FHFA Reports Minor Q2 2026 Rise in Foreclosure Starts

What happened: The Federal Housing Finance Agency (FHFA) announced on September 24, 2026, that foreclosure starts on properties backed by Fannie Mae and Freddie Mac increased 1.9% nationally during the second quarter of 2026. The data is a national indicator, not a local Los Angeles County figure.

On September 24, 2026, the FHFA published its quarterly report on foreclosure prevention, which showed a minor uptick in foreclosure proceedings nationwide for loans guaranteed by the government-sponsored enterprises. While the increase is small, any change in foreclosure trends warrants attention from agents and property owners.

What changed

The FHFA's Foreclosure Prevention, Refinance, and FPM Report—2Q2026 stated that foreclosure starts for Fannie Mae and Freddie Mac-backed loans rose by 1.9% to 25,908 in the second quarter. The report also noted that third-party and foreclosure sales—the final step in the process—rose 4.1% to 3,894 properties nationally.

At the same time, the enterprises completed 48,439 foreclosure prevention actions. These actions, such as loan modifications, help homeowners avoid foreclosure. The number of prevention actions continues to significantly outpace the number of completed foreclosure sales, showing a continued focus on loss mitigation.

When does it take effect?

The FHFA report documents past activity and is not a new law or regulation with a future effective date. The data covers the period from April 1 to June 30, 2026. There are no new compliance requirements or deadlines for agents or homeowners to meet.

The timeline is purely informational:

What this means in the South Bay and on the Westside

This report's data does not mean foreclosure starts increased by 1.9% in Los Angeles County. The figures are national, and local markets like the South Bay and Westside often perform differently. There is no evidence in this report of a foreclosure surge in Manhattan Beach, Hermosa Beach, or Santa Monica.

For local transactions, the report serves as a reminder to maintain diligence. A national uptick, however small, reinforces the need for thorough title review on any property that might be distressed. In high-value areas like Palos Verdes, an unnoticed lien from a past owner can complicate a multi-million dollar sale. Similarly, in condo-heavy communities like Playa Vista or Redondo Beach, delinquent HOA dues can lead to liens and foreclosure actions that must be cleared before a new owner can take title.

Our process at Fidelity National Title already accounts for these risks. We meticulously check the property's history for any recorded Notice of Default or other instruments that could cloud title, ensuring a buyer is protected.

What agents and homeowners should do now

This news is an indicator, not an alarm. The correct response is to be informed and prepared, not to assume a market shift. Here are the practical steps to take:

1. Acknowledge the Data's Limits: First, understand this is a national statistic for GSE-backed loans. It does not reflect the cash-heavy or jumbo loan markets prevalent on the Westside and does not confirm a local trend.
2. Order Title Early: On any purchase transaction, especially one with potential red flags (e.g., an absentee owner, deferred maintenance), order a preliminary title report as soon as the property goes into escrow. This gives maximum time to identify and resolve issues.
3. Scrutinize Payoff Demands: For any sale involving a distressed owner, pay close attention to the beneficiary demand and any other lien payoffs. Ensure all amounts are verified and that reconveyances will be properly recorded at closing. This is a standard part of the escrow process we manage.
4. Confirm Authority to Sell: In a pre-foreclosure situation, it is critical to confirm the seller has the legal authority to convey the property. We verify this as part of our title examination process, protecting all parties from post-closing complications.
5. Consult a Title Professional: If you see a Notice of Default on a property's record or have any concerns about its foreclosure status, bring it to your title representative immediately. We can explain the implications and outline the steps needed to ensure a clean closing.

Open questions

This report provides a high-level snapshot, but several key questions remain for our local market:

• What were the actual foreclosure start figures for Los Angeles County during Q2 2026?
• Did the slight national increase continue, level off, or reverse in the third quarter of 2026?
• Will this data cause lenders or servicers to adjust their loss mitigation strategies or underwriting standards for new loans?
• Are there specific ZIP codes in the South Bay or Westside that are seeing more distress than others?

Sources

• FHFA, Foreclosure Prevention, Refinance, and FPM Report—2Q2026
• California Legislative Information, Civil Code 2924 (governs non-judicial foreclosure procedure)

FAQ

Did foreclosures go up in Los Angeles in Q2 2026?

The Q2 2026 FHFA report does not provide this information. The report's finding of a 1.9% increase in foreclosure starts is a national figure for loans backed by Fannie Mae and Freddie Mac, not a specific statistic for Los Angeles County.

What is a foreclosure start?

A foreclosure start is the initial legal action a lender or servicer takes to begin the foreclosure process. In California, this is typically the recording of a Notice of Default (NOD) with the county recorder's office after a borrower has missed payments.

Does this report mean home prices will fall in LA?

This report, on its own, is not a predictor of home price movements. The total number of foreclosure sales remains a very small fraction of the overall housing market. Home prices are influenced by a wide range of factors, including inventory, demand, and interest rates.

How can I check if a property is in foreclosure?

You can check public records at the Los Angeles County Registrar-Recorder/County Clerk's office for a recorded Notice of Default or Notice of Trustee's Sale. The most reliable method is to have a title company run a preliminary title report, which will show any recorded documents affecting the property's title.

This report is a data point, not a cause for alarm. The best way to protect your transaction is to work with an experienced title team that understands how to navigate potential issues. If you have a file in the South Bay or on the Westside and have questions about a property's status, please call us. Matt Goeglein and Xavier de la Piedra IV are here to provide clarity and ensure your deal closes smoothly.