Ready for surging short sales in 2027?

A rapidly rising number of underwater homeowners who are also behind on mortgage payments means short sales will likely be rising in the next 12 months. Mortgage servicers are already starting to proactively prepare for the coming surge. There were 320,000 homes nationwide with both negative equity — where the estimated value of the home is worth less than the outstanding mortgage balance — and where the borrower was behind on mortgage payments as of August 2026, according to data from Intercontinental Exchange (ICE). That was more than double the 163,000 from a year earlier. Additionally, ICE reported that 813,000 total homes were underwater — had negative equity — as of August, up by 250,000 (44%) from a year ago. An analysis of public record data from Cotality shows the number of negative equity homeowners increasing by more than half a million between July 2025 and September 2026, a 20% increase. The same data shows more dramatic increases for certain loan types: Underwater mortgages insured by the Veterans Administration (VA) rose 44%, while underwater mortgages insured by the Federal Housing Administration (FHA) rose 38%. The number of underwater mortgages was up 7% for conve...