Foreclosures Are Up 57% Year-Over-Year: 3 Reasons a Sale-Leaseback Is Your Best Defense in Early 2026

The numbers are in and they are alarming. According to ATTOM's January 2026 Foreclosure Market Report, completed foreclosures surged nearly 59% year-over-year as we enter 2026, with overall foreclosure filings up 32% from a year ago. This marks the eleventh straight month of year-over-year increases, driven by a painful convergence of persistent high interest rates, softening property values, and tightening credit conditions. Homeowners and small business property owners who locked in equity during the pandemic boom are now watching that equity evaporate and their mortgage obligations become increasingly difficult to service.

If you own real estate and feel the pressure mounting, you are not alone. But you may have more options than you think.

One powerful but underutilized strategy gaining serious momentum is the Sale-Leaseback, a transaction where you sell your property to an investor and simultaneously lease it back, remaining in your home while unlocking your equity in cash.

^{"A sale-leaseback lets you turn your biggest illiquid asset into cash, without packing a single box."}

Below, we break down the foreclosure crisis gripping early 2026, and explain the three most compelling reasons a sale-leaseback may be the smartest move you can make right now.

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THE FORECLOSURE CRISIS AT A GLANCE

The spike is not isolated to one region or property type. According to ATTOM CEO Rob Barber, "Foreclosure starts were up 26 percent from a year ago, while completed foreclosures increased nearly 59 percent." States leading the surge include Delaware, Nevada, Florida, South Carolina, and Maryland, but the trend is national. Foreclosure starts also rose in California, Texas, and Florida, which topped the country for volume.

For owners sitting on equity , even diminished equity,  the window to act proactively is narrowing fast. Once a Notice of Default is filed, your negotiating leverage drops significantly. CBS News has covered how rising insurance costs, property taxes, and elevated interest rates are the key forces pushing homeowners into default, a combination that isn't expected to ease significantly through 2026.

Reason #1: You Preserve Occupancy While Eliminating Mortgage Risk

The most immediate fear for any property owner facing financial stress is displacement, the thought of losing not just your investment, but your home or place of business. This is what keeps people from exploring options until it's too late.

A sale-leaseback solves this problem directly. As LendEDU explains, the process works in four straightforward steps:

• Step 1: You sell your property to a qualified investor or institutional buyer at a negotiated price.
• Step 2: You sign a lease agreement,  typically 1 to 5 years with renewal options, allowing you to remain in the property.
• Step 3: You receive the net sale proceeds in cash, free and clear of your mortgage obligation.
• Step 4: You continue operating from the same location, with no forced move, no disruption, and no foreclosure on your record.

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For a homeowner facing foreclosure, this means the difference between a distressed forced sale, often at 70 to 80 cents on the dollar at auction, and a voluntary, dignified transaction on your terms, at or near fair market value. And unlike a HELOC, reverse mortgage, or home equity loan, you take on no additional debt.

^{A clean voluntary sale protects your credit, your timeline, and your peace of mind. A foreclosure auction protects none of those things.}

Reason #2: You Unlock Equity Before Values Fall Further

Timing is everything in real estate. While national median home values remain historically elevated compared to pre-pandemic levels, the trajectory in many markets is downward and the correlation between rising foreclosure volume and declining local property values is well-documented.

When foreclosed properties flood a market, they create comparable sale data that pulls all valuations down. Your neighbor's distressed sale becomes the appraisal reference for your property. According to Nolo's analysis of foreclosure trends, factors such as surging insurance premiums, elevated interest rates, climbing HOA fees, and reduced buyer demand are all contributing to a growing housing crisis that is likely to persist through 2026.

The longer you wait, the less your equity is worth, even if you ultimately avoid foreclosure yourself. Consider two scenarios for a property owner with a home currently worth $500,000 and a $320,000 mortgage balance:

The math is stark. Additionally, Commercial Property Executive notes that with capital markets stabilizing and institutional buyers returning in 2026, owner-occupiers are in a favorable position to capture value right now,  before the foreclosure wave further compresses local valuations. Acting proactively dramatically outperforms the alternative.

‍Reason #3: You Buy Yourself Time: The Most Valuable Asset of All

Financial crises rarely resolve overnight. Whether your stress stems from a job loss, a business slowdown, a balloon payment coming due, or simply the cumulative weight of a high-rate mortgage, what most people need most is runway.

