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Dance school owner Larvita McFarquhar says she is dismayed at the lack of help the stimulus bill will bring to small businesses and says the tough policies of politicians are destroying lives in the United States.
A promising sign of a rebound in the pandemic-ravaged economy has stalled: fewer borrowers are resuming mortgage payments.
The proportion of homeowners who postpone their mortgage payments declined steadily from June to November, indicating people were returning to work and the economy was starting to recover. But the decrease has largely flattened since November, when the current wave of coronavirus cases exploded in communities across the country.
For about the past two months, this group of homeowners has stagnated at about 5.5%, according to the Mortgage Bankers Association. Although it’s down from a high of 8.55% in June, some economists are concerned about the slowdown in the abstention rate – and fear it may even start to climb as the economy sheds jobs. .
Other data points to a slowdown in the US economy this winter and increased pressure on household finances. Employers cut jobs last month for the first time since spring. The number of job vacancies has declined and unemployment insurance claims remain high. Retail sales have fallen for three consecutive months.
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“With the recovery waning and more and more jobless claims, we’re likely to see increased forbearance demand,” said Ralph McLaughlin, chief economist at Haus, a real estate finance start-up. “One of the guarantees that people have, if they own a house, is to apply for forbearance.”
The roughly 5.5% of borrowers withholding represent about 2.7 million homeowners, according to the MBA. (The rate slipped to 5.37% in early January.) At the peak in June, about 4.3 million homeowners were on forbearance plans, according to the MBA.
Shunda Lee had planned to restart payments on her house in Forney, Texas this month after Regions Financial Corp’s three-month forbearance ended. The courthouses where she works as a lawyer have often been closed, questioning her short-term income.
The pandemic first closed Texas courts last spring, but Ms Lee, 47, managed to stay on top of things until September, tapping her savings to help cover monthly payments of around $ 1,600 on his federally guaranteed mortgage. She recently requested – and obtained – a three-month extension of her abstention plan from the regions.
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If she still isn’t working full-time when the extension expires, she said, she plans to seek further forbearance. Ms Lee said she would seek help from her parents, who live nearby, as a last resort.
“If the worst comes to the worst, that’s what I’ll do,” she said. “No one wants me to lose my house.”
The Federal Care Act, passed last March, gave borrowers the option to defer payments on federally guaranteed mortgages for up to 12 months. About 75% of U.S. mortgages are guaranteed or insured by the U.S. government, according to mortgage data company Black Knight Inc.
Many homeowners might not be able to start paying again when older plans begin to expire in late March, said Andy Walden, director of market research at Black Knight.
“It’s a huge unknown in terms of how many of these owners… could get back on track and what share needs extra help,” Mr. Walden said.
According to Black Knight, only 35% of homeowners with forbearance plans that expired towards the end of December were taken out of forbearance in the first week of January. This was down from an average of 60% over the previous three months. That means more borrowers got extensions to their forbearance plans in January.
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Some of the borrowers who left the forbearance no longer needed the back-up plans, and others were able to develop longer-term repayment options, such as a modified loan with a lower interest rate. Others with recently expired forbearance plans have already fallen behind on their payments, according to the MBA. Of those borrowers, some likely needed an extension and simply forgot to apply for one – or didn’t know they needed to apply.
Homeowners with Federal Housing Administration loans are more likely to forbear than those with mortgages backed by Freddie Mac or Fannie Mae, according to MBA data. Only 3.13% of Fannie and Freddie mortgages were in forbearance in early January, compared to 7.67% of FHA loans.
FHA borrowers generally have lower credit, lower income, and lower down payments than borrowers Fannie and Freddie. Job losses during the pandemic have disproportionately affected low-wage workers, including employees in restaurants, hotels and malls who have been devastated by the home economy.
And people who need to sign up for mortgage relief in the near future might not be able to get it. The current deadline to apply for forbearance on many federally guaranteed home loans is the end of February. On his first day in office, President Biden asked the Department of Housing and Urban Development and other agencies to extend the deadline to at least the end of March. (The US Department of Agriculture has already agreed to do this.)
Dean Lemieux, 51, of Daphne, Ala., Signed a forbearance with his lender, Mr. Cooper Group Inc., in December.
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Mr. Lemieux, a project manager in the oil and gas industry, lost his six-figure income last spring when oil prices fell to their lowest level in years. He and his wife used their savings to stay up to date on their mortgage until the fall.
“It was like we were on the Titanic,” said Mr. Lemieux. “Now we are in the life raft with patience.
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