More People Are Skipping Housing Payments Now That Protections Are Over

Rising living costs and a lack of protections are putting homeowners and renters alike in a tough spot.

Early in the COVID-19 pandemic, protections were put into place to help homeowners and tenants who couldn't keep up with their mortgage and rent payments. Homeowners were allowed to put their mortgages into forbearance and pause payments for up to 18 months, while eviction bans protected tenants who couldn't pay rent due to job loss or another financial hardship.

But at this point, those protections have largely run out. Some mortgage borrowers may have a little time left on the forbearance clock, but those who paused their loan payments at the start of the COVID-19 crisis may have reached the end of that reprieve.

Meanwhile, the federal eviction ban is no longer in place. While some individual cities and states extended their own protections, in much of the country, renters are now required to pay their landlords on time or risk losing their homes.

Unfortunately, new data shows that the number of missed housing payments was substantial in October. That month, 5.43 million households failed to make their mortgage or rent payment, according to the Mortgage Bankers Association. By contrast, in September, only 4.71 million households missed a payment ("only" being a relative term, of course).

When we break those numbers down further, we see that 3.8% of homeowners missed a mortgage payment in October, up from 3.2% in September. Meanwhile, 10.9% of renters missed, delayed, or made a reduced payment in October, compared to 9.6% in September.

Inflation isn't helping matters

Many households have yet to recover from the financial impact of the pandemic, so it's not shocking to see missed housing payments increase now that forbearance and eviction bans are mostly off the table. But compounding the issue is the fact that inflation has been rampant in recent months. That's forced a lot of households to spend extra on essentials like food and groceries, leaving them with less money to cover their housing costs.

Getting help

Those who can't cover their housing payments still have options, even in the absence of federal programs. Homeowners, for example, can reach out to their loan servicers and ask to have their mortgages modified. Loan modification generally involves extending a mortgage, so each monthly payment is lowered, making it more affordable.

Those struggling to keep up with their mortgage payments can also see about refinancing their loans. That said, refinancing generally requires a decent credit score, and those who were hard-hit by the pandemic may have seen their credit take a dive.

Renters, meanwhile, can try negotiating with their landlords for reduced rent or try working out payment plans that give them more time to pay. While landlords can now (outside of areas with extended protections) evict tenants on the basis of non-payment, the process of doing so can be costly and arduous. Some landlords may be amenable to working out deals.

As the economy continues to improve, the number of households missing housing payments could decline. But unfortunately, things could get worse in this regard before they get better, with protections having recently run out.