Mortgage Foreclosure, Forbearance, and Refinancing

  • Agostino Capponi, Professor, Columbia University
  • Ruizhe Jia, Research Assistant, Columbia University
  • David Aaron Rios, Lecturer, Columbia University
A man building a miniature house with wood blocks. The word mortgage is written on one of the blocks.


This paper examines the effect of foreclosure prevention policies during the pandemic on refinancing activities in the United States. By analyzing the foreclosure moratorium introduced soon after the COVID-19 began, we show the multiple benefits of preventing a foreclosure shock in the United States. Undertaking foreclosure forbearance during economic crises helps stabilize house prices, significantly reduces the refinancing cost facing households and relaxes their refinancing eligibility constraints. Our results imply that a foreclosure moratorium has significant benefits for a broad range of households who intend to refinance. Mortgage forbearance amplifies the stimulative effect of monetary policies for households and the economy overall during major shocks.