The numbers are hard to ignore. According to ATTOM Data Solutions, foreclosure filings across the United States have now increased on a year-over-year basis for 11 consecutive months, a streak that began in early 2025 and has extended into the new year. In January 2026, 40,534 U.S. properties received foreclosure filings, including default notices, scheduled auctions, and bank repossessions. That figure is up 32 percent from January 2025.

For homeowners in Indiana and Kentucky, this trend raises an obvious question: should you be worried? The answer depends on where you sit. If your mortgage is current and your finances are stable, the broader trend is more of a market signal than a personal concern. But if you are behind on payments, dealing with a job loss, or watching your housing costs climb faster than your income, the data suggests you are far from alone, and that the window for intervention is narrowing.

Breaking Down the National Numbers

ATTOM's January 2026 report provides a detailed snapshot of where foreclosure activity stands. The headline numbers tell a story of sustained acceleration:

• Total filings: 40,534 properties received foreclosure filings in January 2026, down 10 percent from December 2025 but up 32 percent from January 2025.
• Foreclosure starts: Lenders initiated foreclosure proceedings on 26,369 properties, down 7 percent month over month but up 26 percent year over year.
• Completed foreclosures (REOs): Lenders repossessed 4,714 properties, down 21 percent from December but up 59 percent from a year ago.
• National foreclosure rate: One in every 3,547 housing units had a foreclosure filing in January 2026.

The year-end data for 2025 is equally telling. Foreclosure filings were reported on 367,460 U.S. properties throughout the year, up 14 percent from 2024 and up 3 percent from 2023. While these numbers remain roughly 25 percent below pre-pandemic levels seen in 2019, the direction of the trend is unmistakable.

Where Indiana Stands

Indiana's foreclosure picture is more nuanced than the national headlines suggest. According to ATTOM's state-level data, Indiana had a foreclosure rate of approximately one in every 302 housing units in 2025, which placed it among the states with elevated foreclosure activity relative to its housing stock.

However, the overall foreclosure rate in Indiana remains historically low at roughly 0.3 percent. The state is not experiencing a foreclosure crisis by any measure. What it is experiencing is a return to normal, and for homeowners who became accustomed to the near-zero foreclosure environment of 2020 through 2023, normal can feel alarming.

Several factors are contributing to the uptick in Indiana:

The End of Pandemic-Era Protections

The federal foreclosure moratoriums that protected borrowers during the pandemic expired in mid-2021, and the extended forbearance programs offered by FHA, VA, and USDA have largely run their course. Borrowers who were able to pause payments for 12 to 18 months are now several years past that grace period. For some, the loss mitigation options that followed, including loan modifications and partial claims, provided a bridge back to stability. For others, particularly those whose income never fully recovered, the bridge led to a cliff.

Housing Costs Outpacing Wages

Indiana's median home price has risen faster than the national average in recent years, and while that is good news for homeowners with equity, it has pushed monthly costs higher for anyone who bought or refinanced during the rate spikes of 2023 and 2024. Mortgage rates in Indiana currently hover around 6.0 to 6.3 percent, according to the National Association of Home Builders. For a household that stretched to qualify at these rates, even a modest income disruption can tip the balance.

Insurance and Property Tax Pressures

Rising homeowners insurance premiums and property tax assessments are compounding the strain. These are costs that do not show up in the mortgage payment itself but are typically collected through escrow accounts, and when they spike, the monthly payment goes up with them. Indiana homeowners across Clark, Floyd, Harrison, and surrounding counties have reported escrow shortages that added $100 to $300 per month to their housing costs over the past year.

The Kentucky Landscape

Kentucky's foreclosure dynamics mirror Indiana's in some respects but differ in others. The state processes foreclosures through the courts, and the timeline from filing to sale can stretch six months or longer. Kentucky also provides homeowners with a right of redemption after the foreclosure sale, which gives them additional time to reclaim their property.

The Louisville metro area, which spans the border into Southern Indiana, is a particularly important market to watch. FHA loans are prevalent in Jefferson County and surrounding communities, and FHA borrowers are statistically more likely to experience foreclosure than conventional borrowers because FHA loans serve borrowers with lower down payments and tighter financial margins.

