Most mortgages in forbearance in March 2021 are either current now or closed: CFPB

Most borrowers who had a mortgage forbearance in March 2021, including disproportionately impacted borrowers of color, were either current or closed as of March 2023. This is according to data released this week by the Consumer Financial Protection Bureau (CFPB) Office of Research.

In the immediate aftermath of the COVID-19 coronavirus pandemic’s onset, the Coronavirus Aid, Relief, and Economic Security (CARES) Act passed in March 2020 allowed millions of U.S. mortgage borrowers to enter public or private forbearance programs, which temporarily paused their mortgage payments.

Recent data from the national mortgage database compares the performance of mortgage borrowers in March 2023 to borrowers in March 2021 who had COVID-related forbearance, were delinquent but not in forbearance, and those considered current on their payments. Over the past two years, the CFPB has been vocal about its concerns regarding forbearance recovery, but the data shows generally positive outcomes.

“While we expressed concern in both 2021 and 2022 about borrowers’ ability to recover from periods of forbearance, our most recent analysis shows that the majority of borrowers in forbearance in 2021 – including Black and Hispanic borrowers – were largely able to become current on their payments by March 2023,” the report said.

In 2021, CFPB found that mortgage delinquencies were most common among Black or Hispanic borrowers; loans with a loan-to-value ratio of 60% or higher; borrowers living in majority-minority census tracts; and borrowers living in census tracts with lower relative incomes.

“[M]ortgages that were in forbearance in March 2021 are performing much better than loans that were 60 days or more delinquent in March 2021,” the CFPB found. “They’re performing, however, slightly worse than loans that were current in March 2021. Loans in forbearance in March 2021 were also less likely to be closed by March 2023 versus loans that were delinquent or current in March 2021.”

Among loans in forbearance in March 2021, more than 52% were current as of March 2023, a larger share than the 26% of loans that were 60 days or more delinquent two years prior. Generally, the positive outcomes are clear, the Bureau said.

“[T]he majority of borrowers, including Black and Hispanic borrowers, who had a mortgage forbearance in March 2021 were current as of March 2023,” the data said. “We also showed that borrowers in forbearance in March 2021 had a much lower likelihood of being delinquent or in foreclosure compared to borrowers who were 60 days or more delinquent in March 2021.”

Related research on CARES Act forbearances has illustrated that most borrowers became current either by self-curing or curing with assistance, including entering into a repayment plan, deferral or loan modification.

“The CFPB will continue to monitor how mortgage borrowers are faring as the economic recovery from the COVID-19 pandemic moves forward,” the report said.

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