Near the start of 2026, many in the mortgage industry — particularly loss mitigation and quality control personnel — were concerned by a significant spike in delinquency rates on loans insured by the Federal Housing Administration (FHA) since October 2025.
These loans, which were 90 or more days delinquent but not in foreclosure or bankruptcy, had increased sharply, jumping from 3.57% in September 2025 to 5.23% in January 2026.
But the increase was not due to a significant uptick in financial stress among FHA borrowers, explains a report authored by Kavav Bhagat and published by Center for Responsible Lending. Instead, it was caused by a reporting anomaly stemming from an FHA policy change.
In October 2025, the FHA started requiring trial p...