The economic and social consequences of COVID-19 might be just beginning. A new report suggests a number of FHA mortgage holders are behind in payments:
More than 17% of the Federal Housing Administration’s almost 8 million home loans nationwide were delinquent in August, according to a new study from the American Enterprise Institute.
“Rising FHA delinquency rates threaten homeowners and neighborhoods in numerous other metro areas across the country,” American Enterprise Institute researchers said in the just released report. “It would be expected that these delinquency percentages will increase over time…
The increase in late FHA loan payments is even greater than the rise in the number of overall mortgage delinquencies since the start of the pandemic…
A new study by the Federal Reserve Bank of Dallas warns that highly indebted FHA borrowers are at risk of losing their homes when payment forbearance programs end.
More people falling significantly behind on their mortgages – plus other issues related to housing – could have ripple effects on a number of actors:
- Americans who need housing. If you cannot afford your mortgage or rent, what viable options do you have?
- Mortgage providers. If a lot of mortgages go into default or foreclosure, what does this mean for these large financial actors?
- Local governments and communities. With larger numbers of people without housing and limited housing, what happens? What happens to local tax revenues?
- Housing investors and people with resources. Does this mean they can take advantage of opportunities?
The memory of the burst housing bubble just over ten years ago lingers. While few predicted a worldwide pandemic and the resulting impact on housing, we could know within a few months whether this will lead to another housing crisis.