The pandemic is endangering
the credit histories of at least 30 million Americans and possibly threatening
the shelter status of many of them. The Mortgage Bankers Associations’ (MBA’s) Research
Institute for Housing America (RIHA) said on Friday that over 6 million households
missed making rent or mortgage payments in September and 26 million individuals
did not make payments on their student loans.
The number of
missed payments for rent and mortgage payments did decline slightly from the
second quarter but 2.82 million households failed to pay their rent on time and
in full in September while 3.37 million homeowners missed, delayed, or made a
reduced mortgage payment. These numbers represent 8.5 percent of the renter
population and 7.1 percent of homeowners. The share of student debt borrowers
who missed a monthly payment has remained at 40 percent since May.
“Rent and mortgage
payment collections improved over the summer as more people went back to work,
but high unemployment continues to place hardships on millions of U.S.
households. There is growing concern that absent a slowdown in the number of
coronavirus cases and another round of much needed federal aid, millions of
households in the coming months face the prospect of falling further behind,”
said Gary V. Engelhardt, Professor of Economics in the Maxwell School of
Citizenship and Public Affairs at Syracuse University. “With the current
eviction moratorium expiring in January, the situation could be even more
challenging for renters. Many renter households across the country could find themselves
with no place to live and no means to repay missed payments.”
“The tens of millions of student debt borrowers behind on their payments also
has future ramifications for the housing and mortgage markets. Borrowers ending
up in default would see an adverse effect on their credit, in turn making it
potentially more challenging for them to rent or qualify for a mortgage.”
The RIHA study is
based on an internet survey of an 8,000-household panel. It was designed specifically
to study the pandemic’s financial effects by following the same set of
households from before the outbreak to the end of September.
The survey found
that the number of renters receiving unemployment insurance (UI) benefits rose
from 3 percent at the beginning of April to 7 percent by the end of September
while the percentage of homeowners remained unchanged at 3 percent. The number
of student debt borrowers receiving UI payments has jumped from 3 percent to 8
percent over that period.
Eleven percent of
renters missed one payment over the two quarters covered in the study, 4.0
percent missed two payments, 2.8 percent missed three and 3.8 percent missed
four or more. Property owners have continued to play a key role in helping
renters; 13 percent of renters received permission from their landlord to delay
or reduce their monthly payment. In aggregate, those owners lost as much as
$9.2 billion in third-quarter revenue from missed rent payments.
the least likely of the three groups to miss a payment during the second and
third quarters. Over that period 4.7 percent of them missed one mortgage
payment, 2.0 percent missed two, 1.5 percent missed three and 4.2 percent
missed four or more. Around 20 percent of mortgagors received permission from
their lender to delay or reduce their payment. Those missed mortgage payments were estimated
to total as much as $19.4 billion in the third quarter.
borrowers were most likely to have missed a payment over the two quarters; 16.2
percent had missed one. 8.8 percent missed two payments, 7.0 percent missed
three, and 22.7 percent missed four or more. An aggregate of 34.4 million borrowers
have missed at least one loan payment since the pandemic began (40 percent of
borrowers each month) and the missed payments may have total as much as $29.5 billion
in the third quarter.
Edward Seiler, Executive
Director of RIHA and MBA’s Associate Vice President, Housing Economics said, “This
study reveals the financial distress that many households continue to
experience and highlights the need for all stakeholders to come together to
provide meaningful solutions to those who will need it most in the coming