Office of Research blog: How are mortgages with a COVID-related forbearance performing in 2023?

The views expressed here are those of the authors and do not necessarily reflect the views of the Consumer Financial Protection Bureau. Links or citations in this post do not constitute an endorsement by the CFPB.

In response to the COVID-19 pandemic, the federal government enacted the Coronavirus Aid, Relief, and Economic Security (CARES) Act, allowing millions of mortgage borrowers in the United States to enter public or private forbearance programs and temporarily pause their mortgage payments. In reports from May 2021  and March 2022 , the CFPB explored the characteristics and demographics of mortgage borrowers during the COVID-19 pandemic, with a focus on those who were in forbearance.

In this post, we use recent data from the National Mortgage Database  to compare the performance of mortgage borrowers in March 2023 to those in March 2021 that had COVID-related forbearance, were delinquent but not in forbearance, and those considered current on their payments. While we expressed concern in both 2021 and 2022 about borrowers’ ability to recover from periods of forbearance, our most recent analysis shows that the majority of borrowers in forbearance in 2021 – including Black and Hispanic borrowers – were largely able to become current on their payments by March 2023.

Most mortgages in forbearance in March 2021 are current or were closed as of March 2023

In 2021, we found that forbearance and delinquencies were more common among:

• Borrowers who were Black or Hispanic
• Loans with a loan-to-value ratio of 60 percent or higher
• Borrowers living in majority-minority census tracts
• Borrowers living in census tracts with lower relative incomes

In our report the following year, the share of mortgages in forbearance fell significantly between March 2021 and January 2022 for both minority and non-minority borrowers, but Black and Hispanic borrowers were still more likely to be in forbearance at the start of 2022. Looking now at mortgage performance through March 2023, we’ve found that the majority of loans that were in forbearance in March 2021 were either open and current through the beginning of this year or were reported as closed. We also saw that Black and Hispanic borrowers in forbearance in March 2021 were just as likely as white borrowers to be current on their mortgage in March 2023 but were less likely to have closed their mortgage.

Using the National Mortgage Database, we determined performance status for open loans as reported through March 2023, and for closed loans (e.g., from a refinance, home sale, or foreclosure), we searched between March 2021 and March 2023 for the loan’s last reported status before it was closed. Our estimated fraction of mortgages reported as in forbearance in March 2021 is 7.5 percent; for mortgages 60 days or more delinquent in March 2021, it is 0.5 percent.

As shown in Table 1 below, mortgages that were in forbearance in March 2021 are performing much better than loans that were 60 days or more delinquent in March 2021. They’re performing, however, slightly worse than loans that were current in March 2021. Loans in forbearance in March 2021 were also less likely to be closed by March 2023 versus loans that were delinquent or current in March 2021.

TABLE 1: Mortgage Performance Status in March 2023 for Loans in Forbearance, 60+ Days Delinquent, or Current in March 2021

Note: Sample includes mortgages that were opened on or before February 2020 and were identified as having a forbearance, being 60 days or more delinquent, or current (no forbearance or delinquency) in March 2021. Columns may not sum to 100 percent due to rounding. Source: National Mortgage Database.

Among the loans that were in forbearance in March 2021, over 52 percent were current as of March 2023. This share is larger than the 26 percent of loans that were 60 days or more delinquent in March 2021 and current as of March 2023, but slightly smaller than the 58 percent of loans that were current in March 2021 and still current in March 2023.

Compared to loans that were 60 days or more delinquent in March 2021, loans that were in forbearance in March 2021 were less likely to be delinquent, in bankruptcy, or in foreclosure as of March 2023. However, loans that were in forbearance in March 2021 were more likely to be delinquent or in foreclosure in March 2023 compared to loans that were current in March 2021. Loans that were in forbearance in March 2021 were also more likely to report being in forbearance in March 2023 (5.1 percent), versus loans that were delinquent (4.2 percent) or current (0.7 percent) in March 2021.

Mortgages with a missing or suppressed performance status, as of March 2023 were more likely among loans that were in forbearance (2.5 percent) or delinquent (4.8 percent) in March 2021, compared to loans that were current (0.8 percent) in March 2021. This may be explained by credit reporting procedures for loans in forbearance or serious delinquency during the COVID-19 pandemic. The National Mortgage Database documents a variety of reasons mortgage servicers may report loan performance as missing or suppressed such as a natural disaster, a delay when loan servicing changes hands, loans in foreclosure or serious delinquency, or varying payment due dates. Prior to the pandemic, loans with a missing or suppressed performance status were most often indicative of natural disasters.

