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COVID-19

As unemployment skyrockets, so do mortgage loan delinquencies

Jasmine Garsd May 21, 2020
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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
Heard on:
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
HTML EMBED:
COPY

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

So what’s up with “Zoom fatigue”?

It’s a real thing. The science backs it up — there’s new research from Stanford University. So why is it that the technology can be so draining? Jeremy Bailenson with Stanford’s Virtual Human Interaction Lab puts it this way: “It’s like being in an elevator where everyone in the elevator stopped and looked right at us for the entire elevator ride at close-up.” Bailenson said turning off self-view and shrinking down the video window can make interactions feel more natural and less emotionally taxing.

How are Americans spending their money these days?

Economists are predicting that pent-up demand for certain goods and services is going to burst out all over as more people get vaccinated. A lot of people had to drastically change their spending in the pandemic because they lost jobs or had their hours cut. But at the same time, most consumers “are still feeling secure or optimistic about their finances,” according to Candace Corlett, president of WSL Strategic Retail, which regularly surveys shoppers. A lot of people enjoy browsing in stores, especially after months of forced online shopping. And another area expecting a post-pandemic boost: travel.

What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?

Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”

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