【Freddie Mac】Mortgage Forbearance and Performance during the Early Months of the COVID-19 Pandemic

During the COVID-19 crisis, mortgage forbearance plans have played an important role in helping households manage their finances by providing short-term liquidity to mortgage borrowers. Mortgage forbearance plans temporarily remove the obligation of borrowers to make their monthly mortgage payment.¹  Forbearance plans are typically used by borrowers who experienced a hardship such as a sudden loss of employment, a reduction in income, or a natural disaster. However, on March 18, 2020, Freddie Mac extended broad mortgage relief to borrowers unable to make their mortgage payments because of COVID-19, regardless of whether or not they have contracted the virus.²  Included among these relief options were forbearance plans that could provide borrowers with payment relief for up to twelve months, while suspending borrower late charges and penalties. Mortgage forbearance peaked in May 2020, with more than 4 million U.S. mortgages in forbearance, which represents about 8% of outstanding mortgages and $1 trillion in mortgage debt.³

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