“I don’t really think it’s worth it,” says Dahl, who’s losing about $5,000 in income each month his business is closed. “I don’t really want to pay four mortgage payments in one.” Dahl is one of many thousands of Americans who are having trouble making their monthly mortgage payments due to the coronavirus pandemic—or will soon, if the crisis drags on.
In the past month, nearly 17 million Americans have filed for unemployment as shelter-in-place orders, social distancing measures, and nonessential business closures went into effect.
Last week, economists estimated the unemployment rate was about 13%—worse than during the Great Recession. And those numbers don’t even include many out-of-work, self-employed, and gig workers along with those who’ve had trouble filing their claims because unemployment offices are overwhelmed.
The widespread misery spread by COVID-19 has left many homeowners scrambling to figure out how to pay their mortgages. Homeowners with government-backed loans—and even many without—are being offered up to 12 months of forbearance, doled out in 90-day chunks. But this temporary fix could result in another wave of foreclosures if additional assistance isn’t provided. Many homeowners could be asked to pay back all of those missed mortgage bills in one lump sum at the end of the forbearance period, a near impossible feat for many who can’t afford their payments today and don’t know when the economy will recover.
Fannie Mae, Freddie Mac, and the Federal Housing Administration say their borrowers, who make up slightly more than half of all buyers, are never required to make lump-sum payments. They also offer various assistance plans, some more generous than others. But even those homeowners will also eventually have to make good on what they owe, a hardship for those out of work. Those who can’t could eventually lose their homes.