Housing insecurity among both renters and homeowners has been a serious worry since much of the federal aid implemented by the CARES Act expired over the summer. New data from financial data and analytics company CoreLogic highlights the struggles many Americans face, emphasizing the need for more government assistants.
According to the firm’s findings, the number of homeowners who fell behind their mortgage payments by at least four months reached a 21-year peak in July. CoreLogic, who has followed delinquency rates since 1999, also found that July 2020 120-day rate hit 1.4%. In 2019, the 120-day delinquency rate was 0.12%. The figures include those who sought forbearance under the CARES Act.
Dr. Frank Nothaft, the firm’s chief economist, said, “What we’re seeing is a ‘pig in python’ effect with a spike in June for 90-day delinquencies and now in July with 120-day delinquencies. I think it’s a big concern especially as the CARES Act provided forbearance, but homeowners will still have to owe every payment.”
The study made other conclusions that illustrated the extent of Americans’ financial struggles. For example, the rate of 90-day delinquencies in July increased from 1.3% to 4.1% in 2020 — the most since April 2014. The report found that although 90-day-plus delinquencies rose nationwide, some regions were harder-hit than others.
For example, New York reported a 4.3% jump year-over-year, at 10% in July. Meanwhile, New Jersey reached 9.6%, a 4.5% increase. In Florida, delinquencies climbed 4.1% over the last year to 8.6%.
“If there continues to be financial stress we can see at least 2 million loans seriously delinquent by the end of 2021,” Nothaft warned.
Moreover, by the end of September, more than 17 million people fell behind on their monthly rent or mortgage payments, data from the US Census Bureau found. This could mean that aside from the economic consequences — is weaker voter turnout, a recent Apartment List study found.
According to the rental listening site, just over half of Americans — 55% — behind on rent or mortgage payments will vote, versus 79% of those current on their housing bills.
“There is an unfortunate negative correlation between pain and participation,” observed Apartment List’s chief economist Igor Popov. He also pointed to statistics that show that total turnout is often much smaller than polls indicate. “Economic hardship is associated with limited bandwidth to engage.”
With the next round of stimulus funding on hold until the end of the election, many people will have no other choice except to make do with the options they have. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin have repeatedly met to discuss another bill, but so far, there is no sign of progress.
Earlier this week, President Trump ordered the GOP to end talks until the end of the election, though soon backtracked, stating he would support standalone bills for the Paycheck Protection Program (PPP) or $1,200 stimulus checks.
Rhea Thomas, a senior economist at Wilmington Trust, said, “While elevated savings may help households meet their payment obligations in the near term, additional fiscal stimulus will likely be needed to help households to bridge the gap until the labor market fully recovers.”
Homeowners who declared forbearance under the CARES Act or through government-backed insurers may find themselves in even direr straits when their grace period ends, and they are left to repay months of delinquent loans in full.
- Paynter, Sarah. “Americans behind on Rent and Mortgage Payments Are Less Likely to Vote: Study.” Yahoo! Finance, Yahoo!, 9 Oct. 2020, finance.yahoo.com/news/americans-behind-on-rent-and-mortgage-payments-are-less-likely-to-vote-study-204330920.html.
- Singh, Dhara. “Mortgage Delinquency Rate Hits 21-Year High.” Yahoo!, Yahoo!, 14 Oct. 2020, money.yahoo.com/mortgage-delinquency-rate-hits-21-year-high-180315848.html.