Mortgage Forbearance: A Helpful Option for Homeowners Facing Challenges

Life can throw unexpected challenges our way, whether it’s a job loss, unexpected expenses, or natural disasters. For homeowners, financial struggles can feel overwhelming, but there’s a lifeline many may not realize is still available: mortgage forbearance.

What Is Mortgage Forbearance?

Mortgage forbearance allows homeowners to pause or reduce their mortgage payments during short-term financial crises, such as job loss, illness, or other setbacks. 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 mistakenly believe that forbearance was only available during the COVID-19 pandemic. While it was a critical resource then, it remains a valuable tool for homeowners facing hardships. Real estate professionals, including our team, understand the importance of this option in helping homeowners avoid delinquency or foreclosure.

The Current State of Mortgage Forbearance

Mortgage forbearance continues to serve as a safety net for homeowners experiencing temporary financial difficulties. Recently, the overall rate of forbearance has seen a slight increase, which highlights its role in providing relief during times of need.

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 increase, while modest, is largely attributed to natural disasters like Hurricanes Helene and Milton. These events often lead to temporary financial hardships, emphasizing the importance of forbearance as a recovery tool. In fact, 46% of current borrowers in forbearance cite natural disasters as the cause of their financial struggles.

Even with this recent uptick, the overall share of mortgages in forbearance remains significantly lower than its peak in mid-2020, reflecting a small portion of homeowners overall.

Why Forbearance Matters for Chicago Homes

Forbearance offers homeowners an opportunity to regroup financially and avoid the damaging cycle of missed payments and foreclosure. While most homeowners benefit from the current strong equity and housing market, forbearance remains a crucial option for those facing unexpected challenges.

MPG is here to support homeowners navigating these decisions. If you or someone you know in the Chicago area is struggling, reaching out to a trusted real estate professional can provide clarity on your options.

What Should You Do Next?

The first step for any homeowner facing financial hardship is to contact their mortgage lender. Lenders can walk you through the forbearance process, helping you understand your options and how to proceed. Remember, forbearance isn’t automatic; you must apply and agree to terms with your lender.

Bottom Line

Forbearance isn’t just a tool; it’s a lifeline for homeowners in need. At MPG, real estate professionals is dedicated to supporting Chicago homeowners in safeguarding their properties and finding solutions. Connect with us---we’re happy to help you navigate and know your options, because protecting your home matters...