You might be noticing headlines saying foreclosures are going up. If that’s making you worry about another market crash, here’s what you need to understand.

According to ATTOM, more than nine million people faced some type of distressed home sale between 2007 and 2011 during the housing crash. Last year, that number dropped significantly to just over 300,000.

Even though prices have gone up recently, they’re still much lower than before. So, what’s next? Is a big surge on the horizon? The simple answer is no.

Here’s the deal: mortgage delinquencies—when payments are over 30 days late—are usually seen by experts as an early warning sign of possible foreclosures in the future. But the latest numbers on delinquencies are actually pretty reassuring for the market as a whole.

Delinquencies overall are staying about the same as they were at the end of last year, so we’re not seeing any big jumps that would suggest major problems.

There are still some important signs to keep an eye on. Marina Walsh, Vice President of Industry Analysis at the Mortgage Bankers Association, points out:

““While overall mortgage delinquencies are relatively flat compared to last year, the composition has changed.”
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— Marina Walsh, Vice President of Industry Analysis at the Mortgage Bankers Association

Borrowers with FHA mortgages are currently the largest group when it comes to new delinquencies (see graph below).

Here’s why this might be happening. Borrowers with FHA mortgages tend to be more affected by changes in the economy. With concerns about a possible recession, persistent inflation, job market issues, and other factors, it’s understandable that this part of the market is feeling the impact more. But that doesn’t necessarily mean a market crash is on the horizon.

If you take another look at the graph, you'll see that although more FHA loans are facing hardships than usual, delinquency rates for other loan types are still low and steady. During the crash, delinquency rates were much higher across all four categories.

This means the overall mortgage market is in a much healthier position now compared to 2008. As ResiClub points out:

““The recent uptick in mortgage delinquency seems to be concentrated among FHA borrowers, however, mortgage performance remains very solid when viewed in light of the twenty-year history of our data.”
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— ResiClub

The Region with the Most FHA Loans

Here’s why this doesn’t necessarily mean trouble is coming. FHA loans account for just about 12% of all home loans across the country. But local trends are what really count in housing. In some areas, especially in the South, you’ll find a higher share of these loans compared to other parts of the nation.

The map below doesn’t indicate how many FHA loans are past due. Instead, it shows the overall number of FHA loans in each state, so you can easily spot which areas have the highest concentration (see map below).

The Federal Reserve Bank of New York puts it this way:

““Looking at geographic concentrations of loans, recent data indicate that a higher proportion of mortgage balances are delinquent in many of the southern states . . . we see that higher delinquency rates coincide with a higher share of FHA loans across states.”
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— Federal Reserve Bank of New York

Just keep in mind, the delinquency rates we're seeing today aren't nearly as high as they were back in 2008. This doesn’t mean we’re heading toward a crisis, but it’s definitely something experts will be keeping an eye on in the coming months.

If You’re Experiencing Financial Hardship

No one wants to deal with the stress of foreclosure. If you’re a homeowner having trouble making your payments, remember you’re not alone—and there are options available to help you through it.

The first thing you’ll want to do is get in touch with your mortgage provider. Often, they can help you set up a repayment plan or offer loan modifications to keep you on track. Plus, with home values being so strong right now, many homeowners actually have enough equity to sell their house and avoid foreclosure. Since a lot of people have near-record equity in their homes, it's likely that some will choose this option. It’s definitely worth checking if selling could be a possibility for you as well.

Bottom Line

Foreclosures are going up a bit, but they’re still far from what we saw back in 2008. Plus, current delinquency rates don’t suggest that a housing market crash is coming.

This is definitely something industry pros will be keeping an eye on in the coming days. If you want to stay informed, let’s connect so you’re always in the know.