Forbearance Numbers Are Lower Than Experts Forecasted
August 27, 2020
The real estate and mortgage industries have been closely watching the national forbearance numbers since the onset of the COVID-19 pandemic. Early in 2020, many financial analysts predicted a significant surge in forbearance requests—far higher than what actually occurred. The expectation was that millions of households would struggle to make their mortgage payments, potentially causing a ripple effect across the housing market.
However, to the surprise of many experts, the number of homeowners entering forbearance has remained well below initial forecasts, and that trend has continued steadily. This is positive news for homeowners, future buyers, and the overall stability of the U.S. housing market. It highlights resilience, adaptability, and the effectiveness of government-backed assistance programs that helped cushion families during a challenging economic period.
Why the Forecasts Were So High
When the pandemic began, unemployment rose sharply and economic uncertainty increased across nearly all sectors. Many analysts feared homeowners would quickly fall behind on mortgage payments. Forecasting models—built during past downturns—projected a much more severe impact.
Experts believed that forbearance rates could climb into double digits nationwide, mirroring patterns seen during the Great Recession. They factored in:
-
Rapid job losses
-
Business closures
-
Reduced income across households
-
Economic instability in service and hospitality industries
-
Potential long-term financial strain for small businesses
With these indicators, analysts prepared for worst-case scenarios.
Why Forbearance Rates Have Been Lower Than Forecasted
As the months progressed, several factors helped stabilize the situation and kept forbearance numbers significantly lower:
1. Government Relief and Policy Support
Federal stimulus programs, expanded unemployment benefits, PPP loans for businesses, and mortgage forbearance options under the CARES Act helped households stay financially afloat. These programs provided breathing room and prevented many from falling behind on payments.
2. A Stronger Housing Market Than Expected
Unlike the 2008 housing crisis, home values during the pandemic continued to appreciate. Many homeowners had equity in their homes, giving them more options and less need for distressed-sale alternatives.
3. Fast Recovery in Several Employment Sectors
Although some industries struggled, others rebounded quickly. Many workers were able to transition to remote employment, reducing the projected long-term income loss.
4. Mortgage Servicers Improved Communication
Lenders and servicers did a better job this time with outreach, guidance, and flexibility. Homeowners were able to access information, request help, and arrange plans that aligned with their financial situations.
5. Homeowners Are More Educated About Forbearance Options
The messaging around forbearance—particularly emphasizing that it is not loan forgiveness—helped homeowners make informed decisions. Many used forbearance only when necessary, preventing a surge of blanket requests.
What This Means for Homeowners Today
Lower-than-expected forbearance numbers point to a more stable real estate market, one that continues to show strength despite economic shifts. If you are a homeowner concerned about your financial future, this trend may offer some reassurance. It suggests:
-
The housing market is holding strong
-
Home values remain stable or rising in many areas
-
Fewer homeowners are struggling than originally predicted
-
Options exist for those who still need temporary relief
The most important message is that you have options—and the earlier you explore them, the more solutions may be available.
Considering Forbearance? Here’s What You Should Know
Forbearance can be a helpful tool, but it should be approached carefully. It’s important to understand:
-
Forbearance does not erase your payments—it temporarily pauses them.
-
You must repay the missed payments through a repayment plan, loan modification, or extension.
-
Each lender has specific guidelines for reinstatement after the forbearance period.
-
Communication with your mortgage servicer is essential to avoid misunderstandings.
Before entering forbearance, review your current financial situation, your long-term plans, and the potential impact on future home purchases or refinancing.
If You’re Coming Out of Forbearance
Many homeowners who entered forbearance early on have already exited the program and returned to making regular payments. If you’re reaching the end of your forbearance period, consider:
-
Asking your servicer about repayment options
-
Reviewing loan modification programs
-
Checking whether refinancing is possible
-
Evaluating how much equity you have in your home
In many cases, homeowners are in a stronger position than they expect.
Let’s Connect
Understanding mortgage relief, forbearance, and your long-term housing options can be challenging—especially when markets move quickly. If you’re unsure about your next steps or want a personalized review of your situation, I’m here to help.
Let’s connect today so we can walk through your options and determine the best path forward for you and your family. Whether you’re considering buying, selling, refinancing, or simply exploring solutions during financial uncertainty, you don’t have to navigate it alone.
