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Collection: On Point
Unlike during the Great Recession, the recent surge in severely delinquent residential mortgages is not expected to result in widespread foreclosures. Past financial crises reinforced the principle that policies to keep homeowners in their homes benefit both borrowers and lenders. Therefore, forbearance policies at the start of the COVID-19 pandemic helped stave off a repeat of the housing crisis. For example, policy actions by Congress provided relief to all federally insured or guaranteed mortgages, which cover most higher-risk borrowers. Private mortgage lenders followed suit with deferral or forbearance options. Some vulnerability exists for the roughly 650,000 federal borrowers who are behind in payments and not enrolled in forbearance, but these borrowers also have greater levels of home equity than in the past. Nonfederal borrowers may face greater challenges but are a much smaller proportion of the housing market.