Black HomeownershipMortgage

There’s a problem with the data measuring delinquency and forbearance

What if a homeowner is both delinquent and in forbearance?

According to the U.S Census Bureau’s latest Household Pulse Survey, close to 21% of both Black and Hispanic homeowners missed or deferred the previous month’s mortgage payment compared to 10% of white homeowners. However, Jung Hyun Choi, research associate at the Urban Institute, said the census data doesn’t tell the whole story.

Because the survey only asks whether a person missed or deferred mortgage payments, there is no way to choose both options – making it exceedingly difficult for researches to know whether a person is both under forbearance and also missed payments, Choi said.

And as of right now, there is no public data that acknowledges the share of forbearances by race and ethnicity.

“It’s frustrating to not have that information because we think it’s very likely that a lot of Hispanics and Blacks don’t have information that they can actually use the options to not pay their mortgages for at least a year,” Choi said.

In a recent podcast with HousingWire, Maurice Jourdain-Earl, co-founder and managing director of Compliance Tech, said despite a downward trend in forbearances, if an analysis were inclusive of Black Americans who may be experiencing financial hardship (in need of forbearance) there “would be a much different curve on that chart.”

Choi and her team estimate there will be a higher share of those who are delinquent without being in the forbearance option after hearing from housing counselors and sources that an overwhelming proportion of people don’t know they can take advantage of the program.

“We found out there’s about 10% of the people who are delinquent and not taking the forbearance option after COVID hit. We don’t really know who they are, their race, their ethnicity and why they are not using this option,” Choi said.

After 90 days, borrowers can choose to extend the forbearance program, however, data revealed nearly 20,000 people who came out of the program became delinquent, according to Choi. Her team’s goal now is to distinguish the race and ethnicity of these delinquent borrowers to determine the communities where there are information gaps.

“Now the beauty of this forbearance program is all you have to do is ask, but you can’t ask if you don’t know it exists – there’s no documentation that’s required. None of the Black people that I’ve spoken to were aware of this provision, but at the same time, none of the white people that I spoke to were aware of it, as well,” Jourdain-Earl said. “It’s not been in the mortgage servicers’ best interest to announce or to promote this program. So, they haven’t.”

In addition to tracking labor market conditions, Choi said researchers need more information on the financial and demographic characteristics of those who are in forbearance, by loan channel, to develop and implement adequate policies to help homeowners choose their best option to pay back their deferred mortgage payments.

“Obtaining this data will be challenging but not impossible. Servicers could provide some of this information, and the Census Bureau could add a question that asks whether households were or are in a forbearance plan when the Household Pulse Survey restarts later this year,” Choi said.

“Together with the variables about households’ housing payments and demographic and financial characteristics, the additional question could help us understand households who are not taking advantage of the forbearance option and give decisionmakers including policymakers, banks, servicers, housing counselors, community workers, and advocacy groups, a better sense of what supports could best meet their needs.”

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