In estimating how much distress the COVID-19 crisis has brought upon homeowners, the Mortgage Banker's Association (MBA) determined, via its Research Institute for Housing America [1] (RIHA), that some 6 million households missed rent or mortgage payments in September.
Though the percent of homeowners and renters behind on their payments in Q3 decreased slightly from Q2, the overall amount remains high.
"In September, 8.5% of renters (2.82 million households) missed, delayed, or made a reduced payment, while 7.1% (3.37 million homeowners) missed their mortgage payment," MBA reported.
Some experts predict that the worst might not be over.
"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's data comes from the Understanding America Study (UAS), an internet panel survey of about 8,000 households specially tailored to study the impact of the pandemic.
Authored by Engelhardt and Michael D. Eriksen, Associate Professor of Real Estate at the University of Cincinnati, the study provides "close to real-time economic data on the rapidly evolving financial consequences of the pandemic by following the same set of households from before the outbreak through the end of September," the MBA reported.
Below are key findings from the study, which can be found in full, here: [2]
Receiving unemployment insurance (UI) benefits:
- Renters - Rose from 3% at the beginning of April to 7% by the end of September;
- Mortgagors - Remained unchanged at 3% at the beginning of April and 3% at the end of September
Property owners continue to play a key role in helping renters:
- 11.0% of renters missed one payment over the two quarters, 4.0% missed two payments, 2.8% missed three payments, and 3.8% missed four or more payments.
- 13% of renters received permission from their landlord to delay or reduce their monthly payment (by week).
- In aggregate, rental property owners lost as much as $9.2 billion in third-quarter revenue from missed rent payments.
Mortgagors were less likely to miss a payment during the second and third quarters:
- 4.7% of mortgagors missed one payment over the two quarters, 2.0% missed two payments, 1.5% missed three payments, and 4.2% missed four or more payments.
- Around 20% of mortgagors received permission from their lender to delay or reduce their monthly payment (by week).
- In aggregate, total missed mortgage payments were estimated to be as much as $19.4 billion for the third quarter.