An indicator of foreclosures is on the rise as pockets of distress persist in the U.S. market.

Foreclosure starts even in the short month of February were up compared to the same time the year before and relative to January at 1% and 8% respectively, suggesting there was an increase outside of seasonal variations.

The numbers point to the lifting of some national foreclosure bans lingering from the postpandemic transition, like the Department of Veterans Affairs’, and also regional woes. (Although some distressed areas have newer bans.)

“February’s rise in foreclosure filings suggests evolving market pressures,” said Rob Barber, CEO at ATTOM, in a press release. “While some increases may reflect seasonal trends, the uptick in foreclosure starts both month-over-month and year-over-year signals potential shifts.”

While servicers began foreclosures on 22,730 homes last month, completions were far lower due in part to the post-pandemic proliferation of alternatives, leeway for those affected by local disasters and procedural delays.

While real-estate owned completions did rise 2% on a consecutive month basis in February, they were down 10% on the year and there were just 3,031 of them.

There could be ups and downs in this area during 2025 with foreclosure alternatives extended or added in some parts of the market but also potentially being scaled back in others, such as a proposal regarding VA loans.

Cost-conscious Republicans dominating Washington do want to limit some federal mortgage relief through measures like a bill that would reduce purchase authorizations extended for VASP.

Whether or how they do and the impact it has on servicing could depend on officials’ responsiveness to industry concerns.

Elizabeth Balce, executive vice president at Carrington, advised legislators against the tack the current bill takes to this end during a hearing on Tuesday.

Balce, speaking as a member of the Mortgage Bankers Association, testified before a House subcommittee that limiting VASP could add “unnecessary payment burdens” and increase the number of borrowers who lose homes.

So far the average incidence of foreclosure filings is still low nationally, occurring a single time for every 4,395 homes.

However, it’s dramatically higher in some states and metropolitan statistical areas.

Delaware had the highest foreclosure rate at one out of 2,278 homes, followed by Illinois, 2,333; Nevada, 2,435; and New Jersey, 2,695.

Among MSAs with more than 200,000 people the highest foreclosure rates were: Modesto, California, 1,486; Lakeland, Florida, 1,863; Columbia, South Carolina, 2,000; Chicago, 2,007; and Atlantic City, New Jersey, 2,032.

Regions and states in which foreclosure indicators have a partial overlap with areas Attom had identified in an earlier report as being most vulnerable based on wage-based affordability, foreclosures, negative equity and joblessness.

California, Florida, Illinois and the New York City metropolitan area, including suburban New Jersey, were the jurisdictions identified as having high concentrations of at-risk counties in that report. 

Barber indicated that the report didn’t necessarily point to a crisis due to inconsistencies in the data to date but added that it should be monitored with an eye toward seeing if the indicators become more homogeneous.