Mortgage forbearance has been a financial lifeline for many Americans navigating the pandemic-ravaged economy, allowing homeowners to eliminate what is often their largest bill for months at a time. But the relief programs, largely designed to last a maximum of 12 months, are set to expire in the coming months, a serious challenge for borrowers who are still out of work or are earning less than they did pre-pandemic, the Wall Street Journal reported. More than half of 2.7 million active forbearance plans are set to end for good in March, April, May or June, according to mortgage-data firm Black Knight Inc. The federal Cares Act passed last March allowed borrowers to postpone payments on federally backed mortgages for as long as 12 months. About 75% of U.S. mortgages are guaranteed or insured by the U.S. government, according to Black Knight. Close to one in 10 homeowners signed up for forbearance at the peak of the program’s use last June. Like other consumer-relief programs crafted during the pandemic’s early, frenzied days — lenders also let struggling borrowers skip payments on credit cards and auto loans, and the government paused payments on federal student loans — mortgage forbearance was envisioned as a short-term fix, a way to buy time for the economy to recover and consumers to get back on their feet. The agreement has worked for many homeowners. Some paused their payments when they were laid off, then started paying again when they found new jobs. But others are still struggling. Fewer borrowers have exited forbearance plans in recent weeks, and the share of Americans unemployed for more than six months is rising.
