Published by Forbes on October 8, 2020
It seems there’s a communication issue with some of America’s struggling homeowners.
According to a new report, around 400,000 U.S. homeowners have become “needlessly delinquent” on their mortgage loans, despite qualifying for a payment-free forbearance plan.
Under the CARES Act, homeowners with a federally-backed mortgage can hit pause on their monthly payments if facing financial hardship. That relief can last up to 360 days from the date of application.
“These borrowers may not know they are eligible for forbearance or do know, but wrongly fear having to make double payments when the forbearance period ends.”
Data from the Mortgage Bankers Association shows that most struggling homeowners have taken the government up on its offer. As of this week, about 6.81% of all mortgage borrowers—or about 3.4 million households—are on a forbearance plan.
About 400,000, though? They’ve fallen at least a month behind on payments and could be at risk of foreclosure.
Michael Neal and Laurie Goodman, researchers for the Urban Institute, say it likely comes down to misconceptions about forbearance—or possibly a lack of awareness that forbearance exists at all.