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After Forbearance: A Return to Normalcy

December 21, 2021

DS News

As a mortgage provider, you may find yourself working with customers who have exited mortgage forbearance and are facing difficulties paying back what they owe, especially during the past year.

As a result of the COVID-19 pandemic, total outstanding U.S. consumer debt skyrocketed $800 billion, reaching around $14.9 trillion in total in 2020. It’s also estimated that the average American has $90,460 in debt. This includes all types, from credit cards and personal loans to student loans and mortgages.

Credit Karma survey of more than 1,000 homeowners in forbearance in April 2021 found that 31% used the extra funds for groceries, medical costs, and pandemic-related expenses like homeschooling supplies, and 32% saved the extra money by putting it into an emergency fund or savings account.

When it comes to COVID-19-related forbearances specifically, 591,000 of the 5.7 million homeowners who have exited the program were delinquent on payments as of June 2021, a number that’s only expected to rise, as this figure is already three times the pre-pandemic rate.

This article originally appeared on DS News. Read the full article here.