• Key Insight: Foreclosure auctions for homes purchased since 2022 are accelerating across the country.
• What's at Stake: Mortgage servicers will be forced to ramp up efforts for newer vintages and certain segments as distressed borrowers face rising foreclosure activity.
• Supporting Data: 113% increase in foreclosure-auction volume in one leading state.

Overview bullets generated by AI with editorial review.

Mortgage servicers need to ramp up their efforts to work with distressed borrowers as both completed and scheduled post-foreclosure sales activity is on the rise, the latest Auction.com report said.

Completed foreclosure auctions surged 25% year over year in the third quarter, with the volume of properties backed by post-2022 originations and Federal Housing Administration-guaranteed loans both experiencing significant jumps, according to the report. 

FHA foreclosure-auction volume increased 73% from the same quarter in 2025 to hit its highest point since early 2019. FHA properties also accounted for 43% of the total inventory in the most recent report period, the largest portion since 2015, Auction.com reported.

Properties backed by conventional loans guaranteed by Fannie Mae and Freddie Mac made up just 33% of the inventory, but this grew by 30% year over year.

Similarly, foreclosure auctions for homes purchased since 2022 accelerated by 73%, with the more recent vintages making up 46% of volume.

Properties reaching the bank- or real estate-owned auction stage increased 18% compared to one year earlier, with volumes rising for the seventh consecutive quarter.

Along with providing clues to the types of customers that servicers are managing, the numbers also hint at the borrowers who are likely to stumble on their payments for the rest of this year, Auction.com experts said.

"Scheduled foreclosure auction volume for the fourth quarter indicates both foreclosure auction volume and REO auction volume will continue to increase in that quarter," wrote Daren Blomquist, the firm's head of market economics.

Which property auctions drove sales

The new findings corroborates data presented throughout this year suggesting FHA loans and more recent vintages would see an upward trajectory of mortgage distress. Borrowers purchasing homes after 2022 are today especially hard-hit by current rate levels, with expectations of easing economic conditions and future refinance opportunities failing to materialize. 

The upward trend in FHA volume also coincided with the termination this year of loss-mitigation measures previously available to borrowers of the government-backed mortgages. 

Although foreclosure auctions were up from last year, purchases did not follow suit, with the sales rate declining five percentage points to 45.5%. Quarter-over-quarter sales were flat, up by just 0.4%.

Bucking the trend were FHA sales, which increased 19% from third-quarter 2025, as prices decreased 3% from a year ago, Auction.com said.

"REO auction demand also improved substantially on a year-over-year basis as pricing adjusted lower," Blomquist said. The sales rate jumped 29% year over year, corresponding to a 3% dip in pricing levels on REO homes. 

Buyers of bank-owned units paid an average of 62.2% of estimated retail value compared to 64% in third-quarter 2025. The same types of auctioned properties went for 65.2% of value three months earlier. 

Purchases from foreclosure actions sold at prices averaging 65.3% of retail market value, increasing from a 64.5% rate 12 months earlier but falling from 66.8% in the second quarter, consistent with seasonal fluctuations. 

Where volumes grew the most

A total of 31 states reported higher auction volume over the past year, including the three ranked as the most highly populated. Foreclosure volume accelerated 80% in California, 54% in Texas and 67% in Florida.

The areas seeing the greatest surge in foreclosure-auction volume were scattered throughout the U.S. Numbers were up 113% in Arkansas to lead the country, followed by California. South Carolina and Nevada were next, with both at 76%, and Washington State rounded out the top five in auction growth at 69%.