Mortgage
Foreclosure Inquiry Calls Up 14.8% Year Over Year as Inflation Squeezes Homeowners
By Real Estate Wire Staff, . Real Estate Wire.
Homeowners are calling lawyers about foreclosure at a pace not seen since early 2020, and the trend shows no sign of reversing. National Mortgage News reported this week on LegalShield's third-quarter consumer stress index, which tracks inbound calls from members seeking legal help on housing, bankruptcy and consumer debt.
Forelosure inquiries rose 14.8% year over year through the end of September, with the index component landing at 52.6. The streak now stands at 13 straight months of year-over-year increases. Activity dipped slightly from the second quarter overall, but September alone saw a 7.8% jump from August after a quieter summer, driven by insurance and tax bills landing on top of broader price pressure.
In May, the foreclosure component hit 54.7, its highest reading since March 2020. The composite index, which combines foreclosure, bankruptcy and consumer finance call volume, reached 75.7 by the end of September, up 6.3% from a year earlier and also the highest since 2020. That composite has now risen year over year for 27 consecutive months, a streak surpassed only by the run between 2006 and 2009.
"When a growing share of our members' calls are about losing a home, filing for bankruptcy or dealing with consumer debt, the strain has moved past worry and into action," said Matt Layton, LegalShield's senior vice president of consumer analytics.
The picture LegalShield's advising attorney Ben Farrow describes is not one of reckless borrowing. "The homeowners calling us budgeted and did the right things, but inflation is eating into their income, and then, their insurance doubled," he said. "They're not buying Porsches and ribeyes. Things just cost too much, and there's not much left in the piggy bank."
Consumer prices overall were up 3.4% year over year as of August 2026, according to the US Bureau of Labor Statistics. That figure matters here because LegalShield attributes the third-quarter acceleration not to expiring mortgage relief programs, which it cited for the prior quarter's activity, but entirely to household cost pressure: insurance premiums, property taxes and everyday expenses compressing the margin between income and mortgage payment.
"This feels like a rising tide, not a single shock like the banking crisis in 2008 or Covid," Farrow said. "It's death by a thousand cuts, and it's driven by everyday expenses."
The LegalShield data does not stand alone. Attom's most recent monthly foreclosure research showed filings rising 13% from August 2025. The Mortgage Bankers Association's second-quarter delinquency survey showed distress levels up 44 basis points from a year earlier, a figure the National Mortgage News report notes is consistent with the LegalShield trend line.
Bankruptcy inquiries tell a related story. That component finished September at 39.5, up 4.8% from twelve months prior. Farrow noted a shift in who is calling: younger borrowers are now reaching out earlier, before problems become unmanageable, rather than waiting for a crisis. The consumer finance index closed the quarter at 112.5, up 4.5%.
For servicers, the practical implication is straightforward: three independent data sources, LegalShield's call volume, Attom's filing counts and the MBA's delinquency survey, are all moving in the same direction at once. Call-volume data like LegalShield's typically leads formal filings by weeks or months, since borrowers seek advice before a servicer initiates action. A 13-month streak of year-over-year increases in foreclosure inquiries, with September accelerating sharply, suggests the workload pressure is not yet at its peak. The question servicers need to answer now is whether staffing and loss-mitigation capacity is sized for where the numbers appear to be heading, not where they were six months ago.
Source: https://www.nationalmortgagenews.com/news/rising-inflation-drives-requests-for-foreclosure-advice