It is important to know that life is not always smooth sailing, and sometimes we do experience some challenges that can affect our finances, such as losing a job, having to pay expensive medical bills, or even facing natural calamities like tornadoes, floods, earthquakes, and fires like we just experienced in LA. Fortunately, there’s still hope for San Diego homeowners and anyone facing challenges and needing assistance. Many people aren’t aware of a powerful option called “mortgage forbearance.” This tool offers short-term relief during financial hardships and can be a critical first step toward regaining financial stability and staying on track with your homeownership goals.
What Is Mortgage Forbearance?
For homeowners going through financial difficulties, mortgage forbearance can be a powerful option that lets them temporarily stop or lower their mortgage payments.
As a recent Bankrate article 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 forbearance was only available during the COVID-19 pandemic. They often don’t realize that this option is still accessible and remains a valuable resource for homeowners. During the pandemic, it played a critical role in helping borrowers stay afloat, but it continues to assist those facing financial difficulties today. Forbearance allows borrowers to avoid delinquency and, in the worst cases, foreclosure. This tool serves as a vital lifeline for San Diego homeowners during unexpected challenges, offering a way to safeguard your home and regain financial stability.
The Current State of Mortgage Forbearance
Mortgage forbearance continues to act as a vital safety net for homeowners facing temporary financial hardships. While the rate of forbearance has experienced a slight uptick recently, understanding the reasons behind this change helps provide important context.
As Marina Walsh, Vice President of Industry Analysis at the Mortgage Bankers Association (MBA), notes:
“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 worrisome, but looking at the broader picture paints a clearer story. The graph below, which tracks data back to 2020, shows how far we’ve come.
Forbearance rates have dropped significantly since their peak during the height of the pandemic in mid-2020. However, the slight increase in recent months can be largely attributed to the impact of two major hurricanes—Helene and Milton and, at the time of this blog post, the LA fires. Natural disasters often leave homeowners grappling with unexpected financial challenges, making forbearance a critical resource during recovery. In fact, 46% of borrowers currently in forbearance cite natural disasters as the primary reason for their financial strain.
Even with the recent uptick, the share of mortgages in forbearance remains far below pandemic levels and reflects a very small percentage of homeowners overall. For San Diego residents, this underscores how forbearance can serve as a crucial lifeline during temporary financial setbacks, whether caused by personal challenges or broader events.
Why Forbearance Matters
This is especially helpful for any homeowner facing financial difficulties and at risk of missing payments or, worst of all, foreclosure. A temporary pause or reduction in mortgage payments, called forbearance, can help borrowers in this situation. Equity and stability in the current housing market have left most homeowners in a position where they do not need forbearance. However, for those facing financial difficulty, forbearance is still useful for protecting their homes and financial situations.
If you or someone you know is struggling to keep up with mortgage payments, the first and most important step is to contact your mortgage lender. They can guide you through the forbearance process and outline your available options. Remember, forbearance isn’t automatic—you must apply and discuss the terms directly with your lender. Taking that proactive step can make all the difference in navigating temporary financial setbacks.
Bottom Line
Having the right options available for homeowners during tough times can be a great source of comfort. Mortgage forbearance isn’t just another financial tool—it’s a lifeline for homeowners facing temporary hardships. Rising forbearance rates, as reported by recent headlines, may seem concerning. Still, forbearance is doing exactly what it is supposed to do: supporting those who need it most and assisting them through the tough times without the threat of losing their homes.