In 2020, those who have fallen behind at least three months on their mortgage increased 250 percent to over 2 million households, and is now at a level not seen since the height of the Great Recession in 2010. Collectively, these households are estimated to owe almost $90 billion in deferred principal, interest, taxes and insurance payments.1 At the same time, we are facing a rental crisis, with over 8 million rental households behind in their rent. While there are significant differences from the last crisis, particularly a more stable mortgage market and substantial homeowner equity, there are a significant number of households at risk of losing their housing just as the U.S. economy is poised to emerge from the pandemic—a disproportionate number of them from communities of color. This report summarizes some of the relevant data and research on the impact of the pandemic on the rental and mortgage market, and particularly its impact on low income and minority households.
A first take away from this is that more than 900,000 people have been in forbearance during the last year, with 28% of those remaining current on payments, 26% getting a payment deferral or partial claim and 16% making a lump sum catch-up payments. That leaves 30% that have no solution to their delinquency or of 270,000 households which the report describes as having "limited options to avoid foreclosure initiation when the moratoria end."
Unmentioned, is that Chapter 13 is among those options, particularly in North Carolina, where the Eastern, Middle and Western districts have active mortgage modification programs that provide improved outcomes for homeowners that are delinquent on mortgages. The CFPB could affirmatively work with bankruptcy court across the country to expand these programs.
The omission of bankruptcy as an option (and to be fair this report does not specifically list options) is repeated in the discussion of delinquent rent and for protections related to mobile homes, this includes mobile home cram-down in Chapter 13, see, for example, In re St. Fleur, and incorporation of Eviction Diversion programs with bankruptcy.
For a copy of the report, click here: