The Hidden Risk When Homeowners Leave Forbearance in Saratoga
Timothy Alston | Broker
Aegis Luxury Real Estate · DRE# 01328224
Published
January 27, 2021
Wine country elegance in the foothills
When homeowners leave their forbearance plans, the outcome is far better than most people expect. According to Black Knight, Inc., of the roughly 3.72 million borrowers who have already exited forbearance, only 116,000 (about 2%) left while still behind on payments. The vast majority resolved their situation through repayment plans, payoffs, or simply staying current throughout the program.
You know how it goes. You hear the word “forbearance” and a picture forms in your head: missed payments, foreclosure notices, neighborhoods in distress. And if you have been watching the Saratoga market, maybe you have wondered whether a wave of distressed properties is about to hit. A lot of homeowners are asking the same question right now. But here is the part most people have not stopped to think about yet: the data tells a very different story than the one circulating in the headlines.
So what does your housing situation actually look like right now? Are you a homeowner trying to figure out what the market does next? A buyer waiting on the sidelines, hoping prices drop? Whatever your position, this is worth understanding before you make any move.
Why Most Homeowners Leave Their Forbearance Plans in Better Shape Than Expected
Have you ever stopped to think about what it actually means when a homeowner exits a forbearance plan? Most people assume the worst. But the Black Knight data paints a much clearer picture.
Of the 6.48 million households that entered forbearance due to COVID-19 financial hardship, here is where things stood when many began leaving their forbearance plans:
- 39% left the program while current on their payments
- 9% paid off their mortgages entirely
- 7% negotiated a repayment plan and exited successfully
- 35% extended their original plan
- 8% remained in their original forbearance plan
- 2% left the program still behind on payments
Does that surprise you? Because for most people, it does. The narrative around forbearance has been heavy with fear. But only 2% of those who have already left the program were in a genuinely troubled position. That is not a crisis. That is a manageable number.
What About the Homeowners Still Inside Their Forbearance Plans?
Here is where the real question sits. About 2.77 million borrowers were still inside a forbearance program when this data was compiled. What happens to them? And what does that mean for housing inventory in a market like Saratoga?
Three things stand between these borrowers and a foreclosure wave that would rival 2008:
First, nearly 30% of borrowers still inside forbearance have continued making payments throughout. They enrolled in the program as a precaution, not out of desperation.
Second, lenders have strong financial incentives to avoid repeating the costly mistakes of the 2008 to 2012 foreclosure crisis. Modification plans, not foreclosures, are the preferred path. Banks learned an expensive lesson, and most are not eager to revisit it.
Third, home equity has changed the math entirely. Many homeowners today have built substantial equity in their properties. If they cannot sustain their mortgage, they have the option to sell and walk away with money in hand, rather than letting the bank take the home.
Can you see how that changes the calculus compared to the last housing crash? In 2008, homeowners were underwater. Today, most are sitting on meaningful equity. That is a fundamentally different situation.
Will Foreclosures Rise? What That Could Mean for the Saratoga Market
Here is the honest answer: yes, foreclosures will likely increase from the historic lows recorded in 2020. But the question worth asking is, increase to what level?
For context, new foreclosures in the years before the pandemic looked like this:
- 2017: 314,220
- 2018: 279,040
- 2019: 277,520
Through the first three quarters of 2020, only 114,780 new foreclosures were recorded nationally, an extraordinarily low figure. Even if 10% of borrowers still inside their forbearance plans eventually move toward foreclosure, that would add roughly 275,000 properties to the national market. That is an average year, not a collapse.
Now consider the supply side. The market entered 2020 with 1,210,000 single-family homes available nationally, and that number was already considered too low to meet buyer demand. By early 2021, there were roughly 320,000 fewer homes available, while buyer demand remained extremely strong. The housing market has significant capacity to absorb additional inventory without prices cratering.
What does that mean for someone looking at Saratoga homes for sale? In a market with strong buyer demand and historically tight inventory, even a moderate increase in distressed listings is unlikely to flood the market. Homes in Saratoga tend to attract serious buyers, and inventory levels here have mirrored the national shortage in many respects.
What Happens If You Do Nothing While This Plays Out?
Think about this honestly. If you are waiting for a foreclosure wave to push prices down before you buy, what happens if that wave never arrives? What does another 12 to 24 months on the sidelines actually cost you, in equity you did not build, in a monthly payment you locked in at a lower rate versus one you lock in later?
And if you are a homeowner wondering whether to sell now or wait, what does the inventory picture tell you about your negotiating position? When supply is this constrained and buyer demand stays firm, sellers in the Saratoga real estate market tend to hold significant leverage.
How would your thinking change if you knew the distressed-property wave was not coming the way the headlines suggested?
A Path Forward That Fits Your Situation
Based on everything the data shows, the housing market is not heading for a repeat of 2008. Most homeowners who left their forbearance plans did so in far better shape than expected. The forbearance exits, combined with strong equity positions nationally, point toward a market that can absorb whatever additional inventory does arrive.
That does not mean every decision is simple. Your specific situation, your timeline, your equity position, your goals, those details matter more than any national headline.
If this is making you think differently about your next move, a straightforward conversation might be worth your time. Not a pitch. Not pressure. Just a clear look at where you are and what your options actually look like in this market.
Timothy Alston, Broker (DRE# 01328224), Aegis Luxury Real Estate, can walk through the numbers with you. Reach out at (408) 207-4593 whenever that feels right. The next step is yours to take, on your timeline.
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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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The data relating to real estate for sale on this display comes in part from the Internet Data Exchange program of the MLSListings™ MLS system. Real estate listings held by brokerage firms other than Aegis Luxury Real Estate are marked with the Internet Data Exchange icon and detailed information about them includes the names of the listing brokers and listing agents.
Based on information from the MLSListings MLS as of June 11, 2026. All data, including all measurements and calculations of area, is obtained from various sources and has not been, and will not be, verified by broker or MLS. All information should be independently reviewed and verified for accuracy. Properties may or may not be listed by the office/agent presenting the information.
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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 05, 2026 | Data reflects July 2026 MLS statistics
