Let’s be honest—life can be unpredictable. From job losses and surprise expenses to natural disasters, financial challenges can affect anyone. But here’s the silver lining: if you’re a homeowner feeling the pressure, there’s a resource many people overlook that’s still accessible—mortgage forbearance.
What Is Mortgage Forbearance?
As Bankrate explains:
“Mortgage forbearance allows borrowers to temporarily pause or reduce their mortgage payments during a short-term crisis, such as job loss, illness, or other financial hardship . . . When you’re unable to afford your mortgage, forbearance provides an opportunity to regain financial stability and get back on track.”
Many people mistakenly believe that forbearance was only available during the COVID-19 pandemic. While it was a crucial lifeline during that time, what’s often overlooked is that forbearance is still an option for borrowers facing financial challenges. Today, it remains a valuable resource to help homeowners in certain situations avoid delinquency and, ultimately, foreclosure.
The Current State of Mortgage Forbearance
Forbearance remains a crucial safety net for homeowners experiencing temporary financial difficulties. While the overall forbearance rate has seen a slight uptick recently, it’s essential to understand the factors behind this trend and how it fits into the bigger picture.
Marina Walsh, VP of Industry Analysis at the Mortgage Bankers Association (MBA), explains:
“The overall mortgage forbearance rate increased three basis points in November and has now risen for six consecutive months.”
At first glance, this might seem concerning, but let’s take a closer look. The graph below, which tracks data back to 2020, helps provide a clearer perspective.
Although the percentage of mortgages in forbearance has dropped significantly since its peak in mid-2020, there has been a slight but noticeable increase in recent months. This rise is primarily linked to the impact of two recent hurricanes—Helene and Milton.
Natural disasters like these often lead to temporary financial hardship for homeowners, making forbearance an essential safety net during the recovery process. In fact, 46% of borrowers currently in forbearance attribute their financial difficulties to natural disasters.
Despite the recent uptick, the share of mortgages in forbearance remains far below pandemic levels and continues to represent only a small fraction of homeowners overall.
Why Forbearance Matters
Forbearance offers borrowers a crucial opportunity to avoid missed payments and the risk of foreclosure. It provides temporary relief, allowing time to navigate financial challenges and plan the next steps. While most homeowners today don’t require forbearance—thanks to strong equity and a solid housing market—it remains a vital option for those who do.
If you or someone you know is experiencing financial hardship, the first step is to reach out to your mortgage lender. They can guide you through the forbearance process and explain your available options. Remember, forbearance isn’t automatic—you must apply and discuss the terms with your lender.
Bottom Line
During challenging times, understanding your options can provide peace of mind. Forbearance isn’t just a financial tool—it’s a safety net. While recent increases in forbearance rates may grab headlines and raise concerns, the reality is that this option is functioning exactly as intended: offering critical support to those in need, helping them navigate financial hardships without risking their homes. If you ever need help with these options, get in touch with us.
