Are Foreclosures Rising in California? Why It’s Not a 2008-Style Wave (2026)

Lately I’ve been getting the same question from homeowners, past clients and even friends: “Jack, I keep seeing headlines about foreclosures going up. Is another 2008 coming?”

It’s a fair question. The headlines are real. But when you look past them, the picture is a lot calmer than the news makes it sound. Let me walk you through what’s actually happening, both nationally and right here in LA and Orange County.

Are foreclosures rising in California?

Yes, filings are up. Here’s what the national data shows:

• Nationally: 40,277 properties had a foreclosure filing in August 2026, up 13% from a year earlier (ATTOM).
• First half of 2026: 227,548 properties nationwide, up 21% from the first half of 2025 (ATTOM).
• California: 21,543 properties had a filing in the first half of 2026, up about 13%. That’s roughly 1 in every 680 homes (ATTOM).

So if someone tells you foreclosures are rising, they’re right. But “rising” and “a wave” are two very different things.

What’s happening with foreclosures in LA and Orange County?

This is where it gets interesting. I track the monthly number of Notices of Default (the first public step in a California foreclosure) filed in Los Angeles and Orange County. Here’s what this summer looked like compared with last year:

In other words, while filings are rising nationally and across California, defaults in LA and Orange County were about 30% lower this summer than last summer. To be fair, September in Orange County was up (46 vs. 25). But these are small numbers, and the three-month trend in both counties points down, not up.

Keep in mind that a Notice of Default doesn’t mean someone loses their home. Many owners catch up, work something out with their lender, or sell before it ever gets that far.

Is a foreclosure wave coming like 2008?

Based on today’s numbers, I don’t see one. Here’s why.

1. Foreclosure levels are still below normal

Even after this year’s increase, ATTOM says overall foreclosure activity “remains below pre-pandemic norms.” ICE reports that 0.53% of mortgages were in active foreclosure in mid-2026, still below the 0.57% level before COVID. The national delinquency rate was 3.55%, lower than the 4.16% of June 2019. Part of today’s increase is simply a return toward normal after several unusually quiet years.

2. Most owners have real equity

This is the biggest difference from 2008. Back then, millions of owners owed more than their homes were worth, so when they couldn’t pay, they had no way out.

Today, the average homeowner with a mortgage has about $310,000 in equity nationally and $623,000 in California (Cotality, Q2 2026). Only about 2% to 3% of mortgages are underwater, depending on how you measure it (Cotality and ATTOM).

Why does that matter? An owner with equity who runs into trouble can usually sell on the open market and walk away with money, instead of going through a foreclosure. That’s exactly what keeps a rise in filings from turning into a flood of distressed homes.

3. About half of mortgages carry rates under 4%

Roughly half of all U.S. mortgages had rates below 4% in late 2025, according to FHFA data reported by Wolf Street. With today’s rates above 7% (Freddie Mac’s average was 7.32% on October 22, 2026), those owners have very low payments compared with what it would cost to rent or buy again. That makes them far less likely to fall behind.

Who is really at risk of foreclosure or a short sale?

The pressure is concentrated in one group: people who bought in roughly the last two to four years.

• Loans originated in 2022 or later make up nearly 35% of homes in active foreclosure (ICE). These are owners who bought at higher rates and have seen limited price growth since.
• Many bought with small down payments, at higher rates, near the price peak. Buyers from 2020 hold about $86,000 more equity than buyers from 2023 (Cotality).
• Since then, property taxes, insurance and, for condo owners, HOA dues have kept climbing.

If one of these owners loses a job or faces a big expense, there may not be enough equity to sell for a profit after closing costs. That’s when a short sale, or in some cases a foreclosure, becomes possible.

I recently helped a family in that situation close a short sale in La Habra. You can read how that short sale came together, and why starting early made the difference.

But here’s the key point: this group is a small part of the overall market. Most owners in Diamond Bar, Chino Hills, Walnut, Brea and Yorba Linda have owned for years and have meaningful equity.

Will home prices drop if foreclosures rise?

A small rise in foreclosures usually doesn’t move prices much on its own. Prices fall hard when lots of distressed homes hit the market at once, and that’s not what the data shows today. Where you may see softness is in specific segments, like condos with HOA challenges or areas with many recent buyers. I wrote more about the outlook in Will Home Prices Drop in 2027? As always, no one can predict prices with certainty.

What should I do if I’m falling behind on my mortgage?

If you’re feeling pressure, the most important thing is to act early. In my experience, the earlier you look at your options, the more of them you have.

1. Call your lender before you fall further behind. Ask about repayment plans, modifications or forbearance.
2. Talk with a HUD-approved housing counselor. Their help is free.
3. Find out what your home is worth today. If you have equity, selling on the open market usually protects far more of it than waiting.
4. If you owe more than the home is worth, ask about a short sale. It requires lender approval and takes time, so starting early matters.

I’m not a lender, attorney or tax advisor. For questions about your loan, your legal rights or tax consequences, please talk with those professionals. I’m glad to help with the real estate side.

Frequently asked questions

Disclaimer: This article is for general informational purposes only and is not legal, tax, lending or financial advice. Sources: ATTOM foreclosure reports (August 2026 and mid-year 2026) and Q2 2026 home equity report; Cotality Q2 2026 home equity report; ICE Mortgage Monitor as reported by HousingWire (August 2026); FHFA data as reported by Wolf Street (January 2026); Freddie Mac PMMS. LA and Orange County Notice of Default counts are from a monthly title-data report and may be revised. If you are behind on payments, please contact your lender, a HUD-approved housing counselor, or a qualified attorney. No outcome or price is guaranteed.