Foreclosure Volumes Are “Historically Low.” Banks Just Repossessed 42% More Homes Than Last August, and Texas Took a Third of Them.

Nearly every write-up of the August foreclosure data led with the same framing: volumes remain well below historical norms. Read it again. Volume is the wrong number.

The number that puts a deed in your hand is completions, and completions just rose 42% year over year. In August, lenders took back 5,794 homes through completed foreclosures, up 22% from July alone. Total filings rose 13%. Starts rose 7%.

Three numbers, one spread, and a short list of counties where that spread resolves into something you can actually buy.

A filing is a threat. A start is a clock. A completed foreclosure, the bank-owned asset the industry calls an REO, is inventory with a motivated institutional seller and a balance sheet that wants it gone before quarter-end.

For most of the last two years the pipeline filled faster than it drained. Servicers kept modifying, borrowers with equity kept bailing themselves out by selling, and the courts stayed slow.

That plug is clearing now, and almost nobody sourcing deals has repriced for it.

The distress is not in housing. It is in one loan program.

The Mortgage Bankers Association's second-quarter survey is the one everyone misread. Headline delinquency fell to 4.37%, down 7 basis points on the quarter, and the trade press ran with "delinquencies ease." Underneath that, the loan-type breakdown is not a housing story at all. It is an FHA story wearing a housing costume.

Conventional loans ran 2.72% delinquent. FHA loans ran 11.79%.

That's one in every eight and a half FHA borrowers behind on a payment right now.

The levels are not even the alarming part. The direction is. Seriously delinquent conventional loans rose 6 basis points year over year. Seriously delinquent FHA loans rose 227 basis points.

Thirty-eight times the increase, in the same economy, with the same jobs numbers, on the same streets.

MBA's Marina Walsh put it plainly in the release: "FHA serious delinquencies are becoming pronounced, increasing more than 225 basis points from the previous year." In the same paragraph she notes the seriously delinquent rate "increased for the fourth consecutive quarter," which is the part that turns a data point into a trend.

So why isn't any of this showing up in the headline? Because the headline is an average, and the average is dominated by a conventional book that is 97% current.

Here's the mechanism, and it isn't complicated. FHA buyers who closed between 2022 and 2024 put 3.5% down on a house bought near the top. They financed the upfront mortgage insurance premium of 1.75% into the loan balance, which means half their down payment evaporated at closing and they started with almost no cushion by design. They have no equity to sell into and no refinance to run to, because the 30-year is back at 7.03% as of September 24, up from 6.30% a year ago.

A conventional borrower from 2019 with 40% equity who loses a job sells the house in a week. An FHA borrower from 2023 with negative equity goes to foreclosure, because there is no other door.

The conventional book is fine. The problem is concentrated, and concentrated distress is exactly the kind you can go stand in front of.

The Numbers

Texas took 1,835 of the 5,794 completed foreclosures in August. One state, 32% of every bank repossession in the country.

That isn't because Texas housing is uniquely broken. It's because Texas is a nonjudicial state, meaning the lender forecloses through a trustee rather than a courtroom, and Texas Property Code §51.002 puts that sale on the first Tuesday of every month, so a file that goes bad in the spring is a bank-owned asset by late summer.

Judicial states are loading the same distress into a pipeline that runs two to three years longer. Texas is showing you today what Illinois will show you in 2028. The delinquency wave is national. The completion wave is a map of state procedure.

The rest of the August board, from ATTOM:

• Highest state foreclosure rates: South Carolina at one filing per 1,547 housing units, Nevada at 1,920, Florida at 2,397, Texas at 2,445, Maryland at 2,530. National average: one per 3,569.
• Worst metros: Columbia, South Carolina at one per 1,232, Punta Gorda, Florida at 1,249, Spartanburg, South Carolina at 1,262, Fayetteville, North Carolina at 1,458, Charleston, South Carolina at 1,501.
• Starts by state: Florida 3,189, Texas 3,126, California 2,565, Illinois 1,192, Georgia 1,189.
• Completions by state: Texas 1,835, California 589, North Carolina 356, Arizona 296, Alabama 286.

Put the two bottom lists next to each other. Florida leads the country in starts and doesn't appear in the top five for completions at all.

That gap is a queue, and the queue has a length you can estimate.

ATTOM's CEO Rob Barber kept the framing conservative in the release: activity is trending above year-ago levels, "particularly in completed foreclosures," while overall volumes stay below historical norms. Both halves are true. Only one of them is tradeable.

