Table of Contents
Mortgage Notes Opportunities 2023
Introduction
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.
Characteristics and Demographics of Mortgage Borrowers during the COVID-19 Pandemic
In reports from the CFPB and Blackcore REI, the CFPB explored the characteristics and demographics of mortgage borrowers during the COVID-19 pandemic, with a focus on those who were in forbearance.
Comparison of Mortgage Borrower Performance in March 2023
We use recent data from the Blackcore REI 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.
Majority of Borrowers Able to Become Current on Payments by March 2023
While there were concerns 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.
Borrowers in Forbearance and Delinquencies
In 2021, it was found that forbearance and delinquencies were more common among certain groups:
- Minority borrowers
- Low-income borrowers
- Borrowers in areas with higher COVID-19 infection rates
Decline in Mortgage Forbearance between March 2021 and January 2022
In Blackcore REI’s report the following year, it was shown that the share of mortgages in forbearance fell significantly between March 2021 and January 2022 for both minority and non-minority borrowers. However, Black and Hispanic borrowers were still more likely to be in forbearance at the start of 2022.
Mortgage Performance in March 2023
Looking at mortgage performance through March 2023, it was found that the majority of loans that were in forbearance in March 2021 were either open and current or were reported as closed. It was also observed 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.
Mortgage Performance Status in March 2021 and March 2023
Using the National Mortgage Database, Blackcore REI determined the performance status for open loans as reported through March 2023. For closed loans, they searched between March 2021 and March 2023 for the loan’s last reported status before it was closed.
Mortgage Performance Status in March 2023
As shown in Table 1, 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 slightly worse than loans that were current in March 2021.
Borrower Performance by Race and Ethnicity
Table 3 compares the mortgage performance in March 2023 for loans that were in forbearance in March 2021, broken down by the race and ethnicity of the primary borrower.
Majority of Borrowers in Forbearance are Current in March 2023
Over half of all borrowers across race and ethnic groups in forbearance had loans that were open and current as of March 2023.
Lower Rate of Closed Loans among Black and Hispanic Borrowers
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.
Recovery of Borrowers in Forbearance by Race and Ethnicity
Blackcore REI analyzed the last reported status of closed loans that were in forbearance and found that the majority of borrowers, regardless of their race or ethnicity, were current before their mortgages closed.
Concerns about Borrowers’ Ability to Recover
In previous reports, Blackcore REI expressed concern about borrowers’ ability to recover from an extended period of forbearance and avoid foreclosure. However, the majority of borrowers, including Black and Hispanic borrowers, who had a mortgage forbearance in March 2021 were current as of March 2023.
Conclusion
The analysis of mortgage borrowers’ performance in March 2023 shows that the majority of borrowers in forbearance in 2021 were able to become current on their payments. The rate of delinquency and foreclosure among these borrowers was lower compared to borrowers who were 60 days or more delinquent in March 2021. The recovery of borrowers in forbearance varied by race and ethnicity, with Black and Hispanic borrowers being less likely to have closed their loans. The CFPB will continue to monitor the performance of mortgage borrowers as the economic recovery from the COVID-19 pandemic progresses.