Mortgage Forbearance on the Rise: What It Means & What To Do

If you’re seeing headlines about mortgage forbearance on the rise, it’s natural to worry. The good news is that forbearance levels today are far below pandemic peaks. The caution: pockets of stress do pop up after disasters, job losses, or rate shocks—so being prepared matters. As of spring 2025, the Mortgage Bankers Association (MBA) reported that 0.36% of loans were in forbearance—down from 0.40% in January—while a prior bump to 0.34% in September 2024 demonstrated how quickly conditions can change.

Below is a practical, borrower-first guide that aligns evergreen basics with current rules, options, and next steps—so you know exactly what to do if mortgage forbearance on the rise becomes your reality.

Key Takeaways:

• Mortgage forbearance on the rise doesn’t always mean trouble. National levels remain low, but some states and loan types see short-term bumps after job losses, disasters, or higher escrow costs.
• Forbearance is a pause, not forgiveness. You still owe the skipped payments, but there are several safe ways to repay them without making a lump sum payment.
• Your exit plan matters most. Repayment plans, payment deferrals, FHA partial claims, and loan modifications are all designed to help you catch up without losing your home.
• Credit damage can be avoided. If you follow your forbearance agreement, many servicers won’t report late payments—but always confirm in writing.
• Talk to your servicer early. The sooner you reach out about hardship, the more options you have and the smoother your exit will be.
• Stay informed—but don’t panic. Headlines about mortgage forbearance on the rise are a reminder to stay financially prepared, not a sign that most homeowners are at risk.
• You’re not alone. If you’re unsure which path—repayment, deferral, partial claim, or modification—is right for you, a mortgage expert can walk you through the best option for your situation.

Is Mortgage Forbearance Increasing?

Nationally, forbearance remains very low by historical standards. MBA’s monthly monitoring showed 0.47% in December 2024, 0.40% in January 2025, 0.38% in February, and 0.36% in March—a steady drift lower. That said, some months (like September 2024) showed upticks as certain borrower segments or geographies were hit by localized shocks.

Why you still see “mortgage forbearance on the rise” in headlines:

• Local spikes in forbearance rates can occur after severe weather, wildfires, or industry layoffs, even when national numbers remain steady.
• Program changes (e.g., FHA loss-mitigation updates) can temporarily shift how servicers categorize hardship assistance.

Bottom line: national levels are low, but mortgage forbearance on the rise can be true in specific areas or loan types at any given time.

What’s Driving the Increase Right Now

Even with mild national levels, these factors can nudge mortgage forbearance on the rise locally:

• Income shocks: layoffs, reduced hours, or seasonal work gaps.
• Disasters, such as storms and fires, can trigger short-term forbearance surges.
• Escrow strain: property tax and insurance spikes make payments harder, especially with still-elevated mortgage rates relative to pre-2022 norms.

Forbearance vs. Forgiveness: Know the Difference

Forbearance is not forgiveness. It’s a temporary pause or reduction in payments; you still owe the skipped amounts later. The CFPB’s plain-English definition remains the gold standard: you pause, then repay under an exit plan. That core concept hasn’t changed.

How Forbearance Works (Eligibility, Term Lengths, Escrow)

• Eligibility & request: You contact your servicer and explain your hardship. For federally backed loans (FHA, VA, USDA, Fannie Mae, Freddie Mac), servicers follow program rules that have evolved since the COVID-19 pandemic.
• Term lengths: Today, terms are determined by investor/insurer guidelines (not the blanket CARES Act window used during 2020-2021). FHA/VA/Fannie/Freddie each maintain hardship options; FHA refined them again in 2025.
• Escrow items continue: Servicers typically advance property taxes and homeowners’ insurance for escrowed loans during forbearance. You’ll reconcile any escrow shortage at exit. (This is why widespread spikes can strain servicer liquidity.)

Your Options After Forbearance

When mortgage forbearance on the rise touches your household, your exit plan matters more than the pause itself. Common paths include:

Repayment Plan (Short-Term Catch-Up)

You pay your regular payment plus an agreed-upon amount until the missed sums are repaid. Suitable for short gaps in income.

Payment Deferral / Partial Claim (Move Amounts to the Back)

For FHA loans, updated 2025 guidance keeps the Standalone Partial Claim in effect: missed principal/interest/taxes/insurance advances can be moved to a junior, interest-free lien due at payoff or maturity, not immediately. This keeps the monthly payment stable. Conventional loans may offer a similar deferral that pushes arrears to the end of the loan.

Loan Modification (Change the Terms)

If affordability is tight after hardship, your servicer may modify the loan—adjusting rate/term to reach a sustainable payment under current investor rules. FHA announced updated servicing and loss-mitigation training in late 2025 to help servicers consistently execute these options.

