New ICE data shows FHA defaults fell year over year, the biggest annual decline in four years
New default activity among Federal Housing Administration (FHA) borrowers fell 15% year over year in June 2026, the largest annual decline in more than four years, offering a rare bright spot in a mortgage market still navigating elevated foreclosure activity, according to new data from Intercontinental Exchange, Inc. (ICE).
The June 2026 ICE First Look at Mortgage Performance showed the national delinquency rate rising just 5 basis points (bps) to 3.55% in June, roughly half the typical seasonal increase. That reading remains 60 bps below the pre-pandemic June 2019 benchmark of 4.16%.
"Overall performance remained strong in June," said Andy Walden, head of mortgage and housing market research at ICE.
"Early-stage delinquencies remain subdued, and while serious delinquencies including foreclosures have reached pre-pandemic levels, new default activity has leveled off in recent months — a positive sign. New FHA defaults, which have been a focal point of market attention, were down 15% year over year in June. These trends are encouraging, even as the market continues to warrant close monitoring."
Serious delinquencies — loans 90 or more days past due but not in foreclosure — fell to 570,000 in June, a six-month low, extending the seasonal improvement that began in March.
Roll rates also improved, with the number of borrowers entering 30- and 60-day delinquency declining on both a monthly and annual basis.
For brokers who have been monitoring late-stage stress in government-backed loan portfolios, June's data marks the first clear annual improvement in new FHA defaults in several years.
Foreclosure activity inches toward pre-pandemic norms
The encouraging headline numbers sit alongside a continued climb in foreclosure activity. The share of mortgages in active foreclosure reached 0.53% in June, a six-year high, as activity normalizes from emergency-era lows.
Foreclosure starts hit 43,000, also a six-year high, while foreclosure sales rose 16% from a year ago, though they remained 46% below pre-pandemic levels.
Industry observers have been parsing the divergence between improving early-stage data and rising late-stage stress.
Mirza Hodzic, managing director and founder of BlackWolf, a mortgage servicing consulting firm, has told Mortgage Professional America that whether the trend amounts to normalization or a genuine warning sign for late-stage delinquencies depends on how the late-stage pipeline clears.
"I believe that the market is slowly correcting itself to pre-pandemic levels," Hodzic said.
"I do feel like there's a bit of an effect on the economic side where we've seen some difficulties for the lower- to mid-income families to make payments."
That view is complicated by the FHA-specific pressures Donna Schmidt, president and CEO of DLS Servicing, has warned about in her analysis of rising FHA and VA foreclosure trends.
Schmidt, who works with 59 servicers nationally, told MPA that years of deferred defaults are now moving through the system and that heavy FHA foreclosure pressure could persist for two to three years.
What this means for brokers and their clients
Prepayment speeds eased in June, with the single-month mortality (SMM) rate slipping 2 bps to 0.77%, a five-month low, as elevated mortgage rates continue to suppress refinancing demand, a headwind for volume that brokers across the country are navigating in the second half of 2026.
High homeowner equity remains a critical buffer.
"High levels of homeowner equity continue to strengthen the market and help many distressed borrowers avoid foreclosure," said Bob Hart, president of mortgage technology at ICE.
"Still, early foreclosure activity bears watching, making timely data and proven servicing tools more important than ever."
Geographically, Mississippi (8.41%) and Louisiana (8.37%) posted the highest non-current loan percentages in the country, while Idaho (2.09%) and Montana (2.23%) recorded the lowest.
Indiana saw the largest 12-month increase in non-current loans nationally, up 20.06% — a figure that brokers and servicers in the Midwest should be monitoring closely.
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