Roughly 2 million homeowners in the United States have chosen to skip their monthly mortgage payment as the coronavirus pandemic takes a heavy economic toll on the country.
As more Americans are losing their job, being furloughed, or experiencing reduced income, a growing number of home loans are being left unpaid. The latest data from the Mortgage Bankers Association shows that many borrowers are choosing to go into forbearance, an agreement with a lender that allows them to momentarily forgo payments.
Around 3.74% of home loans have gone into forbearance as of April 5, according to The Wall Street Journal. This statistic is up from roughly 2.75% from the previous week.
The number of borrowers opting to skip their monthly payments is only expected to get larger.
“[T]he number of borrowers asking for forbearance will likely continue to rise at a rapid pace,” stated Mike Fratantoni, the chief economist for the Mortgage Bankers Association (MBA).
The MBA, an association that represents nonbank companies such as Freedom Mortgage Corp. and Quicken Loans Inc, serves as a type of middleman for borrowers who make monthly payments for their home and the lenders who receive the payments. The group’s polling data reflects a sample size of around 27 million loans.
President Donald Trump signed a $2.2 trillion relief package in late March. The stimulus provides $1,200 to every single adult in the U.S. who makes less than $75,000, and also provides forgivable loans of up to $10 million to every small business in the country.
However, the relief package does not provide assistance to mortgage services — which could pose a major problem if this trend continues on. These companies argue they may have to locate tens of billions of dollars to meet payroll with their investors if more homeowners quit making their mortgage payments.
The federal government has rolled out a series of COVID-19 relief that specifically help older homeowners age 62 and older access their homes equity through a reverse mortgage. Given the nature of the virus affecting our older population the Federal housing administration has relaxed guidelines allowing for exterior only appraisals recently extended until the end of June and has also put a moratorium on foreclosures.
More than 580,800 peoples across the country have tested positive for COVID-19 since the crisis began. Of those who have tested positive, more than 23,000 have died from the virus.
The rapid spread has prompted states to go under lockdown, forcing businesses to shut down. The result has been more than six million Americans filing for unemployment.
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