With the sudden and widespread take-up of mortgage forbearance in response to the COVID-19 pandemic, new data were needed to understand the pandemic’s effects on the US housing market. Several data providers responded to this need, providing timely information on mortgage payments that has helped track how households are dealing with the pandemic.

Forbearance rates peaked at 9 percent in late May 2020, before steadily dropping to about 5 percent by the end of January 2021. This decline suggests that households’ overall financial status has improved and that forbearance helped many households at the peak of the crisis.

National delinquency rates also peaked last May at close to 8 percent and declined to about 6 percent by the end of January 2021. However, Black Knight data show that in December 2020, the number of serious delinquencies, loans that are 90 or more days past due, had far exceeded prepandemic levels at 2.15 million, up 400 percent from December 2019. Together, these data show that although fewer loans are becoming newly delinquent, a subset of borrowers is facing real financial trouble.

As the pandemic continues to disrupt people’s lives and livelihoods, policymakers and practitioners need to monitor those who come out of forbearance after the forbearance period ends and renters who cannot make payments. Homeowners who remain in forbearance longer are likely to be financially worse off than those who exited earlier, so they will need more support to resume their mortgage payments. But safety measures such as the loss mitigation waterfall and the home equity buffer are expected to protect even the riskier homeowners in forbearance from foreclosure.

By understanding new and existing housing market data, policymakers can support homeowners, renters, and landlords throughout the pandemic.

Read the full article about deliquency and forbearance rates by Daniel Pang and Jung Hyun Choi at Urban Institute.