Why the Forbearance Program Changed the Housing Market
When the pandemic hit in 2020, many experts braced for another housing market crash. With widespread job loss and economic uncertainty, it seemed inevitable that millions of homeowners would fall behind on their mortgage payments—potentially triggering a wave of foreclosures similar to what we saw after the 2008 housing crisis.
But something different happened this time. The forbearance program stepped in and changed the trajectory of the housing market entirely. It provided critical relief for struggling homeowners, helping them avoid foreclosure and maintain stability during one of the most uncertain times in recent history.
How the Forbearance Program Worked
The mortgage forbearance program allowed homeowners affected by the pandemic to temporarily pause or reduce their mortgage payments without penalty. This gave nearly five million homeowners the time and flexibility they needed to recover financially—at a time when keeping a roof over their heads was more important than ever.
Instead of facing immediate foreclosure, homeowners could work directly with their lenders on repayment plans or adjustments. According to the Mortgage Bankers Association (MBA):
“Most borrowers exiting forbearance are moving into either a loan modification, payment deferral, or a combination of the two workout options.”
In other words, the majority of homeowners didn’t lose their homes—they found solutions.
In fact, four out of every five homeowners who entered forbearance either paid in full or exited with a plan in place to stay current on their loans. That’s a huge success story compared to the housing crash of 2008, when many borrowers had no safety net at all.
What This Means for Today’s Housing Market
Because so many homeowners were able to stay in their homes, we’re not seeing a flood of foreclosures hitting the market. While foreclosure activity has risen slightly since the end of the moratorium, it remains far below the levels seen during the last housing crisis.
Another key difference is that lending standards are much stricter today. Buyers are more qualified, with better credit and stronger financial profiles. This means fewer risky loans and a more stable housing market overall.
Homeowner Equity Is a Game Changer
Even for those who are still struggling financially, there’s another layer of protection in place: record-high home equity.
Many homeowners today have built up significant equity in their properties thanks to years of rising home prices. This gives them options that simply didn’t exist during the housing crash. If they can no longer afford their mortgage, they can often sell their home and avoid foreclosure altogether.
Because there’s still an undersupply of homes on the market, sellers can typically find buyers quickly—often walking away with cash in hand instead of debt.
The Bottom Line
The forbearance program didn’t just help individual homeowners—it helped stabilize the entire housing market. By giving millions of people time to recover and explore repayment options, it prevented another foreclosure crisis and kept home values strong.
Combined with stricter lending practices and historically high homeowner equity, today’s housing market is built on a much more solid foundation than it was in 2008.
So while economic uncertainty still exists, one thing is clear: the lessons learned—and the safeguards implemented—since the last housing crash have made a lasting difference.
