COVID-19

As unemployment skyrockets, so do mortgage loan delinquencies

Jasmine Garsd May 21, 2020
Heard on: Marketplace Morning Report
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More than 3.8 million mortgage holders, 7.3% of all home loans, have already entered into forbearance plans as of April 30. Frederic J. Brown/AFP via Getty Images
COVID-19

As unemployment skyrockets, so do mortgage loan delinquencies

Jasmine Garsd May 21, 2020
More than 3.8 million mortgage holders, 7.3% of all home loans, have already entered into forbearance plans as of April 30. Frederic J. Brown/AFP via Getty Images
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The COVID-19 pandemic has led to record unemployment, and Americans are struggling to pay their bills. Delinquencies on U.S. home loans surged by 1.6 million last month. That’s the biggest one-month jump in history, according to a report by Black Knight, a mortgage data provider.

About 3.5 million homeowners were past due on their mortgages, and over 200,000 properties were in foreclosure or on track to be repossessed. As of April 30, close to 4 million homeowners were in forbearance plans. 

Black Knight’s report says, in an optimistic scenario, the number of forbearances could peak at around 4.5 million in the coming months. 

Congress’ CARES Act, passed in March, allows homeowners to suspend their mortgage payments for up to a year. But it doesn’t protect mortgages that aren’t backed by the government, and that’s about half of all home loans in the U.S.

Nevada was one of the states with the biggest delinquency rates. Cities with the largest delinquency increases were Miami, Las Vegas and New York. 

COVID-19 Economy FAQs

How many people are flying? Has traveled picked up?

Flying is starting to recover to levels the airline industry hasn’t seen in months. The Transportation Security Administration announced on Oct. 19 that it’s screened more than 1 million passengers on a single day — its highest number since March 17. The TSA also screened more than 6 million passengers last week, its highest weekly volume since the start of the COVID-19 pandemic. While travel is improving, the TSA announcement comes amid warnings that the U.S. is in the third wave of the coronavirus. There are now more than 8 million cases in the country, with more than 219,000 deaths.

How are Americans feeling about their finances?

Nearly half of all Americans would have trouble paying for an unexpected $250 bill and a third of Americans have less income than before the pandemic, according to the latest results of our Marketplace-Edison Poll. Also, 6 in 10 Americans think that race has at least some impact on an individual’s long-term financial situation, but Black respondents are much more likely to think that race has a big impact on a person’s long-term financial situation than white or Hispanic/Latinx respondents.

Find the rest of the poll results here, which cover how Americans have been faring financially about six months into the pandemic, race and equity within the workplace and some of the key issues Trump and Biden supporters are concerned about.

What’s going to happen to retailers, especially with the holiday shopping season approaching?

A report out recently from the accounting consultancy BDO USA said 29 big retailers filed for bankruptcy protection through August. And if bankruptcies continue at that pace, the number could rival the bankruptcies of 2010, after the Great Recession. For retailers, the last three months of this year will be even more critical than usual for their survival as they look for some hope around the holidays.

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