WASHINGTON, D.C. (September 17, 2020) — During the first three months of the COVID-19 pandemic, nearly 11 million households fell behind on their rent or mortgage payments and 30 million individuals missed at least one student loan payment, according to new research released today by the Mortgage Bankers Association's (MBA) Research Institute for Housing America (RIHA).

“Housing-Related Financial Distress During the Pandemic,” RIHA’s report, contains new, unreported data from an innovative household survey from the Understanding America Study (UAS), an internet panel survey of over 8,000 households specially tailored to study the impact of the pandemic. The study focuses on rent, mortgage, and student loan payment patterns from the second quarter of 2020.

According to RIHA’s findings, the sudden onset of the pandemic led to abrupt rates of job loss or reduction of hours worked, along with jumps in unemployment insurance benefits received. However, federal government stimulus programs and employees being called back to work both appear to have helped most individuals make their housing payments. The report found that 11% (5.88 million) of renters reported a missed, delayed, or reduced payment, while 8% (5.14 million) of homeowners missed or deferred at least one mortgage payment.

“RIHA’s study shows that households were largely successful in navigating a difficult economic landscape and continued to make their housing payments during the first three months of the outbreak. In contrast, nearly half of student debt borrowers missed at least one payment,” said Gary V. Engelhardt, Professor of Economics in the Maxwell School of Citizenship and Public Affairs at Syracuse University. “Data from other sources reveal that this trend has continued through August. With the first round of federal stimulus having run its course, and Congress deadlocked in passing another round of relief, families’ continued ability to meet their housing obligations during the ongoing pandemic is critical to the health of the housing and mortgage industries.”

Added Engelhardt, “The stubbornly high rates of new COVID-19 cases and the labor market’s sluggish recovery both present significant challenges for household finances as the country enters the fall. Particularly for renters, the combination of those who missed a payment – or were offered and did not take it – is substantive enough to suggest real risk to their ability to make upcoming payments.”

Key Findings from RIHA’s Study on Renters, Homeowners with Mortgages (Mortgagors), and Student Debt Borrowers Through June 30, 2020

• Unemployment and reduced hours spiked in early April for all three groups, followed by a decline in later weeks.
  • The percentage of those who reported having lost a job in the past two weeks held steady throughout the quarter at around 2.5% of renters, 1.5% of mortgagors, and 2% of student debt borrowers.
  • About 9% of employed renters, 8% of employed mortgagors, and 10% of student debt borrowers were working fewer hours than at the beginning of the pandemic.
  • Receiving unemployment insurance (UI) benefits:
    • Renters – 3% at the beginning of April to 12% by the end of June.
    • Mortgagors – 3% at the beginning of April to 6% by the end of June.
    • Student debt borrowers – rose from 3% at the beginning of April to 15% by the end of June.
• Minority groups were the most likely to miss rent, mortgage, and student debt payments.
• Property owners played a key role in helping renters to navigate payments.
  • 10.5% of renters missed one payment over the quarter, 4.5% missed two payments, and 2.7% missed all three payments.
    • About 11% of renters reported missed payments each week over the quarter.
  • 15% of renters received permission from their landlord to delay or reduce their monthly payment.
    • 37% of this subgroup of renters took up this offer and delayed or reduced a payment.
    • Among those renters who did not receive permission, only 6.7% missed a payment.
  • In aggregate, rental property owners lost as much as $9.1B in second-quarter revenue from missed rent payments.
• In part because of the mortgage forbearance program under the CARES Act, mortgagors were the least likely of the three groups to miss a payment during the second quarter: 5% of mortgagors missed one payment over the quarter, 2.8% missed two payments, and 3% missed all three payments.
  • Consistent with MBA’s second-quarter 2020 National Delinquency Survey delinquency rate of 8.22%, about 8% of mortgagors reported missed payments by week.
  • Around 20% of mortgagors received permission from their lender to delay or reduce their monthly payment.
    • 31% of this subgroup of mortgagors took up this offer and delayed or reduced a payment, which is consistent with MBA’s Weekly Forbearance and Call Volume Surveydata. Of those mortgagors not receiving permission, only 3.3% missed a payment.
  • In aggregate, total missed mortgage payments were estimated to be as much as $16.3B for the quarter.
  • Student debt borrowers were the most likely of the three groups to miss one or more payments.
    • 19.3% of student loan borrowers missed one payment over the quarter, 16.4% missed two payments, and 12.9% missed all three payments.
    • The percentage of borrowers reporting missed payments (by week) was around 46%.
    • Throughout the quarter, roughly 65% of borrowers received permission from their lender to delay or reduce their monthly payment, and 57% of this subgroup of borrowers took up this offer and delayed or reduced a payment.
      • Of those borrowers not receiving permission, 30.6% missed a payment.
    • In aggregate, 30.2 million individuals missed at least one student loan payment since the beginning of the pandemic.

RIHA’s report, authored by Engelhardt and Michael D. Eriksen, Associate Professor of Real Estate at the University of Cincinnati, provides close to real-time economic data on the rapidly evolving financial consequences of the pandemic by following the same set of households from before the outbreak through the end of June. Data from the third quarter will be released later this fall.

