Hidden Truth About Forbearance Numbers in San Jose
Timothy Alston | Broker
Aegis Luxury Real Estate · DRE# 01328224
Published
August 20, 2020
Capital of Silicon Valley
The forbearance numbers that worried housing analysts never hit the catastrophic levels many predicted. Forbearance peaked at 8.6% nationally, well below the feared 30% threshold, and has been falling steadily since. For homeowners in San Jose and across the country, that gap between fear and reality carries serious weight when thinking about what comes next for home equity and market stability.
You know how a rumor can take on a life of its own? Someone says something might happen, and suddenly everyone is bracing for the worst. That is exactly what played out in the mortgage world over the past couple of years. The fear of a foreclosure wave gripped the housing conversation. And if you were watching the market, paying attention to headlines, or trying to decide whether to buy or sell, that fear probably touched your thinking too.
So here is the question worth sitting with: what if the story you were told was significantly more dramatic than the reality that actually unfolded?
What the Forbearance Numbers Actually Showed
Let’s start with where things stood at the peak. Odeta Kushi, Deputy Chief Economist for First American, put it plainly: fears that up to 30% of homeowners would need forbearance, leading to a foreclosure wave, simply did not materialize. Forbearance peaked at 8.6% and has been declining steadily since that peak. According to data from Black Knight, the percentage of homes in active forbearance has continued to fall, dropping to 7.4% and pushing the total number of mortgages in active forbearance under 4 million for the first time in months.
What does that actually mean in practical terms? Active forbearance fell by roughly 71,000 mortgages in a single week during the reporting period. New forbearance requests dropped 10%. Renewals fell by nearly 40%. The trend was not ambiguous. It was clear, consistent, and moving in one direction.
Does that surprise you? If you had been paying attention to the loudest voices in the conversation, it probably does.
The 2006-2008 housing collapse reshaped how an entire generation thinks about real estate risk. Loose lending standards, inflated valuations, and minimal home equity left millions of homeowners with no exit ramp when the market turned. In San Jose, home values fell sharply and recovery took years. That era left a scar in the collective memory of buyers and sellers alike, making the forbearance conversation feel more dangerous than the data ultimately supported.
Why This Crisis Looks Different From 2008
Have you ever stopped to think about why the 2008 crash was as bad as it was? It was not just about job losses. It was about households that had borrowed far more than their homes were worth, with almost no equity cushion when things went wrong. The household debt-to-income ratio was stretched to a breaking point. Lending standards were loose. When prices fell, millions of homeowners found themselves underwater with no good options.
That is not the landscape today. Kushi identified two core reasons why a foreclosure wave comparable to 2008 is unlikely. First, the housing market entered this period on much stronger footing. Household debt-to-income ratios are at a four-decade low. Home equity is near a three-decade high. Lending standards became significantly more rigorous after 2008. Second, this economic disruption hit the service sector hardest, and that sector skews heavily toward renters rather than homeowners. The people most economically stressed are, statistically, less likely to be the ones holding mortgages.
Can you see how that changes the foreclosure calculus entirely?
In the years following the crash, mortgage underwriting became dramatically more conservative. Down payment requirements tightened, income verification became standard, and the exotic loan products that fueled the bubble largely disappeared. For buyers in Santa Clara County, this meant a slower path to homeownership but a far more stable foundation once they got there. The homes that changed hands in this era were purchased by buyers who genuinely qualified, building equity rather than masking risk.
What Happens to Forbearance Numbers When the Programs End?
Here is where the conversation gets important for anyone watching the San Jose homes for sale market. The logical concern is this: when forbearance periods end, do those homeowners flood the market with distressed properties? According to Mortgage Bankers Association data cited by Kushi, the majority of homeowners who used forbearance programs are either staying current on their mortgage or paying off the loan through a sale or refinance. They are not defaulting in large numbers.
Forbearance, in this cycle, functioned more like a temporary pause button than a countdown to foreclosure. That is a meaningfully different outcome than what the worst-case predictions suggested.
What would it mean for your own housing plans if the distressed inventory wave never actually arrived? If you were waiting on the sidelines for prices to drop because of foreclosure pressure, that waiting carries a cost worth examining honestly.
Homeowners who purchased in the years leading into the pandemic entered the forbearance period with a meaningful equity buffer. In the San Jose market, where property values have historically trended upward over any extended holding period, that equity provided options: refinance, sell, or simply wait. The combination of rising values and lower forbearance numbers than expected has kept distressed inventory far below what analysts feared, preserving market stability across Santa Clara County.
The One Real Challenge Still Worth Your Attention
There is a gap in this picture that matters. A recent Fannie Mae study found that many homeowners who could be impacted are simply not aware of the mortgage relief options available to them. The programs exist. The options are real. But awareness is not universal.
If you or someone you know is navigating a situation where forbearance or mortgage relief might be relevant, the gap between knowing your options and not knowing them is not a small gap. It can be the difference between a manageable situation and one that spirals.
What would it be worth to spend thirty minutes understanding exactly what options apply to your specific situation? Not a general overview. Your actual situation, your loan, your equity position, your timeline.
If you have been sitting with questions about the San Jose real estate market, about whether forbearance activity will affect pricing, about whether now is a reasonable time to buy or sell, those questions deserve honest answers based on current data, not headlines from the worst-case scenario conversation.
Timothy Alston, licensed Broker (DRE# 01328224) at Aegis Luxury Real Estate in Cupertino, works with buyers and sellers across the San Jose area. If you would like a straightforward conversation about where the market actually stands and how the forbearance numbers play into your specific situation, reach out at (408) 207-4593. Not a pitch. Just a clear look at the numbers and what they mean for you.
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Broker · DRE# 01328224
Aegis Luxury Real Estate
Harvard Business School Online, Certified Master Negotiation
23+ Years Silicon Valley Real Estate Experience
Retired Military Veteran
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Aegis Luxury Real Estate · Timothy Alston, Broker, DRE# 01328224 · 10080 N. Wolfe Rd Ste SW3-200, Cupertino CA 95014 · (408) 207-4593
Last updated: July 03, 2026 | Data reflects July 2026 MLS statistics
