Illinois, Florida, and Delaware Top List of States With Highest Foreclosure Rates in the US

A 'Bank Foreclosure Sale' sign is posted in front of townhomes in Los Angeles, Calif. Kevork Djansezian/Getty Images

U.S. foreclosure filings and starts declined last month on an annual basis, with Illinois and Florida registering the highest rates in the country, according to real estate analytics firm ATTOM.

There were 29,668 properties with foreclosure filings in September 2024 across the country, according to an Oct. 10 report from the firm.

Filings were down 19 percent from a year back, while foreclosure starts fell 21 percent. In the aftermath of the COVID-19 pandemic, a nationwide moratorium was imposed on lenders against pursuing delinquent homeowners. The moratorium was lifted in the middle of 2021, which resulted in a surge in foreclosure activity, the firm said in August. Things have cooled down, however, with rates declining over the past year.

ATTOM CEO Rob Barber noted that even though starts and repossessions have been falling, changes in interest rates or economic disruptions can shift the direction of the present trend.

“Moving forward, we anticipate foreclosure levels will stay relatively low, but there could be localized increases in areas struggling with affordability or other market pressures,” Barber said.

The top five states with the highest rate were Illinois, Florida, Delaware, Nevada, and Indiana.

Florida saw the highest number of foreclosure starts in September, at 2,511, followed by California and Texas with more than 2,000 each. Both New York and Illinois each registered more than 1,000 starts. Ohio, Michigan, Georgia, New Jersey, and Indiana rounded up the top 10 list.

On a quarterly basis, 62,380 properties across the nation kicked off their foreclosure process in the third quarter this year, down 10 percent from a year back. Illinois had the highest foreclosure rate in the country for the third quarter.

Foreclosure filings fell on an annual basis in August as well, according to a Sept. 12 ATTOM report. Barber noted at the time that the overall foreclosure activity was “significantly lower” compared to the period of the financial crisis in 2008–2009, when filing numbers exceeded 300,000 per month.

However, Barber said, “the current economic environment, coupled with rising interest rates and affordability challenges, suggests a continued focus on potential housing market instability.”

The U.S. Federal Reserve had cut its benchmark interest rate by 50 basis points, to a range of 4.75–5.0 percent following its policy meeting on Sept. 18. The agency also announced two more rate cuts of 25 points each.

However, mortgage rates have not been impacted by the rate cuts. The average weekly rate on a 30-year fixed-rate mortgage rose from 6.09 percent for the week ended Sept. 18, to 6.32 percent, as of Oct. 10.

With mortgage rates remaining at high levels, homeowners who had taken loans with variable interest rates could be under financial stress, potentially contributing to foreclosure numbers.

Dealing With Foreclosures

While foreclosure of properties is taking place nationwide, there are efforts undertaken to assist homeowners avoid dire consequences.

Last month, the Federal Housing Finance Agency (FHFA) released a report showing that Fannie Mae and Freddie Mac completed more than 46,000 foreclosure prevention actions in the second quarter of 2024.

Almost a third of loan modifications done in the quarter cut down borrowers’ monthly payments by more than 20 percent.

Fannie Mae’s and Freddie Mac’s serious delinquency rates fell from 0.51 percent in the first quarter to 0.49 percent in the second.

According to the U.S. Federal Trade Commission (FTC), homeowners can negotiate with mortgage lenders to prevent potential foreclosure and retain ownership.

Owners can request reinstatement, a deal in which they agree to pay the entire past-due loan amount as well as penalties and late fees by a scheduled date. This is applicable if the owner is facing a temporary financial crisis, the FTC noted.

Another option is to seek forbearance, in which the mortgage lender lowers or pauses payments for a short period of time.

“When you start making payments again, you’ll make your regular payments plus extra, make-up payments to catch up,” the agency said.

“The lender or servicer might decide that extra payments can be either a lump-sum or partial payments. Like reinstatement, forbearance also won’t help you if you’re in a home you can’t afford.”

Homeowners can also seek out repayment plans or loan modifications to extend the term period, the FTC noted.