Mortgage

The looming danger for debtors and renters when reduction ends, says CFPB

More than 11 million families – nearly 10% of US households – are at risk of eviction or foreclosure due to the economic impact of the coronavirus pandemic, the Consumer Financial Protection Bureau said on Monday.

In a report analyzing the impact of the pandemic on the housing market, the office said around 2.1 million families are at least three months behind on mortgage payments, while 8.8 million renters are behind on their rent.

Overall, around 28% of residents in prefabricated houses, 18% in apartment buildings and 12% in single-family houses are in arrears with their housing benefits from December 2020, according to the CFPB in the 21-page report.

In a press release accompanying the report, Acting CFPB Director Dave Uejio noted the urgency for policy makers to act. He suggested that there will be tangible consequences if federal and state measures to help households cope with the economic fallout from COVID-19, including leniency plans, expire.

Overall, around 28% of residents in prefabricated houses, 18% in apartment buildings and 12% in single-family houses are in arrears with their housing benefits from December 2020, according to the CFPB in the 21-page report.

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"We are working hard to help homeowners and renters as the US begins to turn a painful crisis caused by the pandemic into a robust recovery," said Uejio. “We know that even small landlords have problems when many dive into savings or use credit cards to survive the pandemic. We want everyone – homeowners and renters, landlords and mortgage servants – to have the tools they need now to avoid unnecessary evictions and foreclosures. "

Black and Hispanic homeowners were more than twice as likely to default on housing benefits than white homeowners, the report said.

"Many households will have difficulty dealing with significant arrears or permanent loss of income," the report said.

The Biden government has extended the length of the forbearance plans borrowers can apply for and has provided additional mortgage payments relief, although the aid is mostly for government-sponsored loans. Homeowners also have significant equity, and house prices have risen dramatically over the past year.

The CFPB said 263,000 borrowers are "at particular risk" because they are more than 90 days behind on their mortgages but have not yet committed to delaying mortgage payments through forbearance plans. Many will have limited options to avoid foreclosure if they fail to contact their mortgage servants, the office said.

The report also found that "indulgence can undermine justice" and cited "the effects of indulgence and foreclosure on home values ​​and neighborhoods".

However, homeowners have fared far better than renters as there are no formal guidelines allowing tenants to defer payments, the agency said.

Although some tenants are protected by eviction locks, thousands are still being displaced every week. The average criminal tenant is more than three months in arrears and owes more than $ 5,000 in missed rents and utilities, according to Moody & # 39; s Analytics. In total, criminal tenants owe an estimated $ 44.1 billion in rent back, the CFPB said, citing Moody's.

Black and Hispanic households are more than twice as likely to be renters than white households, so an eviction crisis would hit the color communities hardest, according to the CFPB.

The report does not make any specific recommendations, but does cite recommendations from consumer advocates that the government will allocate $ 100 billion for payments from low-income tenants. In December, the federal government allocated $ 25 billion to the Emergency Rental Assistance program to help tenants.

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