WASHINGTON–Approximately two-million people are skipping their monthly mortgage payments in April, according to new data, and that number is expected to rise.
Separately, other data indicate more people are charging their rent to credit cards.
The Mortgage Bankers Association’s latest report shows approximately 3.74% of home loans were in forbearance as of April 5, up from about 2.73% the prior week.
“[T]he number of borrowers asking for forbearance will likely continue to rise at a rapid pace,” said Mike Fratantoni, MBA’s chief economist, in a statement.
The MBA data is based on a sample size of roughly 27 million loans, or slightly more than half of the overall number of “first mortgages” used to purchase homes.
The recently enacted CARES Act allows homeowners who face hardship from the coronavirus pandemic to request forbearance from the companies that service their mortgages, meaning they can suspend payments without penalty for as long as 12 months.
No Assistance for Servicers
As the Wall Street Journal noted, the stimulus bill provided no assistance to mortgage servicers, and the companies say they might have to come up with tens of billions of dollars to meet their obligations to investors if enough homeowners stop making payments.
The MBA and other industry players are pressing the Federal Reserve to support mortgage servicers via an emergency lending facility similar to those it has extended to other industries, the Journal said, adding bipartisan group of senators last week urged regulators to “take urgent and immediate action” to avoid a housing-finance crisis.
FHFA Director Mark Calabria had earlier indicated the companies are unlikely to get help from government-controlled mortgage giants Fannie Mae and Freddie Mac, which guarantee nearly half of mortgages.
More Charging Rent to Credit Cards
Meanwhile, new data also show a growing number of Americans are paying rent by credit card during the coronavirus pandemic, a move that is enabling more tenants to make timely payments but potentially pushing some deeper into debt and potentially leaving card issuers with big losses.
About 84% of tenants in the U.S. have paid all or partial rent through April 12, according to data released by the National Multifamily Housing Council. That’s up significantly from the first week of April, when about two-thirds of renters had paid, noted the Wall Street Journal.
The trade group, which tracks rent in market-rate properties, said closures of leasing offices and other effects of shelter-in-place orders may have contributed to payment delays.
Other data support the trend indicating more rent is being paid on credit cards. Entrata Inc., a digital property-management platform that pulls information from more than 20,000 apartment communities, showed a 13% increase in credit card usage in April compared with the first three months of the year.
The number of tenants paying rent with a credit card during the first week of April rose 30% compared with the same period in March, according to Zego Inc., a company that processes more than two million rent payments a month, the Wall Street Journal.
Concerns Raised
One consumer group is expressing concern, especially as there is a surge in filings for unemployment benefits.
“Your rent payment isn’t the only thing you owe, and chances are you have other financial commitments you’re having to keep on track as well,” Bruce McClary, spokesman for the National Foundation for Credit Counseling, told the Journal.
He added that while interest rates remain low, the average credit-card interest rate is still in the double digits, and people using cards to get cash advances to pay rent will see even steeper rates,
As CUToday.info has reported, Los Angeles, San Francisco and the state of Utah are allowing renters to defer rent they miss because of coronavirus and then pay it back over time, and dozens of other municipalities, states and court systems have also instituted temporary bans on evictions for unpaid rent.