Home-mortgage borrowers’ pandemic recovery has hit a wall.
The forbearance rate among mortgage borrowers had been improving since peaking in June at 8.55 percent. But after declining to 5.5 percent — or about 2.7 million homeowners — progress ceased in November, the Wall Street Journal reported, citing the data from Mortgage Bankers Association.
At the same time, the number of job openings has declined, and unemployment claims remain high.
“With the waning recovery, and more applications for unemployment claims, we’re likely going to see increased demand for forbearance,” said Ralph McLaughlin, chief economist at Haus, a home-finance startup. “One of the safeguards people have, if they own a home, is to apply for forbearance.”
The federal Cares Act passed last March allowed borrowers to postpone payments on federally backed mortgages for up to 12 months. But Covid infections began surging in the fall and the initial robust stimulus from Congress gave way to deadlock at the election approached.
Shunda Lee, a Texas homeowner, was going to restart payment on her home this month after a three-month forbearance from her lender expired, the Journal reported. Instead, she received a three-month extension because a short-term prospect of her job as a lawyer remains uncertain as the courthouses where she works have often been closed.
If she runs out of her forbearance allowance and is still not working full-time, she’ll ask her parents for financial help, said the 47-year-old.
“If worse comes to worst, that’s what I’ll do,” she said. “Nobody wants me to lose my house.” [WSJ] — Akiko Matsuda