Let’s face it – life can throw some unexpected curveballs. Whether it’s a job loss, unexpected medical bills, or a natural disaster, financial struggles can happen to anyone. But here’s the good news: if you’re a homeowner feeling the pinch, there’s a helpful option that many people don’t realize is still available – mortgage forbearance.
What Is Mortgage Forbearance?
According to Bankrate:
“Mortgage forbearance is an option that allows borrowers to pause or reduce 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.”
A common misconception is that forbearance was only available during the COVID-19 pandemic. While it played a significant role in helping homeowners through that crisis, forbearance is still available today to support borrowers in times of need. It remains a vital option to help homeowners avoid delinquency and, ultimately, foreclosure.
The Current State of Mortgage Forbearance
Forbearance continues to be a crucial safety net for homeowners facing temporary financial challenges. Although the overall rate of forbearance has seen a slight uptick recently, it’s important to understand what’s driving this change.
According to Marina Walsh, VP of Industry Analysis at the Mortgage Bankers Association (MBA):
“The overall mortgage forbearance rate increased three basis points in November and has now risen for six consecutive months.”
This might sound alarming, but here’s the context. The graph below, which tracks forbearance rates since 2020, helps put things into perspective:
[Graph showing mortgage forbearance rates over time]
While the share of mortgages in forbearance has declined significantly since its peak during the pandemic, there has been a small but notable increase in recent months. This uptick is largely attributed to the impact of recent hurricanes, including Helene and Milton.
Natural disasters like these can create temporary financial hardships, making forbearance an essential tool during recovery. In fact, 46% of borrowers in forbearance today cite natural disasters as the primary reason for their financial struggles.
Even with the recent uptick, the percentage of mortgages in forbearance remains far below pandemic levels and represents a very small portion of homeowners overall.
Why Mortgage Forbearance Matters
Forbearance is more than just a temporary pause on payments. It’s a tool that can help borrowers avoid the downward spiral of missed payments, credit damage, and foreclosure. It provides breathing room to address financial challenges and plan the next steps.
While most homeowners today aren’t in a position to need forbearance, thanks to strong equity and a solid housing market, it remains a critical option for those who do.
If you or someone you know is facing financial difficulties, the first step is to contact your mortgage lender. They can walk you through the forbearance process and explain your options. Remember, forbearance isn’t automatic – you need to apply and discuss the terms with your lender.
Bottom Line
In difficult times, knowing your options can bring peace of mind. Mortgage forbearance isn’t just a financial tool – it’s a lifeline. While recent increases in forbearance rates might make headlines, the truth is that this option is doing exactly what it’s designed to do: helping those who need it most navigate challenging times without losing their homes.
If you have questions about mortgage forbearance or other financial relief options, connect with me today. I’m here to guide you through your options and help you protect your most valuable asset – your home.
