finish line.
a Short SaleStart
How We Help
Who W
72,317 starts — the first legal step in the process — jumped 16 % from Q3 2024.
11,723 REO completions, meaning properties that made it all the way back to bank ownership, surged 33 %y:
That last number is especially telling. A rise in REO completions signals that fewer homeowners are finding workout options before the bank takes title. It’s a late-stage symptom — one that often hints at a growing backlog in loss-mitigation pipelines.
What’s Causing the Tug-of-War?
- Softening rates encourage loan modifications and make refinancing slightly more achievable.
- But higher overall debt loads and reduced household liquidity mean fewer borrowers can actually qualify to refinance.
- Meanwhile, home prices in many markets remain flat or slightly down, leaving less equity to absorb financial shocks.
The result? A nationwide picture where the surface looks calm — filings barely down month-over-month — but the undercurrent is gaining speed.
Short Sales Step Back Into the Spotlight
For homeowners who owe more than their property’s worth or can’t sustain modified payments, short sales are once again becoming the practical middle ground between foreclosure and walking away.
We’re now seeing more real estate agents and investors revisit this strategy — particularly in states like Florida, Georgia, Illinois, and Texas, where foreclosure activity has been climbing steadily through 2025.
Short sales give lenders a faster resolution, help sellers minimize credit damage, and often leave both parties better off than a drawn-out foreclosure. With filings up year-over-year and rates just starting to ease, this fall could mark the start of another wave of short sale opportunities.
The Bottom Line
September’s slight monthly dip in filings might look like a cooling trend — but the quarterly data suggests otherwise. Borrower stress is still climbing, even as interest rates fall.
That tug-of-war means short sales will likely become the go-to solution for underwater or delinquent borrowers heading into 2026. For agents and investors who know how to navigate them, this is the time to prepare, connect, and act.
Ready to help a homeowner avoid foreclosure? Our team specializes in managing every step of the short sale process — from lender negotiations to closing — so your deal actually makes it to the finish line.
Start a Short Sale
How We Help
Who We Serve