Back in the days before the Great Recession, it was easy for people to secure a mortgage. When the Great Recession came, it became too difficult for those with less than perfect credit scores to get approved for a mortgage. Since then, the government-sponsored entities like Fannie Mae and Freddie Mac, and to some extent the Federal Housing Administration have exerted efforts to expand the credit box to creditworthy borrowers.
Then COVID-19 came! This public-health-turned-economic catastrophe, along with Hurricane Laura and Hurricane Delta, only heightens the risk of mortgage delinquencies. Increases in mortgage delinquencies will constrict the credit box again, which means getting easy mortgage approval will become a thing in the past again.
It was noted that the Black and Hispanic borrowers are disproportionately impacted negatively by a disaster based on data following Hurricane Katrina. Research associates Michael Neal, Linna Zhu, and Faith Schwartz suggest that this COVID-19 pandemic resembles that of a natural disaster during Hurricane Katrina.
Urban Institute convened a group last March, Mortgage Markets COVID Collaborative (MMCC), which brings together a wide range of experts and stakeholders to share data and discuss how the mortgage market’s response to the current pandemic can ensure equity, inclusion, and sustainability for homeowners.” The group published a new brief that urges the policymakers to maintain forbearance but fix its cost.
The group appreciates the importance of forbearances that helped the homeowners keep their homes up to date but specific forbearance policies have also contributed to the tightening of the mortgage credit box. Public policy can help mute the impact of natural disasters like the COVID-19 pandemic on foreclosures.
In the meantime that the MMCC’s suggestion is not yet materialized by policymakers, mortgages affected by COVID-19 pandemic may get in touch with Analytics Before Foreclosure at 866-857-5405 to find long-term solutions for homeowners.
