What State Has the Most Foreclosures?
Uncover the states experiencing the highest foreclosure rates and the economic and market dynamics driving these housing market trends.
A foreclosure is the legal process by which a mortgage lender takes possession of a property when the homeowner fails to make their mortgage payments. This action allows the lender to recover the outstanding loan balance, typically through the sale of the property. Understanding foreclosure dynamics across regions is important for homeowners and those interested in the housing market. This article examines areas with higher foreclosure activity and explores underlying reasons.
Understanding Foreclosure Data
Foreclosure activity is commonly measured using two primary metrics: the foreclosure rate and the total number of foreclosure filings. The foreclosure rate indicates the proportion of housing units within a given area that have received a foreclosure filing, often expressed as “one in every X housing units.” Conversely, the total number of foreclosure filings represents the raw count of properties that have entered some stage of the foreclosure process.
Reliable data sources, such as ATTOM, regularly compile these statistics. Reporting periods can vary, with data available monthly, quarterly, or annually. These metrics help interpret which states are experiencing heightened activity, and understanding whether a state has a high rate due to a small housing stock or a large total number due to its sheer size is important for proper analysis.
States with Higher Foreclosure Activity
In July 2025, Nevada recorded the highest foreclosure rate, with one in every 2,326 housing units experiencing a filing. Florida followed closely (one in every 2,420 homes), then Maryland (one in every 2,566 units). South Carolina (one in every 2,588) and Illinois (one in every 2,727) also showed elevated rates.
For the first half of 2025, Illinois and Delaware shared the highest foreclosure rates, each with 0.23 percent of their housing units experiencing a filing. Nevada, Florida, and South Carolina also maintained high rates during this period (0.21 percent, 0.21 percent, and 0.20 percent respectively). More populous states like Texas, Florida, and California often have many foreclosure starts due to their considerable housing inventories, even if their rates are not always the highest nationally.
The national foreclosure rate in the second quarter of 2025 was one in every 1,413 housing units. States such as South Carolina (one in every 874) and Illinois (one in every 877) exceeded this national average in Q2 2025. Florida, Delaware, and Nevada also had rates higher than the national average. Overall, foreclosure activity has shown an upward trend compared to the previous year, with increases in both new filings and completed foreclosures.
Factors Influencing State Foreclosure Rates
Economic conditions play a role, as downturns can lead to increased unemployment and financial instability for homeowners. When individuals lose jobs or experience reduced income, meeting monthly mortgage obligations becomes challenging, increasing default likelihood. A strong job market with employment opportunities can help homeowners maintain payments and reduce foreclosure risk.
Housing market dynamics are another influence. Changes in home prices and demand impact a homeowner’s ability to sell or refinance if they face financial distress. Falling home prices can lead to negative equity, where the outstanding mortgage balance exceeds the property’s value, making it difficult to sell without incurring a loss. Rising interest rates can also increase monthly mortgage payments, pushing some homeowners towards default.
State-specific legal processes also affect the speed and volume of foreclosures. Procedures are categorized as either judicial or non-judicial. Judicial foreclosures require lenders to go through the court system, which involves a court process. This process is more time-consuming and can take a year or longer to complete.
Non-judicial foreclosures occur outside of court. These processes are faster and less expensive for lenders, sometimes concluding within a few months. States that predominantly use non-judicial foreclosure processes may experience higher volumes and quicker completion of foreclosures compared to states with primarily judicial processes.