More than 11 million households across the country struggled to make rent and mortgage payments between March and the end of June due to widespread unemployment during the early days of the coronavirus pandemic, according to a new report by the Mortgage Bankers Association.
While the numbers of homeowners with a mortgage receiving unemployment insurance rose from 3 to 6 percent by the end of June, the number of renters receiving unemployment insurance spiked from 3 to 12 percent, according to the new data. Student debt borrowers, however, were hit hardest of all, rising from 3 percent to 15 percent.
As a result, 10.5 percent of all renters missed one or more payments during this quarter while 4.5 percent missed two payments and 2.7 percent missed all the three payments. This cost property owners and landlords more than $9 billion in lost rent revenue overall.
“Data from other sources reveal that this trend has continued through August,” Gary V. Engelhardt, Professor of Economics in the Maxwell School of Citizenship and Public Affairs at Syracuse University, said in a statement. “With the first round of federal stimulus having run its course, and Congress deadlocked in passing another round of relief, families’ continued ability to meet their housing obligations during the ongoing pandemic is critical to the health of the housing and mortgage industries.”
Property owners were crucial in helping both themselves and renters navigate the economic crisis, according to the MBA. Fifteen percent of renters were given permission to delay or reduce their monthly payment amid the pandemic, of which 37 percent did. Twenty percent of homeowners with a mortgage received similar permission, of which 31 percent did.
Missed mortgage payments, meanwhile, added up to over $16 billion in lost revenue. Nonetheless, homeowners were least likely to fall behind on their payments. Many were at least temporarily protected by the forbearance program under the CARES Act and, as a result, only 5 percent missed a mortgage payment over the past quarter.
“The stubbornly high rates of new COVID-19 cases and the labor market’s sluggish recovery both present significant challenges for household finances as the country enters the fall,” Engelhardt said. “Particularly for renters, the combination of those who missed a payment – or were offered and did not take it – is substantive enough to suggest real risk to their ability to make upcoming payments.”