Survey Finds 1.2 Million Borrowers Feared Mortgage Foreclosure in December

A recent report from the Research Institute for Housing America (RIHA), backed by the Mortgage Bankers Association (MBA), showed that nearly 1.2 million borrowers feared they would be foreclosed on at the end of 2020, revealing a lack of access and awareness to pandemic-related governmental protections.

Loan performance has improved due to government aid and optimism about COVID-19 vaccinations, according to an American Banker article highlighting the report, but the survey showed that borrowers who remain unaware of available relief could put protracted liquidity burdens on servicers.

“It’s reduced, but the pain persists,” said Edward Seiler, RIHA Executive Director and MBA associate vice president of housing economics.

The portion of borrowers with foreclosure concerns varied by numbers of missed payments, starting at 2 percent for those with payments up to date, and reached 10 percent for borrowers who missed eight or nine payments. The dollar volume of missed mortgage payments fell to $14.2 billion from $19.4 during the fourth quarter. Rent payments fell to $7.2 billion from $9.1 billion.

Nearly 2.38 million homeowners and 2.62 million renters missed housing payments in December, down from 6 million combined in September. Also, the percentage of mortgagors who missed payments dropped to 5 percent from 7 percent, and renters in the same category fell from 8.4 percent to 7.9 percent.

Alternatively, the percentage of student debt borrowers that missed payments rose from 40 percent in May to about 43 percent. Some Americans hit hardest by the pandemic have income-based student loans, making it difficult to qualify for first-time homebuyer mortgages from the Federal Housing Administration.