A Million Mortgage Borrowers Fall Through Covid-19 Safety Net - important, really
WASHINGTON—About one million homeowners have fallen through the safety net Congress set up early in the coronavirus pandemic to protect borrowers from losing their homes, according to industry data, potentially leaving them vulnerable to foreclosure and eviction. Homeowners with federally guaranteed mortgages can skip monthly payments for as long as a year without penalty and make them up later. They must call their mortgage company to ask for the relief, known as forbearance, though they aren’t required to prove hardship.
Many people have instead fallen behind on their payments, digging themselves into a deepening financial hole through accumulated missed payments and late fees. They could be at risk of losing their homes once national and local restrictions on evictions and foreclosures expire as early as January.
About 1.06 million borrowers are past due by at least 30 days on their mortgages and not in a forbearance program, according to mortgage-data firm Black Knight Inc. Of those, some 680,000 have federally guaranteed mortgages and qualify for a forbearance plan under a March law. The rest have loans that aren’t federally guaranteed, and their lenders aren’t required to offer forbearance, though many have chosen to do so. Housing counselors say many borrowers don’t know that forbearance is an option. Others are afraid of reaching out to their lenders, and still others have trouble navigating the complex bureaucracy of mortgage finance.
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Lenders and consumer groups said the number of past-due mortgages that aren’t in forbearance could grow as several million people who are in forbearance reach the six-month point of their plans by the end of October. An extension of as long as six months is possible, but homeowners must ask for it. Lenders said they are reaching out to these borrowers before their forbearance periods expire.
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A group of consumer advocates and housing-policy experts have discussed starting a national ad campaign to educate borrowers about their options, but the effort is in the early stages. A group of government agencies have set up a website https://www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/ designed to educate borrowers about their alternatives, but consumer groups said more work is needed to reach at-risk borrowers. Lenders that collect mortgage payments said they have boosted their outreach to borrowers.
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https://www.wsj.com/articles/a-million-mortgage-borrowers-fall-through-covid-19-safety-net-11600335001 (subscription)
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