“RIHA’s comprehensive study sheds light on questions regarding the impact of the pandemic that other industry data sources have been unable to answer,” said Edward Seiler, Executive Director, Research Institute for Housing America, and MBA’s Associate Vice President, Housing Economics. “MBA continues to closely track the pandemic’s effects on the housing and mortgage markets. This study is one of the many ways we’re delivering real-time insights and analysis that are critical to members, policymakers, and consumers throughout the pandemic and subsequent economic recovery.”

WASHINGTON, DC – September 16, 2020 – Fannie Mae (FNMA/OTCQB) is reminding those impacted by Hurricane Sally and the West Coast Wildfires of available mortgage assistance and disaster relief options. Under Fannie Mae’s guidelines for single-family mortgages impacted by a natural disaster:

• Homeowners may request mortgage assistance by contacting their mortgage servicer following a disaster
• Mortgage servicers are authorized to suspend or reduce a homeowner's mortgage payments for up to 90 days – even without establishing contact – if the servicer believes the homeowner was affected by the disaster
• Homeowners affected by a disaster are often eligible to reduce or suspend their mortgage payments for up to 12 months
• During this temporary payment break:
  • Homeowners will not incur late fees
  • Foreclosure and other legal proceedings are suspended
• There are a number of options available to potentially help homeowners catch up on missed payments

In addition, homeowners currently on a COVID-19-related forbearance plan who are subsequently impacted by the storm or fires should contact their mortgage servicer to discuss options.

Fannie Mae also offers help navigating the broader financial effects of a disaster to homeowners with a Fannie Mae-owned mortgage and renters living in Fannie Mae-financed properties through its Disaster Response Network*, including:

• A needs assessment and personalized recovery plan
• Help requesting financial relief from FEMA, insurance, and other sources
• Web resources and ongoing guidance from experienced disaster relief advisors

Homeowners and renters can call 877-833-1746 to access Fannie Mae’s Disaster Response Network™* or other available resources.

“We are monitoring these situations, and we urge those in the path of the storm and fires to focus on their safety,” said Malloy Evans, Senior Vice President and Single-Family Chief Credit Officer, Fannie Mae. “Along with our lending and servicing partners, Fannie Mae is committed to ensuring assistance is available to homeowners in need. We encourage residents whose homes, employment, or income are impacted by this storm and fires to seek available assistance as soon as possible.”

*Operated by Clearpoint Credit Counseling Solutions, a division of MMI, through its Project Porchlight program

Record Mortgage Origination Volume Expected in 2020, as Housing Remains Highly Supportive of Economic Growth

WASHINGTON, DC – September 15, 2020 – Despite continued downside risks, full-year 2020 real GDP is now forecast to contract by 2.6 percent, an improvement from the prior month’s forecast of a 3.1 percent contraction, according to the latest commentary from the Fannie Mae (FNMA/OTCQB) Economic and Strategic Research (ESR) Group. The upgrade was attributed to continued strength in consumer spending – and data suggesting that such spending is likely to support economic growth through the remainder of the year. In fact, the ESR Group also improved its forecast for real GDP growth for the third quarter 2020 to 30.4 percent – from the prior forecast of 27.2 percent – but reduced its expectations for fourth quarter growth to 6.2 percent from 8.7 percent due in part to the lack of further COVID 19-related legislative stimulus. Risks to the forecast remain skewed to the downside, including the potential for a re-acceleration nationally of COVID-19 cases, a slowdown in global growth, and consumer retrenchment owing to diminished unemployment benefits and the expiration of federal relief programs. To the upside, many households continue to save at elevated levels and appear to have the means to offer additional support to the economy through increased spending.

Housing also continues to play an important supportive role in the country’s economic recovery, according to the ESR Group. The pace of existing home sales jumped in July to a level not seen since 2006 and, importantly, was followed by strong pending sales, purchase mortgage applications, and construction data. As a result, the ESR Group substantially upgraded its full-year 2020 forecasts for both new and existing home sales—and, with robust refinance demand, for total mortgage originations to $3.87 trillion, which would be the highest nominal dollar annual total in the series’ 32-year history.

“The most important factor in our expectations for U.S. economic performance remains the impact of COVID-19 on household, business, and policymaker actions,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. “Optimism regarding a potential vaccine and declining infection and mortality rates are all supportive of stronger growth; however, any delays or disappointment in the development and deployment of a vaccine could result in a reduced rate of growth. As expected, the pace of economic recovery is slowing, but housing remains highly supportive. The Federal Reserve has made clear that it has no intention of raising interest rates in the near future, and, as mortgage spreads continue compressing, households are seizing the opportunity to refinance their existing mortgages. Historically, low interest rates are also an inducement to buy homes, but slow supply growth continues to result in high levels of home price appreciation, which is offsetting some of the affordability benefits of the lower rate environment.”

Visit the Economic & Strategic Research site at fanniemae.com to read the full September 2020 Economic Outlook, including the Economic Developments Commentary, Economic Forecast, Housing Forecast, and Multifamily Market Commentary. To receive e-mail updates with other housing market research from Fannie Mae’s Economic & Strategic Research Group, please click here.