Purpose: Mortgage defaults within a neighborhood may tip the scales whereby a vicious cycle of disinvestment and deterioration in the surrounding neighborhoods begins. This paper aims to examine the impact that mortgage default has on properties in the same ZIP code and neighboring ZIP codes. Design/methodology/approach: Hypothesizing that neighborhoods' susceptibility to cascade failure can be measured by the rate of acceleration of mortgage failures within the neighborhood, the paper introduces a model to investigate whether or not this vicious cycle is such that mortgage failures multiply, and there is a tipping point at which the downward cycle accelerate. Findings: The paper applies the model to data for the Los Angeles metropolitan area for the period 2006-2007 and finds evidence of a tipping point. Research limitations/implications: The paper is limited by the availability of data with respect to both time and space. Practical implications: A failure tipping point will provide a signal that mortgage crisis is pending. Reacting to this signal could allow financial markets to avert such crises in the future. Social implications: Some neighborhoods may resist being labelled as one with significant mortgage failure activity. This resistance may cause a negative reaction to these results and implementation for the findings. Originality/value: To-date, no evidence of a mortgage failure tipping point has been discovered in the literature. © Emerald Group Publishing Limited.