Rising inflation drives requests for foreclosure advice

• What’s at Stake: Mortgage servicers may need to plan for an incoming wave of distressed borrower workloads if prior trends are any indication.
• Expert Quote: “the strain has moved past worry and into action” — Matt Layton, LegalShield
• Supporting Data: Foreclosure call numbers increased on a year-over-year basis for a 13th straight month.

Overview bullets generated by AI with editorial review.

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Mortgage borrowers expressed rising worries about potential foreclosures on their homes during the third quarter, with the trend, alongside ongoing overall consumer stress levels, revealing pockets of risks for servicers. 

For servicers of all types of loans, the numbers might raise warnings about rising workloads in the months ahead, according to LegalShield, a platform that works with inbound callers looking for advice and assistance.

“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, senior vice president of consumer analytics at LegalShield, in a press release.

Foreclosure inquiries accelerated 14.8% on a year-over-year basis to end the third quarter, according to the company’s consumer stress index. The foreclosure component of its index clocked in at a score of 52.6, with readings based on the number of logged calls requesting legal assistance. 

While activity eased marginally from the second-quarter level, calls showed volatility spiking sharply in September after a pullback in July and August, as consumer prices ate into homeowner budgets, LegalShield said. Between August and September, requests for assistance jumped 7.8% to send the index surging.

Foreclosure call numbers have now risen year over year for 13 straight months, LegalShield said.

“The homeowners calling us budgeted and did the right things, but inflation is eating into their income, and then, their insurance doubled,” Ben Farrow, an advising attorney, said in the press release.

“They’re not buying Porsches and ribeyes. Things just cost too much, and there’s not much left in the piggy bank,” he continued.

In May, the foreclosure index hit a reading of 54.7, its highest since March 2020. LegalShield’s data typically serves as a signal of upcoming distressed mortgage volume, as reported by industry research groups. 

Backing up the findings, the most recent monthly foreclosure research from real estate data provider Attom showed filings rising 13% from August 2025. At the same time, the Mortgage Bankers Association’s second-quarter delinquency report showed distress levels rising 44 basis points from a year earlier, also in line with LegalShield trends.

While it attributed the prior quarter’s activity in part to expiring relief measures for Federal Housing Administration-backed mortgages, LegalShield pegged the jump in the following three months solely to other factors: home insurance and tax bills eating into borrowers’ ability to pay alongside consumer prices.

Consumer stress aligns across the board

Foreclosure inquiries aligned to overall consumer-stress call activity. LegalShield’s composite index, which combines foreclosure, bankruptcy and consumer finance volume, also hit its highest mark since 2020, rising 6.3% over a year ago to a reading of 75.7.

The latest number sustains a streak of 27 months where the consumer legal stress index has increased year over year. The current streak is only outpaced by a run between 2006 and 2009 during the Great Recession. 

“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.”

Calls regarding bankruptcy drove that particular component to 39.5 by the end of September, up 4.8% from 12 months earlier. The consumer finance index finished at 112.5, up by 4.5%.

Of particular note among bankruptcy inquiries are the ages of callers, demonstrating the extent of consumer stress today, Farrow added. Younger callers, though, are trying to get ahead of issues before they become unmanageable. 

“Bankruptcy calls used to come mostly from older, more established people, often after an injury or job loss,” he said. “Now we’re hearing from younger people who are calling sooner, while their problems are smaller and easier to fix.”