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
Share Now on:
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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

Which businesses are allowed to reopen right now? And which businesses are actually doing so?

As a patchwork of states start to reopen, businesses that fall into a gray area are wondering when they can reopen. In many places, salons are still shuttered. Bars are mostly closed, too, although restaurants may be allowed to ramp up, depending on the state. “It’s kind of all over the place,” said Elizabeth Milito of the National Federation of Independent Business.

Will you be able to go on vacation this summer?

There’s no chance that this summer will be a normal season for vacations either in the U.S. or internationally. But that doesn’t mean a trip will be impossible. People will just have to be smart about it. That could mean vacations closer to home, especially with gas prices so low. Air travel will be possible this summer, even if it is a very different experience than usual.

When does the expanded COVID-19 unemployment insurance run out?

The CARES Act, passed by Congress and signed by President Donald Trump in March, authorized extra unemployment payments, increasing the amount of money, and broadening who qualifies. The increased unemployment benefits have an expiration date — an extra $600 per week the act authorized ends on July 31.

You can find answers to more questions here.

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