Market Brief
The delinquency rate fell last quarter. The part that matters got worse.
Mortgage delinquencies dipped in the second quarter, but loans 90 days past due or in foreclosure rose a fourth straight quarter. FHA is carrying it.
The daily read on the numbers that set Florida housing costs. Today: mortgage performance, which loan types are deteriorating, and why the answer matters more in Northeast Florida than the national average suggests.
Two numbers moved in opposite directions
The Mortgage Bankers Association released its National Delinquency Survey for the second quarter of 2026 on August 13. The seasonally adjusted delinquency rate on mortgages secured by one to four unit residential properties fell to 4.37% of outstanding loans, down 7 basis points from the first quarter.
That is the headline. Underneath it:
- Loans 90 days or more past due or already in foreclosure rose to 2.06%, up 3 basis points on the quarter and 49 basis points on the year. That is the fourth consecutive quarterly increase.
- Foreclosure inventory rose to 0.67%, up 3 basis points on the quarter and 19 basis points on the year.
- Foreclosure starts fell 4 basis points to 0.20%.
Read those together and the picture is not improvement. Fewer borrowers are falling behind for the first time, and fewer new foreclosures are being started, but a larger share of the people already behind are not getting out. The pipeline is not filling faster. It is draining slower.
"Mortgage delinquencies decreased slightly across all loan types in the second quarter of 2026," said Marina Walsh, the MBA's vice president of industry analysis, in the release. "Nonetheless, the broader trend is that both delinquencies and foreclosures have increased over the past year."
The averages hide which borrowers
Every major loan type improved on the quarter and every one of them is worse than a year ago. The size of that year over year deterioration is where the story is:
| loan type | Q2 2026 delinquency | change on the quarter | change on the year | serious delinquency, change on the year |
|---|---|---|---|---|
| Conventional | 2.72% | down 3 bp | up 12 bp | up 6 bp |
| VA | 4.89% | down 10 bp | up 57 bp | up 31 bp |
| FHA | 11.79% | down 9 bp | up 122 bp | up 227 bp |
A conventional borrower is 6 basis points more likely to be seriously delinquent than a year ago. An FHA borrower is 227 basis points more likely. That is not a difference of degree.
Why the quarterly dip may not hold
Donna Schmidt of DLS Servicing told National Mortgage Professional that part of the second quarter improvement is a timing artifact rather than a change in household finances: FHA loss mitigation trial payment plans that began in the elevated period from October 2025 reached full maturity in the second quarter, so borrowers who entered trial plans in the autumn were only brought current in March or April after completing three payments.
She also noted a seasonal pattern in fifteen years of her firm's data: loss mitigation applications typically fall in the second quarter, helped by tax refunds and lower post holiday spending, then rise modestly from July and spike from September through year end as households absorb back to school and holiday costs.
Her conclusion, stated as a forecast rather than a finding: the second quarter decline may not carry through the rest of 2026.
Alongside this, the MBA pointed to labor market weakness, rising delinquencies on other consumer debt, stretched affordability and slower home equity accumulation as conditions consistent with greater homeowner distress.
Why this reads differently in Northeast Florida
National loan performance becomes a local question through loan mix, and Northeast Florida's mix is not the national one.
Per Momentum Research analysis of realMLS closed residential sales across Baker, Bradford, Clay, Duval, Nassau, Putnam and St. Johns counties, government backed loans were about 32.7% of closings in 2026, with VA at 17.0%, a 25 year high in our record, and FHA near 16%. Conventional financing accounted for roughly 40%.
So the two loan channels showing the fastest deterioration nationally are the two that finance roughly a third of the homes that close here, and one of them is at its highest local share in a quarter century. That is a statement about exposure, not a prediction. Nothing in the MBA data is broken out for Northeast Florida, and none of these figures shows distress in this market.
Two practical notes follow from it.
For a buyer using FHA or VA financing, the relevant number is not the delinquency rate. It is that servicer and underwriting conditions in these channels are tightening while the channel is under stress, which makes documentation and timeline discipline worth more than usual. All VA servicers must implement the VA's new loss mitigation waterfall and partial claim option by November 28, which is a change worth asking a lender about directly.
For a seller, the read is narrower than it looks. Serious delinquency is not distressed supply until it becomes a listing, and foreclosure starts actually fell last quarter. What it does mean is that any assumption that distressed inventory has stopped building nationally is not supported by this release.
People also ask
What is the current mortgage delinquency rate?
The Mortgage Bankers Association's National Delinquency Survey put the seasonally adjusted delinquency rate for mortgages on one to four unit residential properties at 4.37% of outstanding loans at the end of the second quarter of 2026. That was down 7 basis points from the first quarter but 44 basis points higher than the second quarter of 2025. The seriously delinquent rate, meaning loans 90 days or more past due or in foreclosure, was 2.06%, up 49 basis points on the year and rising for a fourth consecutive quarter.
Are FHA loans defaulting more than conventional loans?
By this measure, yes, and the gap widened over the past year. The FHA delinquency rate was 11.79% in the second quarter of 2026 against 2.72% for conventional loans and 4.89% for VA loans. All three fell slightly on the quarter. Measured against the second quarter of 2025, the serious delinquency rate rose 6 basis points for conventional mortgages, 31 basis points for VA loans and 227 basis points for FHA loans.
Is foreclosure activity rising in 2026?
Foreclosure inventory rose to 0.67% of outstanding loans in the second quarter of 2026, up 3 basis points from the first quarter and 19 basis points from a year earlier. Foreclosure starts moved the other way, falling 4 basis points to 0.20%. The combination means fewer new foreclosures are being initiated while a larger share of loans already in the process remain unresolved. These are national figures and the MBA release does not break them out for Northeast Florida.
Sources and links
- Mortgage Bankers Association, National Delinquency Survey, second quarter 2026, released August 13, 2026: https://www.mba.org/news-and-research/newsroom/news/2026/08/13/mortgage-delinquencies-decrease-slightly-in-the-second-quarter-of-2026
- National Mortgage Professional, "Mortgage Delinquencies Ease, But FHA Distress Keeps Deepening", by Czarinna Andres, August 18, 2026, read in full: https://nationalmortgageprofessional.com/news/mortgage-delinquencies-ease-fha-distress-keeps-deepening
- Freddie Mac Primary Mortgage Market Survey, week ended August 13, 2026, 30 year fixed at 6.67%. The next print lands midday Thursday, August 20, after this brief: https://www.freddiemac.com/pmms
- Momentum Research analysis of realMLS closed residential sales, Baker, Bradford, Clay, Duval, Nassau, Putnam and St. Johns counties. Deemed reliable but not guaranteed.
Disclosure: Jon Brooks is a co-founder of Momentum Realty, a Florida real estate brokerage that owns and funds Florida Housing Intelligence. Momentum has a financial interest in Florida real estate transactions, including in markets named here. See our editorial standards.
Market statistics in this article are computed from MLS data licensed by Momentum Realty, and are current as of the date shown. Data may be preliminary and subject to revision by its source. This article is general information, not advice about any specific property, transaction, or financial decision, and is not a representation about any specific property, community, builder, or association.
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