Mortgage Forbearance: A Helpful Option for Homeowners Facing Challenges

Mortgage Forbearance: A Helpful Option for Homeowners Facing Challenges

Life can be unpredictable, and financial challenges like job loss, unexpected expenses, or natural disasters can happen to anyone. If you're a homeowner facing financial difficulties, there’s good news: mortgage forbearance is still an option that could provide the relief you need.

What Is Mortgage Forbearance?

As Bankrate explains:

“Mortgage forbearance is an option that allows borrowers to pause or lower their mortgage payments while dealing with a short-term crisis, such as a job loss, illness or other financial setback . . . When you can’t afford to pay your mortgage, forbearance gives you a chance to sort out your finances and get back on track.”

Many people mistakenly believe that mortgage forbearance was only available during the COVID-19 pandemic. While it was widely used to support homeowners during that time, it’s important to know that forbearance is still an option today. It continues to serve as a valuable tool to help borrowers facing financial hardship avoid delinquency and, ultimately, foreclosure.

The Current State of Mortgage Forbearance

Forbearance remains a critical safety net for homeowners dealing with short-term financial difficulties. Recently, there has been a slight uptick in forbearance rates, but understanding the factors behind this shift provides valuable context. Marina Walsh, Vice President 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, an increase in forbearance rates might raise concerns, but it’s important to take a closer look. When viewed in context with historical data, the graph below—tracing trends back to 2020—offers valuable perspective:

While the percentage of mortgages in forbearance has dropped significantly since its peak in mid-2020, there has been a slight uptick in recent months. This increase is primarily linked to the aftermath of two recent hurricanes—Helene and Milton.

Natural disasters often lead to temporary financial challenges for homeowners, making forbearance an essential tool for recovery. In fact, 46% of borrowers currently in forbearance cite natural disasters as the reason for their financial difficulties.

Despite this recent rise, the overall share of mortgages in forbearance remains far below pandemic levels and represents only a small portion of homeowners nationwide.

Why Forbearance Matters

Forbearance offers a way for borrowers to avoid the downward cycle of missed payments and foreclosure, giving them time to address financial challenges and plan their next steps. While the majority of homeowners today are in a strong position, supported by substantial equity and a stable housing market, forbearance remains a critical lifeline for those who need it.  

If you or someone you know is experiencing financial difficulties, the first step is to reach out to the mortgage lender. They can guide you through the forbearance process and help outline available options. Remember, forbearance isn’t automatic—you’ll need to apply and work with your lender to determine the terms.

Bottom Line

In challenging times, understanding your options can provide a sense of relief. Forbearance isn’t just a financial tool—it’s a lifeline for homeowners facing temporary hardships. While recent headlines may highlight a slight increase in forbearance rates, the reality is that this option is fulfilling its purpose: supporting those who need it most during tough moments and helping them keep their homes.