As with Indiana, Kentucky's foreclosure numbers are rising from a historically low base. The trend is concerning not because it signals an imminent crisis, but because it reveals the fault lines in household finances that were papered over by pandemic-era interventions.

What Is Driving the National Trend

To understand why foreclosures are rising, it helps to look at the convergence of factors hitting homeowners simultaneously:

Mortgage Rate Lock-In and Its Consequences

The so-called mortgage rate lock-in effect has frozen much of the housing market. Homeowners who locked in rates below 4 percent during 2020 and 2021 are reluctant to sell and lose that rate. But for homeowners who need to sell due to financial hardship, this effect is a trap. They cannot easily move to a cheaper home because a new mortgage at current rates would cost more per month, even on a less expensive property.

The Affordability Squeeze Continues

The National Association of Home Builders reported in February 2026 that the housing market faces ongoing challenges from rising material and labor prices and policy uncertainty. With a nationwide shortage of roughly 1.2 million housing units, there is no relief valve on the supply side. Home prices continue to appreciate in most markets, including Indiana and Kentucky, which keeps housing costs elevated for current owners whose incomes have not kept pace.

Credit Tightening

As foreclosure rates rise, lenders become more cautious. This makes it harder for distressed borrowers to refinance out of trouble, creating a feedback loop where the borrowers most in need of relief are the least likely to qualify for it.

Context Matters: This Is Not 2008

Before the trend lines trigger panic, some important context is necessary. The current foreclosure environment is fundamentally different from the crisis of 2008-2012:

• Equity positions are strong. Most homeowners have significant equity in their homes, thanks to the sustained price appreciation of the past five years. This means that even if a borrower defaults, they are far more likely to be able to sell the property and pay off the mortgage than they were during the subprime crisis.
• Lending standards are tighter. The risky loan products that fueled the last crisis, including no-documentation loans, negative amortization mortgages, and subprime adjustable-rate products, are largely absent from today's market.
• The banking system is better capitalized. Financial institutions are in a much stronger position to absorb losses without triggering the kind of cascading failures that defined the 2008 crisis.

The foreclosures we are seeing today are driven primarily by individual financial hardship, not by systemic dysfunction in the mortgage market. That distinction matters for the broader economy, but it offers cold comfort to the individual homeowner facing a default notice.

What to Do if You Are Falling Behind

If you are behind on your mortgage or worried about falling behind, the single most important step you can take is to act early. Every loss mitigation option available to you, whether it is forbearance, modification, partial claim, short sale, or deed in lieu, works better when you engage with it before the process reaches an advanced stage.

Here is a practical roadmap:

• Contact your servicer immediately. Federal law requires your servicer to evaluate you for loss mitigation options before initiating foreclosure. Do not wait for them to reach out to you.
• Call a HUD-approved housing counselor. Indiana homeowners can reach the Indiana Foreclosure Prevention Network at 1-877-GET-HOPE (1-877-438-4673). These counselors are free, confidential, and experienced in negotiating with servicers.
• Gather your financial documents. Your servicer will need recent pay stubs, tax returns, bank statements, and a hardship letter. Having these ready speeds up the process significantly.
• Understand your state's timeline. In Indiana, you have at least 30 days from the pre-foreclosure notice before the lender can file suit, and you have the right to request a settlement conference. In Kentucky, the judicial process provides additional time, and the right of redemption extends your options even after sale.
• Explore all alternatives. If staying in the home is not realistic, a short sale or deed in lieu of foreclosure can help you exit without the full credit damage of a completed foreclosure.

Looking Ahead

Market forecasters generally expect foreclosure activity to continue rising through 2026, though the pace of increase may moderate as the backlog of post-pandemic defaults works through the system. The NAHB projects that mortgage rates will remain slightly above 6 percent this year, with the Federal Reserve expected to make two 25-basis-point rate cuts. Any rate relief will help at the margins, but it will not reverse the trend for borrowers who are already in distress.

For Indiana and Kentucky homeowners, the message is straightforward: the safety net that caught millions of borrowers during the pandemic is gone. The tools to avoid foreclosure still exist, but they require you to reach out and use them. Eleven months of rising foreclosure filings is a clear signal that the time to act is before, not after, the default notice arrives.