The COVID-19 pandemic and associated lockdowns in 2020 led to over 9 million American workers are losing their jobs. Of those who did not, some suffered pay cuts or had their working hours reduced. This has strained the ability of many Americans to meet their mortgage payments. (Here are the states with the most mortgage debt.)
Distressed homeowners received temporary relief. The federal law on aid, relief and economic security against coronaviruses, promulgated in March 2020, included mortgage forbearance provisions – meaning homeowners with federally guaranteed mortgages could suspend their monthly payments. The abstention relief was expanded up to 12 months in September 2021.
However, when forbearance ends, homeowners should contact their lenders or loan officers to set up a deferred payment catch-up plan. As of February 2021, according to the Government Accountability Office, forborne homeowners had accumulated an average of eight mortgage payments that will need to be repaid. This will leave some homeowners in debt tens of thousands of dollars. (Here are the states where people are most in debt.)
Click here to find out how many people in your state are behind on their mortgage payments
GAO found that abstention was more common among certain demographics in greatest risk mortgage defaulters, including first-time homebuyers, low- and moderate-income buyers with Federal Housing Authority and Rural Housing Service loans, and minorities. Black and Latino homeowners – who are more likely to have been negatively affected by the pandemic – had used forbearance twice as much as white homeowners.
While some borrowers are back on their feet and out of forbearance and are currently working to update their payments, many are still overdue and could face foreclosure. Others were not able to receive relief in the first place and are currently in default.