April 2025 Mortgage Delinquency and Forbearance Analysis

As of April 2025, mortgage delinquency rates in the United States have shown modest increases across various sectors. This report provides a comprehensive analysis of these trends, comparing current figures to historical highs observed during the 2008 financial crisis. Additionally, we examine the impact and effectiveness of COVID-19 forbearance programs in mitigating delinquencies and preventing foreclosures, with a particular focus on the Chicagoland area.

Residential Mortgage Delinquency Rates

In the fourth quarter of 2024, the delinquency rate for mortgage loans on one-to-four-unit residential properties rose to a seasonally adjusted 3.98% of all loans outstanding. This marks an increase of 6 basis points from the previous quarter and 10 basis points from the same period in the prior year. Notably, the delinquency rate for Federal Housing Administration (FHA) loans increased by 57 basis points to 11.03%, while Veterans Affairs (VA) loans saw a 12 basis point rise to 4.70%. Conventional loan delinquencies remained relatively stable, decreasing by 1 basis point to 2.62% (MBA).

By February 2025, the national delinquency rate edged up by 5 basis points to 3.53%. This represents a 19 basis point increase year-over-year but remains 32 basis points below pre-pandemic levels. The big story within this article is FHA mortgages accounted for 90% of the 131,000 year-over-year rise in delinquencies, despite constituting less than 15% of all active mortgages.

Commercial and Multifamily Mortgage Delinquency Rates

The commercial mortgage-backed securities (CMBS) sector experienced fluctuations in delinquency rates. In February 2025, the overall CMBS delinquency rate decreased by 26 basis points to 6.30%, marking the second consecutive month of decline after a six-month period of increases. The office sector notably contributed to this improvement, with its delinquency rate falling by 45 basis points to 9.78%. Likley due to the current return to the office push.

However, other sectors within commercial real estate faced challenges. In the fourth quarter of 2024, delinquency rates increased across most capital sources, except for life company portfolios, which saw a slight decrease. Banks and thrifts experienced a 0.02 percentage point rise to 1.26%, while CMBS delinquencies increased by 0.63 percentage points to 5.78%.

Comparison to the 2008 Financial Crisis

To contextualize current delinquency rates, it’s informative to compare them to the peaks observed during the 2008 financial crisis. At that time, delinquency rates surged dramatically, with subprime adjustable-rate mortgages experiencing delinquency rates exceeding 25% by early 2008. In contrast, the current overall mortgage delinquency rate of approximately 3.53% remains significantly lower than the crisis-era highs.

Visualizing Delinquency Rate Trends

The following chart illustrates the trajectory of mortgage delinquency rates from 2000 through 2025, highlighting the sharp increase during the 2008 financial crisis and the subsequent stabilization in recent years:

Source: ConsumerAffairs

Impact and Effectiveness of COVID-19 Forbearance Programs

The COVID-19 pandemic prompted the implementation of widespread mortgage forbearance programs under the CARES Act, allowing borrowers to temporarily pause or reduce their mortgage payments. At the peak in May 2020, approximately 8% of outstanding mortgages, representing over 4 million loans, were in forbearance (Freddie Mac).

These programs were instrumental in preventing a foreclosure crisis during the pandemic. Research indicates that forbearance provided essential liquidity to households, allowing many to remain in their homes despite financial hardships. The availability of forbearance during the pandemic increased house price growth by 0.6 percentage points between April and August 2020, relative to the same period in 2019, by limiting the effect of labor market weakness on housing supply.

Furthermore, the majority of borrowers who entered forbearance were able to resume regular payments or negotiate repayment plans, thereby avoiding foreclosure. By the seventh month after entering forbearance, about half of the mortgages were current, while approximately 40.7% were 90 or more days delinquent, indicating a need for continued assistance for some borrowers.

However, challenges remain. Despite the successes of the CARES Act Mortgage Forbearance Program, past due rates remain higher for minority and lower-income borrowers, underscoring the need for continued support and targeted assistance (Federal Reserve Bank of Cleveland).

Regional Focus: Forbearance Programs and Mortgage Delinquency in the Chicagoland Area

While national trends paint a relatively optimistic picture for mortgage recovery post-COVID, the impact in Chicago and its surrounding suburbs reveals a more nuanced story. Early in the pandemic, Chicago saw an elevated risk of delinquency due to a high concentration of FHA-backed loans and a large population of service-industry workers who were most vulnerable to job loss. According to the Federal Reserve Bank of Chicago, mortgage delinquencies in Cook County peaked at over 10% in mid-2020, significantly higher than the national average (Chicago Fed).

Local forbearance efforts proved to be a stabilizing force. Programs such as the Illinois Emergency Homeowner Assistance Fund (ILHAF) provided up to $30,000 per household in relief, directly reducing the number of foreclosures filed in Chicago in 2021 and 2022. Data from the Institute for Housing Studies at DePaul University shows that more than 70% of program participants were able to either bring their mortgages current or establish a repayment plan within six months of exiting forbearance (DePaul IHS).

Despite these efforts, gaps remain. Delinquency rates remained disproportionately high in historically disinvested neighborhoods such as Englewood and North Lawndale, where homeowners faced more persistent economic challenges. Many local experts argue that while forbearance offered immediate relief, it failed to address structural inequities in housing finance—meaning Chicago’s recovery, while on track, is uneven across racial and economic lines.

For Chicagoland realtors, this underscores the importance of providing buyers and sellers with current, localized data. Understanding how these programs played out across different zip codes empowers real estate professionals to better advise clients, particularly first-time buyers and homeowners emerging from hardship.

Conclusion

The COVID-19 forbearance programs have been largely effective in providing temporary relief to borrowers facing financial hardships, thereby preventing a surge in foreclosures and stabilizing the housing market during an unprecedented economic downturn. By allowing borrowers to defer payments without immediate penalty, these programs offered critical liquidity and helped many households remain in their homes. The positive impact on housing stability and property values underscores the success of these interventions.

However, the effectiveness of forbearance programs varied among different demographic groups. While many borrowers successfully exited forbearance and resumed regular payments, certain populations, particularly minority and lower-income borrowers, continued to experience higher rates of delinquency. This suggests that while forbearance provided short-term relief, it did not uniformly address underlying financial vulnerabilities.

In assessing whether forbearance programs merely delayed inevitable foreclosures or genuinely assisted borrowers, the evidence leans toward the latter. A significant number of borrowers utilized forbearance as a bridge during temporary hardships and were able to recover financially, thus avoiding foreclosure. Nonetheless, for a subset of borrowers, forbearance may have postponed rather than prevented foreclosure—highlighting the ongoing need for long-term housing policy solutions that extend beyond temporary relief.

Author Credit:
By David & Candy Goddard, Top-Ranked Realtors – #youget2forthepriceof1

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