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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.

CBL & Associates Properties Inc. yesterday urged a bankruptcy judge to reject senior lenders' efforts to assert control over the mall operators' assets and operations, saying that its ability to reorganize in chapter 11 is at stake, Reuters reported. The statements from CBL attorney, Ray Schrock of Weil Gotshal & Manges, came during opening arguments in a virtual trial before Chief U.S. Bankruptcy Judge David Jones in Houston over lender claims that a series of alleged defaults on the loan documents gave them the right to take over certain subsidiaries and collect revenues directly from tenants. Wells Fargo & Co., which heads up the lender group and is represented by Jones Day, claims that CBL did not have the authority to file for bankruptcy and is looking to have the case thrown out. The case is now a showdown between the lenders and the company, which said it was forced to seek bankruptcy to protect itself and its assets from Wells Fargo. Chattanooga-based CBL filed for chapter 11 protection in November following months of COVID-19-related economic turmoil for its retail tenants and Wells Fargo's allegations of default on a $1.1 billion loan. The company, which was one of the first major mall operators to seek bankruptcy since the onslaught of the pandemic, reported $4 billion in debt and a restructuring support agreement with holders of its $1.4 billion in unsecured notes. Under the noteholder-backed restructuring agreement, CBL would reduce its debt load and preferred obligations by $1.5 billion.

For all the talk of workers fleeing pricey coastal cities such as New York and San Francisco, one of the most troubled spots in the U.S. commercial real estate market is deep in the heart of Texas, Bloomberg News reported. Houston ended last year with a 24% office-vacancy rate, the highest of any major U.S. city, according to Jones Lang LaSalle Inc. After years of construction to accommodate an oil boom that’s now gone bust, buildings are sitting empty, values are plunging and mortgage defaults are piling up. The COVID-19 pandemic is only accelerating the real estate distress in America’s energy capital. Office tenants vacated a net 3.2 million square feet (300,000 square meters) last year, and there’s 3.1 million square feet of new top-tier space set to be completed over the next 18 months. 

Knotel has filed for chapter 11 protection in Delaware court after the WeWork rival was pressured by the coronavirus, Bloomberg News reported. The company, which manages and rents short-term office space, has had to grapple over the past year with companies and governments mandating that workers stay at home. It listed both estimated liabilities and assets of $1 billion to $10 billion. The company has obtained debtor-in-possession financing from an affiliate of Newmark of about $20 million in cash. In March of last year, New York-based Knotel said it was cutting or furloughing half of its staff, or about 200 workers, in response to the coronavirus.