When the pandemic threatened Americans’ abilities to pay their mortgages, the government stepped in with a bailout program, allowing people to delay payments for (ultimately) 18 months. That grace period, for some, will end in two months, though. And it’s unclear how big the impact will be.
One thing’s certain: Come September, people who have been putting off payments will either have to resume them, sell their homes, or face foreclosure.
As of June 29, 2.05 million homeowners—some 3.9% of mortgaged properties—remained in COVID-19-related mortgage forbearance plans, according to mortgage data company Black Knight. That’s a 6.6% decline from the previous month—the first downtick since the COVID-19 crisis began.
Meanwhile, as of June 23, 4.73% of the nation’s mortgages were at least 30 days past due. Nearly 1.7 million were 90 days delinquent, though not in foreclosure. That’s down from 2.15 million in February.
Banks, at present, don’t seem eager to foreclose. Roughly 146,000 forbearance plans were reviewed for extension or removal over the past week. Of those, 44,000 homeowners left forbearance, and the other 102,000 were extended.
Borrowers won’t have to make a lump payment to reimburse lenders for missed mortgage payments if their loan is government backed. And while some institutions could extend the terms of forbearance, others might negotiate lower interest rates or extend the length of the mortgage to lower monthly payments, if the borrower has a job.
Foreclosure is a real threat for some, however. The good news for those people is the red-hot state of the U.S. housing market. Housing prices have been increasing for the better part of a year, meaning people who are behind on mortgage payments and facing foreclosure could erase that debt with the added equity in their homes.
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