Is anyone connecting the FHA credit data to the REO count? I read ATTOM's own release and HousingWire's coverage of it end to end. Neither mentions FHA once. That's a two-item sample and I'll say so, but the delinquency story and the foreclosure story are being covered by different desks, and the handoff between them is where the deals are.

Common Mistakes Investors Make Here

• Screening on "foreclosure" as one bucket. A notice of default and a bank-owned asset are different products with different sellers, timelines, and discounts. Filings are a lead list. Completions are inventory.
• Chasing the highest-rate state. South Carolina has the worst filing rate in the country and doesn't crack the top five for completions, where Alabama does with 286. Rate tells you where stress lives. Completions tell you where you can buy something this quarter.
• Underwriting distressed acquisitions at a hoped-for exit rate. If you're buying in Texas at a discount and modeling a 2027 resale at 6%, you've put the whole deal margin on a rate forecast. Underwrite the exit at 7% and make the discount carry the return.
• Ignoring the equity math on the seller's side. An owner with 30% equity is a normal negotiation. An owner from 2023 with negative equity can't accept your offer on their own, because the lienholder has to approve the loss first. Know which call you're making before you dial.

Where I Land

The consensus read is that foreclosures are historically low and therefore irrelevant, and that read is going to cost people the best acquisition window since 2011.

I don't think we get a 2008 event. I think we get something more useful: a narrow, program-specific credit failure that puts real inventory into five or six fast-procedure states while the national average keeps saying everything is fine, which is what keeps the competition away.

With my own money I'd be doing one thing right now, and it isn't buying. It's building the list. I'd have every 2022 through 2024 purchase in my target counties tagged, sorted by estimated equity position, and monitored for the first default notice. The people who made money in 2010 weren't smarter about the macro. They had the list built in 2008.

My called shot, on the record: completed foreclosures nationally print above 8,000 in a single month before the end of Q1 2027. August's 5,794 was a 22% jump off July, and I'm not treating one month as a run rate, but four straight quarters of rising serious delinquency feeding a pipeline that clears monthly in the biggest completion state gets there. Anyone still telling you come spring that distress is historically low will be reading a national average that has stopped describing any actual market.

How to Use PropGPT for This

The whole point of the analysis above is that it resolves to a property list. These screens use fields PropGPT reads directly from the property record: sale dates, mortgage history, estimated equity, foreclosure status, and owner occupancy. Every filter below is a loan and equity characteristic, never a demographic one.

"Find single-family homes in Harris County, TX that last sold between January 2022 and December 2024, are owner-occupied, and have estimated equity under 5%. Show the mortgage history for each."

This is the core screen. It reconstructs the cohort driving the FHA delinquency numbers: recent purchase near the top, minimal down payment, no cushion. The mortgage history tells you which of them are FHA loans.

"Show me pre-foreclosure and foreclosure properties in Bexar, Tarrant, and Dallas counties, with loan origination date, original loan amount, and estimated current value for each."

Fast nonjudicial counties convert filings to deeds in months, not years. This is the live queue in markets that actually clear, with the equity math attached so you know which files are short sales and which are headed to the courthouse steps.

"Give me counts of pre-foreclosure properties and counts of bank-owned properties for each of the ten largest counties in Florida, and rank them by the ratio."

This finds the queue. A county with many filings and few completions has stress that hasn't surfaced yet, which is exactly where you want your list built before anyone else is calling.

"List absentee-owner single-family properties in Columbia, SC and Spartanburg, SC that last sold after 2021 with no MLS listing activity since, and show last sale price against estimated value for each."

Two of the highest-distress metros in the country, filtered to owners who bought near the top and have gone quiet. Sort the results by the gap between the two prices yourself; the ones where estimated value sits below what they paid are the calls to make first.

"For each property on my list, pull arms-length sales within a half mile in the last six months and calculate a maximum offer at 70% of after-repair value minus $40,000 in rehab."

Turns a lead list into offers. Run it the day a new default notice hits and you're the first call rather than the fourth.

One caution on the fourth screen: several states regulate unsolicited purchase offers and wholesaler solicitation, and the rules differ by state and by how you make contact. This article is reporting, not legal or financial advice. Check your state's requirements before you mail anything.

The Bottom Line

Filings tell you where borrowers are hurting. Completions tell you where you can buy. Those two maps came apart this year, and the gap between them isn't noise. It's procedure and loan vintage, and both are knowable in advance.

Start with the Harris County screen. If it returns more than a few hundred properties, you already know more about your market's 2027 supply than the person you'll be bidding against.