The Power is Now

A Crisis In The Making! 3.2 Million Homeowners At Risk of Losing Their Homes

Homeownership Program

Joblessness all across the country remains high and millions of people report that they are still unable to meet their family’s basic needs. In addition, many more report that they are not caught up on their monthly rent payments. The coronavirus has devastated the lives of many both economically and socially but more prevalent in minority communities (blacks, Latino, indigenous, and immigrants). The disproportionate impact on these groups indicates the hardships and the longstanding inequities that not only await them, but also, what they’ve had to go through often as a result of structural and institutional racism in education, employment, health care, and housing.

Speaking of housing, a most recent report by the Urban Institute indicates that although millions of Americans have recovered from the pandemic financially and are now back on track with their mortgage payments, there still remains some disturbing data. The report indicates that as of November 2020, some 3.7 million homeowners who had entered into forbearance since the onset of the pandemic had exited. But, about 3.2 others continue to struggle. This number includes 2.8 million homeowners who are still very active in forbearance and some 369,000 homeowners who are delinquent on their mortgages.

The report further indicates that some of the homeowners who are in the forbearance program have reached their sixth month. This will require them to exit the programs or request an extension.

This shows that millions of households are just one step away from becoming homeless. The American Rescue Plan Act which was enacted on March 11 seeks to reduce poverty and narrow these disparities by race. It is a step in the right direction and any action taken with an aim to reduce hardship especially among the children is a hopeful step for the country.

Data continues to show and support that a good number of these homeowners risking their homes are not pursuing any measure to counter the loss perhaps due to the lack of awareness of repayment options. The issue of disparities keeps coming up whereby it has been proven that many minority communities face stark disparities in their attempt to housing payment status.

Where Do We Go From Here?

A survey launched last year in April by the Census Bureau, dubbed Household Pulse Survey shows how unprecedented the health and economic crisis can be to a nation. The survey which is one among many including one from the Census Current Population Survey and the Department of Labor shows that millions of Americans are jobless and are struggling to make ends meet. So if they are struggling to afford a meal, how can they afford a shelter? How can we help them?

Active Campaigns Must Be Held

There needs to be an active campaign to reach out to the 775,000 borrowers who have become delinquent since the outbreak of COVID-19 and are behind with their payments. About 476,000 of these borrowers soon after leaving forbearance became delinquent and another 299,000 did not make it to forbearance. While it is encouraging to see that about 85percent of the borrowers who became delinquent soon after coming out of forbearance are engaging servicer for a loss mitigation measure, 15 percent of the borrowers are yet to initiate any loss mitigation measures. That’s not all, the number of borrowers coming out of forbearance is about to grow which in turn puts more borrowers at risk of falling delinquent on their mortgages.

Speaking during the Urban Insitute Webinar, Dana Dillard of the Housing Finance Strategies and Lisa Rice of the National Fair Housing Alliance said that the homeowners who are currently facing more than one issue must be helped in order to help them navigate through the mortgage options available to them. What you notice is that most of these homeowners may be having health problems, or even struggling with their kids who are still in school. This is where mortgage servicers have to step in because for most of these struggling borrowers, navigating the forbearance and repayment options can be very challenging.

Also present during this webinar was Meg Burns of the Housing Policy Council who stressed the importance of broader, more vibrant campaigns that will better inform all the households in need. While we cannot assume that the ongoing efforts to try and rescue homeowners who are still ignorant about the many loss mitigation measures available to them, the industry can do better, especially in tracing these homeowners.

Adequate Preparation for the Wave of Delinquency This Spring!

Right now, there are about 2.8 million homeowners who are n forbearance and will likely end up in a worse financial situation than the 3.5 million homeowners who exited forbearance earlier. The report shows that borrowers with government-backed loans who are still able to make monthly payments are much more likely to exit a forbearance program after just 6 months. The households that are still in the forbearance program but are not making any payments and are still scheduled to exit forbearance during this year need additional assistance. Some 23 percent of homeowners in forbearance said that they are not sure whether they’ll be needed to make increased payments or make a single lumpsum payment once the foreclosure period lapses. More worrying is that about 54 percent of households said they have no confidence in their ability to resume monthly payments when the forbearance period ends.

There needs to be a better communication plan from the industry. Mortgage servicers must provide borrowers with an array of options. The repayment and forbearance programs must be clear and streamlined to avoid confusing servicers and consumers.

Race  and all Disparities in Housing Must be Addressed

Data shows that the most vulnerable borrowers will be the people of color and minority communities who are more likely to fall behind on their payments. As we soldier on, barely surviving from the effects of the pandemic, problems like racial, ethnic, and economic inequalities that existed even before the pandemic will only get worse!

But the good news is that there is something we can do about these disparities and help many struggling borrowers. For instance, negative reporting should be condemned and, there need to be antidiscriminatory laws enacted and followed strictly.

Bottom Line

If you go out to the streets today, the stories you will hear are so disheartening and this trend must stop! We need to be agents of change. 3.2 million homeowners are not a joke! These numbers are critical, and we have a responsibility to one another. If you link these numbers to the families and individuals through a compelling narrative may be a great way to advocate and lobby for these vulnerable communities. There is a crisis coming, we must be prepared for it. The vulnerable homeowners do deserve better policies and systems to help them weather this crisis.



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