Homeowners struggled to make mortgage payments during the pandemic. According to a survey since March, 24% of homeowners have missed or deferred a mortgage payment Clever real estate. Tenants were also hit hard, with one in three tenants receiving no rental payments during the pandemic. Together, these two groups paint an amazing picture of the pressures Americans face to keep up with needs.
"Americans were not financially prepared for the pandemic because many did not have enough savings to cover several months on lower incomes. With the pandemic lasting over 6 months, people's savings are drying up." Francesca Ortegren, Data scientist at Clever Real Estate, tells GlobeSt.com. "When it comes down to it, people have to make a choice between deferring loan payments or paying for things that cannot be deferred, like groceries." We suspect this will lead to an increase in missed mortgage payments. Essentially, people are running out of savings (or they already have them), and many either don't yet have a job or cannot fully recover from their jobless days. The ability to defer mortgage payments without penalty in some cases is a tempting option for these homeowners. "
Of homeowners who missed payments, only 16% returned the missed payments, and 46% of deferred homeowners missed three or more payments. Forbearance guidelines have helped, but the protection isn't universal. “The guidelines vary widely depending on the lender and the type of loan. There is more protection for those who have government-backed loans in terms of whether they can be charged penalties and how to set up repayment options, ”Ortegren says. "In these cases, the guidelines are likely to help, as homeowners will not be forced to repay deferred payments in a lump sum or late penalties."
Outside of government-funded loans, lenders have less incentive to work with homeowners. "With other types of mortgage, the lender has more control over repayment schedules and can make it difficult for homeowners to repay their missed mortgage payments," says Ortegren.
It's important to note that not all homeowners with a missed payment have signed up for an indulgence plan. "Some people just missed payments with no forbearance plan," says Ortegren. "In many cases, they face late penalties and may struggle to make up for these missed payments without working out a plan with their lender."