Single borrowers versus coborrowers in the pandemic: Mortgage forbearance take-up and performance

Abstract

Early in the COVID-19 pandemic, policymakers initiated a forbearance program—that allowed borrowers to pause their mortgage payments—to prevent a large-scale foreclosure crisis. Using detailed loan-level performance data, we study forbearance take-up and subsequent performance among two distinct group of mortgage borrowers: single borrowers versus coborrowers. We provide stylized facts that compared to coborrowers, single borrowers have lower incomes, lower credit scores, higher loan-to-value ratios and higher debt-to-income ratios and are hence more financially vulnerable. We find that single borrowers are more apt to elect forbearance, all else constant. We further find that forbearance had a stronger positive effect on helping single borrowers avoid or recover and exit delinquency than coborrowers.