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Despite Aid, Some Borrowers Still Unable to Pay Bills

Earlier in the year, while the CARES ACT did its part to offset the financial toll, in light of the lack of a new bipartisan deal, many people are scratching their heads as they wonder how to satisfy their financial obligations, according to WalletHub.

Meantime, leveraging data like the average credit score, the change in the number of bankruptcy filings between January and July, and the share of people with accounts in distress. WalletHub compared the 50 states and the District of Columbia across nine key metrics to illustrate where those challenges are particularly severe. WalletHub defines an account in distress as one which either is in forbearance or has its payments deferred.

Among states with the most financially distressed individuals during the pandemic, Louisiana had a total score of 52.65, followed by Nevada, 48.74; Indiana, 47.70; Oklahoma, 47.01; and Florida, 46.50.

While delinquencies sagged by 0.4% year over year in February, according to CoreLogic Loan Performance Insights report, with COVID-19 continuing to help fuel job losses, a spike was expected.

"Delinquency and foreclosure rates were at a generational low in February as the U.S. unemployment rate matched a 50-year low," said Dr. Frank Nothaft, Chief Economist for CoreLogic. That said, the pandemic-induced closure of nonessential businesses caused the April unemployment rate to spike to its highest level in 80 years and will lead to a rise in delinquency and foreclosure, he continued. “By the second half of 2021, we estimate a four-fold increase in the serious delinquency rate, barring additional policy efforts to assist borrowers in financial distress.”

In February, for the fifth consecutive month, no states posted a year-over-year increase in the overall delinquency rate, and Mississippi and Maine (both down 0.9 percentage points) recorded the largest declines. Only four metropolitan areas recorded small increases in overall delinquency rates and eight recorded increases in serious delinquency rates.

“After a long period of decline, we are likely to see steady waves of delinquencies throughout the rest of 2020 and into 2021," said Frank Martell, President and CEO of CoreLogic. "The pandemic and its impact on national employment is unfolding on a scale and at a speed never before experienced and without historical precedent. The next six months will provide important clues on whether public and private sector countermeasures—current and future—will soften the blow and help us avoid the protracted, widespread foreclosures and delinquencies experienced in the Great Recession.”

About Author: Chuck Green

Chuck Green has contributed to the Wall Street Journal, Washington Post, Los Angeles Times, San Francisco Chronicle, Chicago Tribune and others covering various industries, including real estate, business and banking, technology, and sports.

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