by Maurie Backman | May 9, 2021
The Ascent is reader-supported: we may earn a commission from offers on this page. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation. Terms may apply to offers listed on this page.
It turns out most renters and homeowners haven't fallen so delinquent on their housing payments.
Millions of Americans found themselves out of work once the coronavirus pandemic took hold, which meant that paying their bills suddenly became difficult. To help those in need, relief was made available to prevent both tenants and homeowners from being thrown out on the street due to not having the means to pay rent or cover their mortgages.
But new data from the Mortgage Bankers Association's (MBA) Research Institute for Housing America reveals that while Americans have needed a fair amount of housing relief over the past year and change, they've also managed to keep up with their payments to a greater extent than expected. In fact, over the course of the whole pandemic, only 8.6% of renters and 6.8% of homeowners missed more than two housing payments.
Of course, the percentage of those who missed a single payment is greater. An estimated 23.7% of renters and 14.2% of homeowners fell behind at least once since March of 2020. But all told, the numbers may not be as dire as anticipated.
Get free access to the select products we use to help us conquer our money goals. These fully-vetted picks could be the solution to help increase your credit score, to invest more profitably, to build an emergency fund, and much more.
By submitting your email address, you consent to us sending you money tips along with products and services that we think might interest you. You can unsubscribe at any time. Please read our Privacy Statement and Terms & Conditions.
The fact that renters and homeowners got housing relief during the pandemic is a good thing, but that aid is soon coming to an end. Once the eviction ban is lifted, renters will generally need to get current on their missed payments or risk being forced to leave their homes. On a positive note, there's $45 billion in rental assistance available to those in need, and once states get a better handle on distributing that money, a lot of renters may be in a better position to get caught up.
Homeowners, too, have some options. Those who put their mortgages into forbearance early on in the pandemic will see that option run out in the fall when their 18 months are up. But that doesn't mean loan servicers won't work with homeowners who can't make good on their payments right away. In fact, loan servicers are already being urged by the Consumer Financial Protection Bureau to help borrowers stay in their homes once forbearance comes to an end -- namely, by agreeing to let borrowers modify the terms of their mortgages so they're easier to pay off.
Mortgage loan servicers also cannot require homeowners who put their loans into forbearance to catch up on what could be 18 months of payments in one lump sum. Rather, borrowers must be given a reasonable method for catching up. For the most part, that will generally involve extending the length of a mortgage's repayment period. For example, if a borrower has 20 years left on a mortgage but put that loan into forbearance for 18 months, that borrower's repayment term would simply get extended to 21.5 years.
All told, renters and homeowners alike may have to catch up on some missed payments, but the fact that the majority didn't miss more than two payments puts them in a better position to do so. And if loan servicers and landlords are willing to be flexible, it'll create a scenario where more people can recover from the pandemic without needless struggle.
Chances are, interest rates won't stay put at multi-decade lows for much longer. That's why taking action today is crucial, whether you're wanting to refinance and cut your mortgage payment or you're ready to pull the trigger on a new home purchase.
The Ascent's in-house mortgages expert recommends this company to find a low rate - and in fact he used them himself to refi (twice!). Click here to learn more and see your rate. While it doesn't influence our opinions of products, we do receive compensation from partners whose offers appear here. We're on your side, always. See The Ascent's full advertiser disclosure here.
We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.
Copyright © 2018 - 2021 The Ascent. All rights reserved.