- DSNews - https://dsnews.com -

Outreach Could Help 400,000 ‘Needlessly Delinquent’ Borrowers

Although the CARES Act has made it possible for homeowners to defer mortgage payments for up to a year, some 400,000 borrowers are not taking advantage of these forbearance programs and have thus become delinquent, estimates the Urban Institute.

"To take advantage of forbearance, borrowers need only attest to the fact that they have a pandemic-related financial hardship. But not all eligible borrowers have taken advantage of forbearance and have become needlessly delinquent," wrote Urban Institute's Senior Research Associate Michael Neal [1] and Vice President, Housing Finance Policy Laurie Goodman [2].

They continue, "These borrowers may not know they are eligible for forbearance or do know but wrongly fear having to make 'double payments' when the forbearance period ends. To provide information and support to these borrowers, it is important to understand who they are."

Some of their research derives from the latest forbearance report [3]s, initially from the Mortgage Bankers Association (MBA). Here are some of the Urban Institute authors' findings:

The solution? They say "broad outreach is needed to support needlessly delinquent borrowers." Because, as the above data show, they are not concentrated in any area or under any specific lender, the outreach, UI reported, must be widespread.

"Servicers are an important part of this outreach," Neal and Goodman wrote, "but outreach efforts must also include assistance from consumer groups. Although some government messaging around forbearance options as an alternative has occurred, broader outreach may be in order."

For the entire report and methodology, visit UrbanInstitute.org.  [4]