Foreclosures Hit a Six-Year High — And It's Insurance, Not the Mortgage

The May 4 WSJ noted that U.S. foreclosure filings rose 28% year-over-year in March to a six-year high. The headline is alarming. The mechanism is mostly insurance and property tax, not mortgage stress. For California homeowners specifically, this matters.

What's actually causing it

Foreclosure inputs nationally:

• Mortgage delinquencies are up modestly — not at crisis levels.
• Property taxes are up 18–35% in many fast-growth states (TX, FL, AZ) since 2022.
• Homeowner insurance premiums are up 25–60% in CA, FL, and LA over three years.
• The combined "TI" (taxes + insurance) line of a mortgage payment in 2026 is, in some ZIPs, equal to the principal-and-interest line.

People aren't failing to pay their mortgages. They're failing to pay the escrow shortfall when their carrier ratchets the premium up 30%.

The California-specific picture

California foreclosures are running below the national pace. Two reasons:

• Strong appreciation has built equity cushions for most owners (70%+ have 30%+ equity).
• Prop 13 caps property-tax increases at 2% per year for existing owners.

But the picture is uneven. New buyers post-2020 in high-cost ZIPs (LA, Orange County, Bay Area) bought near peak prices, refinanced into rates above 6%, and are now hit with insurance ratchets. They have less equity cushion. The risk is concentrated in this cohort.

Action items

• Audit your homeowner insurance dec page. If your dwelling limit is below replacement cost, your renewal premium will spike again.
• If you're escrow-pay, ask your servicer for an escrow analysis after each renewal. Don't wait for the surprise.
• If you're struggling: most servicers have a Loss Mitigation department that will offer a forbearance or modification before they file. Call them before you miss two payments, not after.
• For investors: the multi-family rental market in fast-growth states is starting to see distressed inventory. Watch but don't front-run.