More than 2 million U.S. homeowners have recently missed a mortgage payment, banking data show, a sign that the deep economic slump caused by the coronavirus pandemic is taking a toll on household budgets.
The number of home loans that are past due by one month or longer grew to 3.7% in the first week of April, up from 2.7% the previous week, according to the Mortgage Bankers Association. By comparison, as of March 2 only 0.25% of loans were in forbearance, as late payments are called.
"The nationwide shutdown of the economy to slow the spread of COVID-19 continues to create hardships for millions of households," Mike Fratantoni, the group's chief economist, said in a statement.
Fratantoni said people are capitalizing on a provision in thethat bars evictions of homeowners between March 27 and July 25 for non-payment if their mortgages are backed by Fannie Mae and Freddie Mac.
Under the new law, passed in late March to deliver more than $2 trillion in financial relief, homeowners may also ask their loan servicers to reduce or suspend their mortgages for up to 12 months without incurring late fees or penalties. That applies to people with mortgages for single-family homes or condominiums. Loans backed by the U.S. housing, agriculture or veteran affairs departments might be eligible for CARES Act provisions as well.
Fannie Mae and Freddie Mac back more than half of all mortgages nationwide. Loans that aren't federally backed are not protected under the CARES Act.
Signs of stress in the mortgage sector come as many Americans are also. Nearly a third of households around the country didn't pay their rent as of April 5, according to the National Multifamily Housing Council.
Households are tightening their budgets as millions of workers around the country are being laid off, with most of the U.S. shuttering all but essential businesses.
Analysts expect the number of Americans who are falling behind on the mortgage to increase as unemployment skyrockets. Roughly 17 million workersover the last month, with many experts forecasting that the nation's jobless rate will soar above 10% by the end of April.
Black Knight, a provider of financial technology, said in a report this week that unemployment of 15% could result in more than 5 million past-due mortgages.
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