The latest Coronavirus: Unemployment claims in the U.S. go down into new pandemic eras

U.S. borrowers are reluctant to deal with delinquency at the end of the program, according to research published by the New York Federal Reserve blog, but that doesn’t mean delinquency will approach levels seen in the financial crisis.

An important part of the US policy response to the coronavirus crisis was to reduce the risk of pandemic housing incidents and the risk of execution waves such as the financial crisis. An important policy was created by the Custody Act, which allowed lenders with federally secured mortgages to suspend or reduce their debt service payments for six months, while some agencies granted 12-month extensions.

The authors say the success of the program has protected lenders in the face of the financial crisis, “consumer delays and mortgage foreclosures were increasingly the engine of the financial crisis and then in a crazy cycle as a result of the crisis, housing prices fell and nearly 12 million because they involved foreclosure of Americans ”.

Mortgage borrowers have raised more than $ 6.1 million since the pandemic began, but many have sold home prices because of housing demand. More than 2 million are still looking for loans paid off on loans in March, of which 1.2 million were introduced in June or earlier last year.

Loans with the highest pandemic credit scores went at least in search of relief and only a quarter of them remained, compared to those with the lowest pandemic credit scores, where half were still intolerant, the authors said.

One of the manifestations of this is that their payment rate was lower than the payment rate of those who left faster. As a result, in March, 70% of unsecured lenders made no payments, a higher fee in 2020 than in any other month.

A serious delinquency rate could rise to 3.8 percent after the measure is completed if all of these borrowers are late, the researchers said. That would be above the previous pandemic rate of 1.3%, but below the levels seen in the financial crisis.

“However, from where we are, it seems unlikely that more than 6% of mortgage foreclosures will be linked to a delay of 90 days or more, as was the case in the Great Recession,” the researchers said.

How these loans are repaid will depend on the US recovery and policy measures.