More than 8 Million Households to Face Eviction or Foreclosure as the End of Moratorium Nears
Millions of Americans households are expected to face evictions or foreclosures as the national eviction ban comes to a halt by the end of June.
A new Harvard University housing report stated that while the nation is now rebounding from the global health crisis, there are still more than 2 million of American homeowners who are still lagging behind their mortgage loan payments. These homeowners are facing the risk of being forced out of their homes by the end of June once the housing moratorium is lifted.
Researchers earlier said that most of these homeowners who are facing foreclosure come from families of color or belonging to a low-income family. This finding was published by the researchers at the 2021 State of Nation’s Housing Report. To help alleviate their plight amid the pandemic, the US Congress has allocated $10 billion just to help them get caught up with their loan payments. Whether that funding though will make it to the affected families once the mortgage companies start to send out foreclosure notices, will remain unclear.
On the other hand, the Harvard researchers said that millions more renters are “on the edge of being evicted.” The census data show that about 6 million are still behind on their rent and if the federal eviction ban expires at the end of June, they could be forced out of their homes.
Last year, the Center for Disease Control and Prevention (CDC) provided much relief to millions of affect American households by ordering a halt in eviction amid the Covid-19 Pandemic. The CDC stopped lots of evictions and federal limitations on foreclosures for federally backed housing, unfortunately, these two are expiring, this end of June. Several housing advocates have been prodding the Biden administration to extend the two programs. However there is no clear indication an extension will happen up to this moment.
The report from Harvard University also stated, “With so many renters in financial distress, there are concerns about an impending wave of evictions.”
More than 7 million American homeowners grabbed the opportunity and took advantage of the foreclosure suspension which was passed as part of the Coronavirus Aid, Relief and Economic Security Act last spring. The then newly elected President Biden, extended the provision. And as of March this year, most of those affected American homeowners managed to start repaying their respective lenders, and some of these homeowners were even able to update their payments. However, despite these encouraging figures, the researchers said that there are still about 2.1 million households who are behind on their mortgage loans. Of the 2.1 million, 350,000 homeowners have a Federal Housing Administration loan and are behind for at least two months or 60 days. And the U.S. Department of Housing and Urban Development said that people of color would most probably make up that number.
One example is 51-year-old Karen King who is staff member at the Tuscaloosa Housing Authority. She is five months behind her loans in Birmingham, Alabama and she is really worried that she will be forced out of her home once the moratorium is lifted. King, fell behind her mortgage last year at the peak of the pandemic which forces her company to switch her o part-time hours. Currently, King is down by $4,200. Last January, luck was somewhat on her side as her job returned to full-time hours, but despite of thus, she has only been able to pay her normal loan amount – nothing more. She said that she is willing to try a special payment arrangement with her loan provider; however she is nervous about it citing that she is not even sure if her mortgage provider will grant her unusual payment scheme.
“I can not necessarily pay extra on the mortgage, so I am hoping I could work out something with them,” she said, adding that she is even willing to include on five payments at the end of her home loan. “I actually would prefer a deferment,” King further said.
Most people of color like her were really hit hard with income and job losses during the global health crisis. The Harvard researchers said that 17% of Black, 16% of Hispanic and 16% of Asian – American homeowners were financially distraught causing them to be behind their mortgage in the early of this year. White homeowners on one hand registered a 7% share of American homeowners who were behind rent.
In a statement, Harvard University researcher Chris Herbert said, “For those households with secure employment and good-quality housing, their homes provided a safe haven from the pandemic,” He further added, “But for millions struggling to cover the rent or mortgage, their housing situations have become increasingly insecure and these disparities are likely to persist even as the economy recovers.”
The Gap of Homeownership Remains
The report provided by researchers also showed a sharp increase in the prices of homes since the middle of last year, the shortage of homes available for sale across the country, and the homeownership gap between the Black and the White Americans.
The researchers also noted that in the first quarter of this year, Black ownership was only at 46% while the White household was at 74%. They further said that despite the slight improvement in the statistical gap, the numbers is still quite large based on historical standards.
The research also showed that the disparity in the income, contributed to be one of the main causes of the huge gap between the Black and the White Americans. In 2019, the median income for a household headed by a Black individual is just $45,000 while a White worker will probably earn a median income of about $76,000, the Census data show.
“Accumulating the savings needed for down payment and closing costs is difficult for most first-time buyers, but especially for renter households of color,” as presented in the report, which was funded by Wells Fargo, Habitat for Humanity, the National Association of Realtors and the National Association of Home Builders.
Putting in more financial aid to the home down payment assistance programs that state and local government is offering, and at the same time targeting those cash to the affected people of color would greatly help shorten the gap.