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Almost 400,000 Delinquent Homeowners Have Better Options
Tuesday, October 6, 2020
The Urban Institute (UI) estimates that there are
about 400,000 homeowners who have become "needlessly delinquent" as a result of
the COVID-19 pandemic. UI analysts
Michael Neal and Linda Goodman credit the Coronavirus Aid, Relief, and Economic Security (CARES) Act
with providing "a much-needed lifeline" during the crisis, but conclude that
there needs to be a broader approach. The CARES
Act allows borrowers to defer mortgage payments for six months with the
possibility to extend that period for another six months. Homeowners need only
to attest to having a pandemic-related financial hardship. The Mortgage Bankers
Association (MBA), which has tracked forbearance plans on a weekly basis,
reported that as of September 28, 6.87 percent of mortgage borrowers are in
forbearance, including 4.46 percent of borrowers with Fannie Mae and Freddie
Mac mortgages and 9.15 percent of borrowers with Ginnie Mae (VA/FHA) mortgages.
About a quarter of these borrowers have continued to make mortgage payments,
apparently entering forbearance as an insurance policy, but many eligible
borrowers have not taken advantage of the benefit and have fallen behind on
their payments.
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