A Rule Change Broke the Foreclosure Numbers. Here’s What’s Still True.

There’s an argument going on right now about whether the country is heading into a foreclosure crisis. One side says the numbers are exploding. The other side says it’s noise. Here’s the part almost nobody has mentioned: a big piece of what both sides are arguing about got scrambled by a paperwork rule that changed last October. If you’re a Florida homeowner who’s behind, or watching it get close, you deserve the version with the footnote in it.

What Changed Last October

Before October 1, 2025, if you were behind on an FHA loan and your servicer approved you for help, meaning a partial claim, a payment supplement, or a modification, your loan got marked current the month after you signed the paperwork. Done. Back to good on the report.

Since October 1, 2025, that’s not how it works. Now you have to finish a three-month trial payment plan first, three on-time payments in a row, before the loan gets marked current. And for those three months, your loan still gets reported as 90 or more days delinquent.

You didn’t get worse. The report did.

Kanav Bhagat, formerly the research director at the JPMorgan Chase Institute, put numbers on this in a paper published in March. FHA’s 90-plus delinquency rate went from 3.57% in September 2025 to 5.23% in January 2026. He found that 92% of that jump, 1.53 percentage points of it, was the reporting change and not people falling behind. Without the rule, the rate would have been about 3.70%.

The cure numbers show the same fingerprint. Through most of 2025, somewhere between 11% and 14.5% of seriously delinquent FHA loans went back to current each month. The month the trial payment requirement took effect, that dropped to about 3.1%. People didn’t stop getting caught up. Their catching up got parked in a three-month holding tank.

Both Sides Are Reading the Same Broken Gauge

Last winter, the doom crowd pointed at exploding FHA delinquencies as proof a crisis had landed. Most of that spike was plumbing.

Now the tank is draining. Those trial plans are finishing, loans are getting marked current, and the reports are improving. ICE published its June mortgage numbers on July 24 showing new FHA defaults down 15% year over year, the biggest annual drop in more than four years, and serious delinquencies at a six-month low. That improvement is real on paper. But part of it is the same rule running the other direction.

I want to be careful here, because this is where people overreach. Bhagat’s work runs through February. Nobody has published a version of the June numbers adjusted for the rule. So the honest statement is that part of the improvement is mechanical, not all of it. The rule is also FHA-only, so it doesn’t move the whole national delinquency figure by itself.

The same day the June numbers came out, Logan Mohtashami at HousingWire published a piece called “Don’t fall for a fake foreclosure crisis,” going after the doom content built on ATTOM’s 21% jump in foreclosure filings. His case rests on inventory, equity and loan quality, and the FHA rule doesn’t touch any of those. In 2007 there were about 4 million homes for sale nationally. Today there are 1.56 million, against a normal range of 2 to 2.5 million. New listings last week came in at 74,250, compared to 379,711 in 2010. Back in 2010 more than 23% of homeowners owed more than the house was worth. Today about 40% of American homes carry no mortgage at all, and loan-to-value across the market sits at 45.1% versus roughly 85% in 2008. Most people hold a 30-year fixed rate, so there’s no payment reset waiting to hit.

He’s right, and the rule change helps his argument more than he claimed. But it costs him something too. He doesn’t get to lean on this year’s improvement either, because that’s the same broken gauge running backward.

The Numbers the Rule Change Didn’t Touch

Here’s the useful part. Foreclosure starts, foreclosure inventory and completed foreclosure sales run through a court process, not a servicer’s classification code. The October rule doesn’t reach them. So look there.

Total loans 30 or more days late or in foreclosure rose 40,000 in a single month, to 2,253,000. Every bucket is up year over year. Loans 30 days or more behind are up 127,000. The 90-plus group is up 104,000. Homes actively in foreclosure are up 84,000, a 39.3% increase. Active foreclosure inventory sits at 0.53%, a six-year high. Foreclosure starts came in at 43,000, up 39.7% from a year ago, also a six-year high. Completed foreclosure sales were 7,300, up 15.5% year over year but still 46% below where they ran before the pandemic.

One more thing worth sitting with. A borrower in a trial payment plan is in an active workout, and servicers generally don’t push a foreclosure forward while one is running. That’s how the process works, so the rule ought to be holding starts down. Starts hit a six-year high anyway. That’s my read on the mechanics rather than a published finding, but it’s worth thinking about.

Florida Stopped Getting New Buyers

Under all of that sits a Florida number that got almost no coverage.

The University of Florida’s Shimberg Center published new Census-based migration estimates on July 13. Florida added 201,191 residents through migration in 2025, about 551 people a day. At the 2022 peak it was 598,737, or roughly 1,640 a day. Births minus deaths came out close to flat, so migration is basically all of Florida’s growth.

The domestic piece fell harder. Net domestic migration ran around 310,000 across 2022 and 2023. Then about 184,000. Then roughly 58,000 in 2024. Then about 22,500 last year. That’s a drop near 93% from the peak.

Where the remaining movers are going matters too. Miami-Dade lost more domestic residents than any county in the state in 2025, with nearly 73,000 more people leaving for other counties and states than arriving. Broward lost domestic residents. So did Orange, Hillsborough and Pinellas. Polk, Pasco and Marion kept gaining. Anne Ray at the Shimberg Center put it this way: “As housing costs have risen, many movers appear to be looking beyond the state’s largest urban counties to communities where homes are more affordable and new construction has kept pace with demand.”

Here’s why that matters if you’re in trouble. Almost every distress conversation focuses on the seller’s costs, meaning insurance, taxes, assessments, the payment. This is the other half. For twenty years Florida distress got bailed out by the next wave of people moving in. There was usually somebody arriving who wanted to buy the house. That wave is down to a trickle. Fewer buyers showing up means a house sits longer, the price gets cut deeper, and there’s a better chance the seller lands under what’s owed.

What This Actually Means for You

The doom crowd used an artificial spike as proof of a crisis. The all-clear crowd is about to use an artificial drop as proof it’s over. Same rule change, opposite conclusions.

What’s actually true is narrower and more useful than either one. This is not 2008 and it’s not close. It’s also not nothing. Pressure is building slowly off a very low base, Florida is carrying more of it than most states, and none of that argument reaches the person who can’t make the payment this month.

If that’s you, the national debate is background noise. Your numbers are the ones that matter: what you owe, what the house would really sell for today, and how many months of options you have left. That last one gets smaller the longer you wait.

If you’ve got questions about where you stand, reach out. JimArmstrong904@gmail.com or (904) 671-4161. No pressure, no pitch, just a straight answer.