A sale-leaseback gives you exactly that. Here is what time buys you:

• Your immediate mortgage obligation disappears. Monthly cash flow improves the day the transaction closes. 
• A clean voluntary sale leaves your credit score intact. According to Experian, a foreclosure stays on your credit report for seven years from the date of the first missed payment, severely limiting your ability to borrow, rent, or qualify for business credit.
• With cash in hand and no forced timeline, you can evaluate your next steps, whether that's renting long-term, buying again when rates improve, or redeploying capital into your business.
• A foreclosure can disqualify you from purchasing another property for 3 to 7 years. The CFPB confirms this timeline, and even FHA loans require a 3-year minimum waiting period after foreclosure. A sale-leaseback creates no such barrier.

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Think of it this way: a sale-leaseback doesn't end your story with your current property. It writes a bridge chapter, one that keeps you in control, keeps you housed, and keeps your financial future open. As Blue Owl Capital notes, a sale-leaseback can unlock 85-90% of your property value, compared to just 50–65% from traditional mortgage financing.

_{"The best financial decisions are made from a position of stability, not desperation. A sale-leaseback can restore that stability before it's too late."}

Is a Sale-Leaseback Right for You?

A sale-leaseback is not a one-size-fits-all solution, but it is particularly well-suited for:

• Homeowners with meaningful equity (typically 20%+ above the mortgage balance) who are struggling to make monthly payments
• Property owners facing balloon payment deadlines or adjustable-rate reset events in 2026
• Anyone who has received a Notice of Default but has not yet entered the foreclosure auction process, once that process begins, options narrow quickly but S2R can still help you out. 

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If you fall into any of these categories or simply feel the early warning signs of financial stress, the time to explore this option is now, not after a default has been recorded.

What to Look for in a Sale-Leaseback Partner

Not all sale-leaseback arrangements are created equal. Matthews Real Estate notes that creating competition among buyers, rather than accepting a single direct offer, results in an average 10% higher purchase price. As the property owner, due diligence matters. Look for:

• Transparent, fair valuations based on current market comparables, not lowball investor offers
• Flexible lease terms with reasonable renewal rights and rent escalation caps
• A reputable buyer with a track record of honoring leaseback agreements and treating occupants fairly

The Window Is Open, But Not Indefinitely

Foreclosure surges historically run in waves. The data from ATTOM's Year-End 2025 Report shows foreclosure filings were up 14% for the full year 2025, and January 2026 data shows the pace is accelerating. Analysts at HousingWire report that FHA borrowers face additional vulnerability as new loss-mitigation rules strain both servicers and distressed borrowers, meaning this trend has further to run before it stabilizes.

The irony of financial distress is that the best solutions are almost always available before the crisis reaches a breaking point and become far more limited after. A sale-leaseback is a tool that requires equity to work. Every month that passes in a deteriorating market, or a month closer to a foreclosure filing, is a month that may erode the equity that makes this option viable.

If your property represents your largest asset and your financial situation is anything less than rock solid, the smartest thing you can do today is speak with a qualified sale-leaseback specialist. Understanding your options costs nothing.

 Explore resources like HUD's free housing counseling services as a starting point. But don't wait  the foreclosure process is designed to move fast, and your response to it should move faster.

^{"Don't let inaction make your decision for you. The foreclosure process is designed to move fast — your response to it should move faster."}

That's Exactly Why We Built Sell2Rent

We're not a bank. We're not a lender. We don't offer you another loan to solve a loan problem. Sell2Rent was built from the ground up to give homeowners one thing: a dignified way out that keeps them in their home.

Our platform connects you directly with vetted cash investors who compete for your property, so you get a fair, market-driven offer, not a lowball take-it-or-leave-it number. Once the sale closes, you sign a lease and stay put. No packing. No moving trucks. No disruption to your kids, your job, or your life. Just cash in hand and a mortgage payment you never have to make again.

We've helped homeowners facing foreclosure, divorce, job loss, ballooning medical bills, and retirement uncertainty, all without forcing anyone out of the home they love. And unlike a reverse mortgage that traps you with debt and strips 40–60% of your equity, we unlock your property value and transfer every future repair bill, tax payment, and insurance premium to the investor. You walk away clean.

^{"Foreclosure is a process that moves fast and shows no mercy. The homeowners who act today are the ones who land on their feet tomorrow. Don't become a statistic."}

The window is open. Your equity exists today. The second the foreclosure clock starts, options disappear. With 59% more completed foreclosures already on the books this January versus last year, there has never been a more urgent time to understand what your home is worth and what you can do with that value before it's too late. See exactly how Sell2Rent works 

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