Let’s face it: life throws curveballs. One minute you’re sipping iced coffee on your patio, the next you’re Googling “how to stop a foreclosure with zero dollars and a prayer.” Mortgage forbearance might not be magic, but it’s about as close as it gets when your bank account is crying and your lender is knocking.
So… What Is Mortgage Forbearance?
Imagine your mortgage saying, “Hey buddy, I’ll chill for a bit while you get your life together.” That’s forbearance.
Basically, you hit pause (or slow-mo) on your mortgage payments for a short time, while you handle unexpected drama — like a job loss, medical emergency, or a hurricane deciding your roof looked too good to leave alone. You don’t get off scot-free, though. This is a delay, not a delete. You’ll still owe those payments later, but it’s better than drowning now.
Remember 2020? (We’re Sorry.)
COVID-19 kicked off the Great Pause of Everything, including mortgages. Thanks to the CARES Act, millions of homeowners got temporary forbearance. Translation: "Pay us later, we know the world is on fire."
Unlike the 2008 disaster (when lenders offered all the compassion of a brick wall), this time we learned our lesson. Most folks who took forbearance bounced back, avoided foreclosure, and lived to refinance another day.
Fast forward to 2025: forbearance is now down to just 0.36% of the mortgage market. That’s right — we’re no longer on fire. Just… simmering slightly.
Who Gets to Use the “Pause” Button?
This isn’t a free-for-all. To qualify for forbearance, you’ve gotta be able to say, “Hey, I’m having a temporary crisis here.” That includes things like:
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Natural disaster turned your home into a splash pad
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Medical bills so high you're on a first-name basis with your billing department
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Lost your job (but not your will to fight)
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Divorce (let's not go there)
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Death of a co-borrower (heartbreaking, but eligible)
Your lender decides if you qualify — and no, you can’t just ghost them. Call before you miss a payment, or you’ll end up with a credit score shaped like a sad emoji.
How to Apply Without Losing Your Mind
Here's your to-do list:
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Call your mortgage servicer. Yes, with a real phone. No, they won’t text you back.
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Get your paperwork together: mortgage statement, proof of hardship, and your budget (including how much you’re spending on oat milk and streaming subscriptions).
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Be honest. Be clear. And ask smart questions like:
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“How long is the forbearance period?”
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“Do I have to pay anything during it?”
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“Are you telling credit bureaus I’m poor?”
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“How the heck do I repay all this later?”
Repayment: Pay Now, Pay Later, or Just… Pay Eventually
You’ve got options, none of which include “never paying again.”
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Lump Sum (Reinstatement): You win the lottery or get an insurance payout? Great! Pay it all back in one chunk and be free.
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Installments: Like a payment plan, but more stressful because now your monthly bill is chonkier.
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Deferral: Push the missed payments to the end of your loan. You’ll pay more in interest over time, but hey, Future You can deal with it.
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Loan Modification: Like a mortgage makeover for when you know you’re not bouncing back soon.
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Sell the House: If it’s all too much, cash out, pay off the debt, and start fresh somewhere cheaper (and maybe less humid).
Forbearance vs. Deferment: Let’s Not Confuse the Two
Forbearance is like a timeout. Deferment is like telling your mortgage, “We’ll talk later, much later.” Deferments might last longer, sometimes up to 36 months, and often kick in as part of your forbearance exit strategy.
Think of deferment as your backup plan’s backup plan.
Will This Wreck Your Credit?
Short answer: probably not — unless you botch the whole process.
If you get approval and stick to the terms, you’re golden. Some lenders may report your forbearance, but it won’t hit your score like a missed payment or a foreclosure would. Foreclosure is the credit equivalent of a dumpster fire. Forbearance is more like calling a time-out before things get ugly.
What Does This Mean for the Housing Market?
Contrary to doom-and-gloom headlines, forbearance hasn’t ruined real estate. If anything, it’s helped save it.
During the pandemic, forbearance stopped what would’ve been a foreclosure tsunami. In fact, research says around 500,000 people avoided foreclosure in one quarter of 2020 alone thanks to it. (That’s half a million homes not sitting empty and dragging down property values. Yay!)
Forbearance + Home Selling = Extra Paperwork (But Still Doable)
Selling while in forbearance? Totally possible. Just know:
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Your payoff amount may be higher (those paused payments come back with interest).
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Tell your real estate agent. Seriously. We’re not mind readers.
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If your home is worth more than you owe, you’re in luck — equity to the rescue.
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If you owe more than it’s worth, you may need to look into a short sale or a “deed in lieu” situation (basically, giving the house back like a rental car with no gas).
Buyer Confidence and Market Vibes
Too many forbearance cases in one zip code? It might spook buyers. They might think, “What’s wrong with this place?” That’s why it’s important to keep things transparent, realistic, and backed by real numbers (and maybe a fresh coat of paint).
The Bottom Line (Aka, Why This Actually Matters)
According to the National Bureau of Economic Research, 94% of mortgage defaults are tied to loss of income. If forbearance can stop that train before it hits foreclosure station, it’s worth it.
During COVID, millions took advantage of forbearance and dodged disaster. Compared to 2008, this was basically the glow-up of mortgage crisis management.
As the JPMorgan Chase Institute bluntly put it: "Whether this works depends on what happens when forbearance ends." And they’re right. The exit strategy is everything — whether that’s deferment, modification, or moving on.
Moral of the Story:
Life’s messy, money’s tight, and mortgages don’t care — but forbearance gives you a fighting chance. Use it wisely, ask the right questions, and don’t ghost your lender. They hold the keys... literally.