The majority of closed loans that had a forbearance were current before closing

Another key difference is the share of now-closed loans in March 2023. In Table 1, 36 percent of mortgages in forbearance in March 2021 had closed by March 2023, compared to 46 percent of March 2021 mortgages that were 60 days or more delinquent and 40 percent of mortgages that were current. A closed loan could be a positive outcome, such as a refinance or home sale, but it could also be a negative outcome, such as a foreclosure or bankruptcy. Therefore, for each closed loan in our National Mortgage Database sample, we searched for the loan’s last reported loan performance status before the loan closed, as shown in Table 2.

TABLE 2: Last Reported Mortgage Performance Status for Closed Loans That Were in Forbearance, 60+ Days Delinquent, or Current in March 2021

Note: Sample includes mortgages that were opened on or before February 2020, closed by March 2023, and were identified as having a forbearance, being 60 days or more delinquent, or current (no forbearance or delinquency) in March 2021. Columns may not sum to 100 percent due to rounding. Source: National Mortgage Database.

For mortgage loans that closed between March 2021 and March 2023, 84 percent of closed loans that were in forbearance in March 2021 reported being current before closing. This share is lower than the 98 percent of closed loans that were current in March 2021 and reported being current before closing, but much higher than the 15 percent of closed loans that were 60 days or more delinquent in March 2021 and reported being current before closing. By contrast, among loans that were 60 days or more delinquent in March 2021 and closed by March 2023, 56 percent last reported being 90 or more days past due, 2 percent reported being in bankruptcy, and almost 10 percent reported being in foreclosure. Closed loans that were either in forbearance or current in March 2021 were less likely to report being delinquent, in bankruptcy, or in foreclosure before they closed.

Within the category of closed loans, 11 percent of closed loans with a forbearance in March 2021 were reported as having a missing or suppressed performance status in the last available month reported before closing. For comparison, over 10 percent of closed loans that were delinquent in March 2021 and 0.8 percent of closed loans that were current in March 2021 reported a missing or suppressed performance status. As discussed above, a missing or suppressed performance status may have been reported if the loan was in forbearance or serious delinquency before it closed.

Black and Hispanic borrowers in forbearance performed similarly to white borrowers

Our May 2021 report showed that Black and Hispanic borrowers were more likely to have a mortgage loan in forbearance. Table 3 below compares the post-forbearance mortgage performance of loans that were in forbearance in March 2021, by race and ethnicity of the primary borrower.

TABLE 3: Mortgage Performance Status in March 2023 for Loans in Forbearance in March 2021, by Race and Ethnicity of Primary Borrower

Note: Sample includes mortgages that were opened on or before February 2020 and were identified as having a forbearance in March 2021. Race is defined based on the primary borrower. White is non-Hispanic and white. Black is non-Hispanic and black, including borrowers that reported two races with one being Black. Hispanic is based on reported ethnicity and can be for any race (white, black, or other). Other includes non-Hispanic borrowers reported as American Indian, Asian, Native Hawaiian/Pacific Islander, or multiple races. Columns may not sum to 100 percent due to rounding. Source: National Mortgage Database.

Just over half of all borrowers across race and ethnic groups in forbearance had loans that were open and current as of March 2023. We see that white and other non-Black or Hispanic borrowers in forbearance were more likely to have closed their loan (over 38 percent for both groups) compared to Black (29 percent) and Hispanic (31 percent) borrowers in forbearance. Delinquency rates are low across race and ethnic groups. The statistics in Table 3 show that large shares of borrowers that were previously in forbearance were able to stay current, regardless of the primary borrower’s race or ethnicity, but the lower rate of closed loans among Black and Hispanic borrowers suggests that they were less likely to refinance their mortgage or move to a new home during the COVID-19 pandemic.

We analyzed the last reported status of closed loans that were in forbearance and found that 83 percent of white borrowers, 81 percent of Black borrowers, 85 percent of Hispanic borrowers, and 89 percent of other-race borrowers were current before their mortgages closed. The second most-common status of closed loans previously in forbearance was a missing or suppressed performance status, ranging between 9 and 12 percent across race and ethnic groups.

In our 2021 and 2022 forbearance reports, we expressed concern about borrowers’ ability to recover from an extended period of forbearance and avoid foreclosure. In this post, we have shown that the majority of borrowers, including Black and Hispanic borrowers, who had a mortgage forbearance in March 2021 were current as of March 2023. We also showed that borrowers in forbearance in March 2021 had a much lower likelihood of being delinquent or in foreclosure compared to borrowers who were 60 days or more delinquent in March 2021. Related work on CARES Act forbearances has shown that most borrowers became current by self-curing or curing with assistance , such as with a repayment plan, deferral, or loan modification. The CFPB will continue to monitor how mortgage borrowers are faring as the economic recovery from the COVID-19 pandemic moves forward.