Homeowners who lost jobs or saw their hours reduced during the pandemic were allowed to pause monthly mortgage payments by entering a forbearance period. For some, that protection ends after September and as of the end of March, 2.5 million homeowners were still in forbearance, per the Mortgage Bankers Association
With home prices reaching new highs, few homeowners today owe more on their homes than their properties are worth. Plus, the nation is in the throes of a historic housing shortage, so any homes that go on the market are likely to be snapped up quickly. So if homeowners can't make their mortgage payments, they can take another path, one far less painful than foreclosure: sell, often at a hefty profit. President Joe Biden may also continue to extend the forbearance period.
“Right now, we’re at very low housing inventory rates, just a record low,” says Marina Walsh, vice president of industry analysis at the Mortgage Bankers Association. That means homes are selling quick, often for well over the asking price as buyers compete over them. "There’s just not enough housing out there for the demand, which is a big, big change from the Great Recession.”
But that doesn't mean that financially squeezed homeowners are out of the danger zone yet—even if they don't go through foreclosures. The percentage of homeowners who are seriously behind on mortgage payments or in foreclosure was an astonishing 245% higher in February 2021 than it was in February 2020, according to the data firm Black Knight.