Foreclosure Inquiries Reach Highest Level Since 2020

Foreclosure inquiries have increased for the third consecutive quarter, reaching their highest point since March 2020, according to LegalShield data. Historically, actual foreclosure filings tend to follow this index by one to two quarters.

LegalShield attributes this rise to the conclusion of pandemic-related Federal Housing Administration (FHA) relief programs last fall. Borrowers who lost these protections have spent the subsequent months falling behind on payments, depleting their loss-mitigation options, and increasingly seeking legal assistance. The composite Consumer Stress Legal Index (CSLI) experienced a year-over-year increase of 9.4% and a 2.3% rise from Q1, driven primarily by bankruptcy inquiries, which recorded the most significant annual increase of any category at an estimated 28.7%.

“The second quarter shows foreclosure pressure building, with homeowners contacting attorneys in numbers we haven’t seen in years,” said Matt Layton, SVP of Consumer Analytics at LegalShield. “This data tracks actual consumer behavior, not a survey. Foreclosure, combined with the fastest-rising bankruptcy inquiries in our index, shows consumers are struggling to manage debt and can’t pay the bills.”

LegalShield’s CSLI tracks consumer initiatives to engage an attorney for financial issues, encompassing bankruptcy, foreclosure, and consumer finance. Overall, data indicated that all indices reported higher values at the end of the quarter.

Key Findings — Q2 2026:

CSLI (composite): 74.6

• Up 9.4% year-over-year (YoY)
• Up 2.3% quarter-over-quarter (QoQ)

Foreclosure Index: 52.5

Bankruptcy Index: 41.3

• Up 28.7% YoY (representing the largest annual increase of any category)
• Up 5.1% QoQ

Consumer Finance Index: 107.7

• Up 1.2% YoY (remaining essentially flat)
• Down 0.1% for the quarter

The Foreclosure Index reached its highest level since March 2020 in May, peaking at 54.7, before declining to 52.5 in June. Traditionally, LegalShield’s Foreclosure Index serves as a leading indicator for actual residential foreclosure filings, typically one to two quarters in advance, as reported by the Mortgage Bankers Association (MBA), with a correlation coefficient of .95.

In the study, LegalShield provider attorneys identified two key trends contributing to this increase:

FHA loans and escalating escrow costs.

“We are hearing from folks who’ve fallen behind on FHA or government-backed loans,” said Wayne Hassay, Managing Partner with Maguire Schneider Hassay, LLP, a LegalShield Provider Firm in Ohio. “The issues are usually incomplete loss-mitigation efforts, loan-modification disputes, or trial-payment problems.”

With that being said, numerous consumers are encountering difficulties with their monthly mortgage payments following the expiration of pandemic relief options last fall.

“The FHA relief programs expired three quarters ago, and we’ve seen foreclosure calls rise ever since,” said Layton. “We’ve tracked more than 36 million intakes since 2002. When we see the foreclosure index climb like this, actual filings tend to follow.”

There are additional national mortgage statistics indicate a link to the cessation of FHA relief. For example, the serious delinquency rate for FHA loans climbed to approximately 11.5% in late 2025, marking its highest level since 2021 and approximately six times greater than the conventional rate, which is around 2%, as reported by the MBA. This rise in delinquency rates coincides with the conclusion of pandemic-related FHA relief measures at the end of September 2025, along with the introduction of new trial-payment obligations.

However, there are other factors contributing to foreclosure inquiries include taxes and insurance.

“Calls are often triggered by escrow shock,” said Ben Farrow, LegalShield provider attorney with Anderson, Williams & Farrow in Alabama. “People want to know why it went up, and it’s usually taxes and insurance. The escrow statement can be confusing given it’s really three statements in one: last year’s projection, the actual account history, and a projection for the coming year. We help it make sense, but sometimes there’s not enough money to cover it.”

Property taxes and homeowners insurance currently constitute approximately 21% of an average monthly mortgage payment, with some metropolitan areas exceeding one-third, as reported in a March 2026 analysis by Neighbors Bank covering nearly 450 metros. According to Cotality, homeowners insurance premiums are expected to increase by around 8% nationwide in 2026, surpassing the rate of inflation.

Household Debt Driving Up Bankruptcy Inquiries

LegalShield’s Bankruptcy Index has a historical tendency to precede actual consumer bankruptcy filings by two quarters, exhibiting a correlation of .98. Throughout the second quarter, the index consistently increased each month, starting at 39.4 in April, rising to 39.9 in May, and reaching 41.3 in June, concluding at its peak. The annual growth of 28.7% represents the most significant increase among all categories monitored by the index.

The increase indicates a growing pressure on family finances. According to the latest Household Debt and Credit Report from the Federal Reserve Bank of New York, total household debt has hit an unprecedented $18.8 trillion, while credit card debt amounted to $1.25 trillion—reflecting a 5.9% rise compared to the previous year, despite the typical seasonal decline in Q1. Additionally, some 4.8% of the total debt was reported to be in some form of delinquency, with the rate of serious mortgage delinquency rising from 1.4% to 1.5%.

“We are seeing an uptick in bankruptcy inquiries from middle-aged and older workers struggling to pay their mortgages, car payments, and credit card balances,” said John Saltarelli, LegalShield provider attorney and Partner with Ross & Matthews, P.C. in Texas. “The strain is moving past the house. It is generally driven by the economy, higher prices, and employer cutbacks that mean lost jobs or lower wages.”

Region	CSLI	Foreclosure Index	Bankruptcy Index	Consumer Finance Index
National	74.6 +9.4%	52.5 +12.2%	41.3 +28.7%	107.7 +1.2%
West	72.5 +14.6%	41.4 –3.8%	44.1 +24.9%	107.0 +16.6%
South	82.6 +25.3%	56.4 +30.4%	48.7 +29.5%	117.8 +21.7%
Midwest	77.2 +13.8%	56.3 +44.1%	34.9 -10.1%	118.1 +15.0%
Northeast	61.5 –3.8%	44.4 –31.5%	22.4 -10.9%	105.0 +13.2%

Additional Findings:

• West: the sharpest quarterly bankruptcy jump of any region at 18.2%
• South: highest overall stress in the country and the highest bankruptcy reading
• Midwest: the largest year-over-year regional foreclosure increase
• Northeast: moving the other way, with overall stress and foreclosure activity down

Overall, the national statistics obscure significant regional disparities. Stress levels are intensifying in the South, West, and Midwest, whereas the Northeast is experiencing a reduction. However, the Midwest also presents a contrasting narrative: it experienced the highest rise in foreclosures nationwide, increasing by 44.1%, while simultaneously witnessing a decrease in bankruptcy inquiries. This trend appears to be linked to housing-related pressures such as taxes, insurance, and the expiration of FHA relief, rather than widespread financial hardship. In contrast, the Northeast exhibited a uniform decline, with foreclosure inquiries decreasing by 31.5%.

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