Myth check: Lump-sum “balloon due immediately” at exit is not the default outcome under today’s federal programs. Always ask your servicer for all available options.

Credit Reporting, Late Fees, and Refinance Timing

• Credit reporting: During an accommodation, federal guidance under the CARES Act required furnishers to report accounts as current if they were current at the time of the accommodation and the borrower met the terms of the agreement. While pandemic-era rules have sunset, the principle is instructive; confirm with your servicer how your account will be reported under today’s hardship option.
• Late fees & interest: Program rules generally waive late fees during approved forbearance, and interest accrues as if payments were made as scheduled for many federally backed programs—ask your servicer to confirm specifics for your loan type.
• Refinancing: Lenders often require that you exit forbearance and make a certain number of on-time payments before a new loan. Policies vary by investor and product—so align your exit plan with your timeline to refi.

How Servicers and Bond Markets Handle Forbearance

When borrowers pause payments, servicers still advance principal/interest to bond investors and cover escrow. In modest amounts, that’s routine. When mortgage forbearance on the rise spikes quickly (as in 2020), it can strain servicer liquidity and ripple through pricing in mortgage-backed securities—occasionally nudging rates or overlays. Today’s much lower base level reduces that systemic risk, but localized spikes still require careful management.

Step-by-Step: How to Request (and Exit) Forbearance

1. Call your servicer first. State your hardship, ask which forbearance and loss-mitigation options fit your loan (FHA, VA, USDA, Fannie, Freddie, or portfolio).
2. Confirm in writing. Request a written summary of terms: start/end dates, what’s paused, treatment of escrow, and how missed payments will be handled at exit.
3. Set your exit path now. Ask whether you’ll be eligible for a deferral/partial claim or a modification, and what documents you’ll need.
4. Protect your credit. Ask how the servicer will report during and after the arrangement; keep all correspondence.
5. Budget for escrow. Expect an escrow shortage reconciliation later; plan for a repayment plan or deferral to avoid an unexpected payment increase.
6. Re-evaluate monthly. If income recovers, you can shorten the forbearance or switch to a repayment track early to minimize arrears.
7. Exit on time. Before the end date, finalize your chosen deferral/partial claim/repayment/mod so you don’t fall into delinquency.

Final Word

Even when you read that mortgage forbearance on the rise, remember that most borrowers won’t need it—and those who do have multiple exit paths to protect their homes and credit. If hardship strikes, act promptly, document everything, and plan your exit strategy from day one. If you need some help figuring out the best way to tackle your loan—whether it’s repayment, deferral/partial claim, or modification—Gustan Cho Associates can guide you through the choices that work for your loan type and timing.

Frequently Asked Questions About Mortgage Forbearance on the Rise:

What Does Forbearance Actually Mean?

Forbearance refers to a temporary suspension or reduction in your mortgage payments for a specified period. It’s not forgiveness—you’ll still owe the skipped amounts later.

Why Do I Keep Seeing Headlines About Mortgage Forbearance on the Rise?

Because certain areas or loan types may experience short-term spikes after job losses, disasters, or significant escrow increases. National levels are low, but local bumps still happen—hence “mortgage forbearance on the rise” stories.

Do I have to Repay Everything in One Lump Sum When the Forbearance Ends?

Usually no. Most lenders offer options like a repayment plan, payment deferral, or (for FHA) a partial claim that moves what you owe to the end of the loan.

Will Forbearance Wreck My Credit?

If you follow the agreement with your servicer, many programs avoid late-pay hits during the forbearance period. Always ask your servicer how they’ll report it and get it in writing.

How do I Start Forbearance if I’m Struggling Right Now?

Call your loan servicer (the company you pay each month). Explain your hardship and ask what forbearance and exit options you qualify for.

What Happens to My Property Taxes and Insurance While I’m in Forbearance?

If you have an escrow account, your servicer usually advances those bills. Later, you may encounter an escrow shortage that can be addressed through a plan or deferral.

Can I Refinance After Forbearance?

Often yes—after you exit forbearance and make a certain number of on-time payments. Ask your servicer and lender about their exact rules and timelines.

How Long Can Forbearance Last?

It depends on your loan type and investor rules (FHA, VA, USDA, Fannie Mae, Freddie Mac, or portfolio). Terms are set on a case-by-case basis today, not like the one-size-fits-all COVID programs.

What if My Income is Still Tight When Forbearance Ends?

Ask about a loan modification. Your lender may adjust your rate or term so that the payment fits your budget, rather than forcing a big catch-up.

When Should I Worry About Mortgage Forbearance on the Rise?

You don’t need to panic. Use the headlines as a reminder to review your budget and contact your servicer early if you’re experiencing financial difficulties. Having a plan—repayment, deferral/partial claim, or modification—matters more than the headline.

This article about “Mortgage Forbearance on the Rise: What It Means & What To Do” was updated on November 12th, 2025.