Late mortgage payments due to COVID-19 put black property at risk, report says

Theresa Battle had to close her daycare in New York’s Jamaica Queens neighborhood last March when the COVID-19 pandemic closed the economic, and in May, she had to ask her lender to temporarily suspend her monthly mortgage payment of about $ 2,200 that she couldn’t afford to pay.

After resuming payments in September, she is paying almost $ 1,400 more per month to make up for missed payments and to meet loan modification requirements.

“Even though I have the money, it gives me so much anxiety,” says Battle. “Every morning when I wake up I worry… And then in the evening, when you try to sleep, I’m lying there counting. I add and subtract because I still have bills. ”

Just as black Americans lost their jobs and their health at a higher rate than whites during the COVID-19 pandemic, Black homeowners also found it more difficult to keep their homes.

Between August 2020 and March, 17.6% of black homeowners fell behind on their mortgage payments compared to 6.9% of white homeowners, according to a report from the Center For American Progress, which analyzed data from the Household Pulse survey. US Census Bureau survey.

The gap offers another glimpse into how the pandemic cost black Americans, who generally had less financial safety net to help them weather the crisis, than their white counterparts.

“A lot of homeowners were working class workers who lost their jobs… so the loss of income means you’re going to fall behind on your payment,” says Andre M. Perry, senior researcher at the Brookings Metropolitan Policy Program and author on the barriers that black homebuyers often face. “Black people don’t have the same amount of wealth to absorb these economic shocks as our white peers. ”

Missed mortgage payments can ultimately lead to foreclosure and the loss of an opportunity to build up equity and close a gap that resulted in the typical white family having eight times the wealth of the typical black family, experts say. .

“You fall behind on your payments, it increases the risk of losing your home,” Perry said. “It impacts your credit score, reducing your ability to get another home… or a good interest rate on whatever else you need. So it can be devastating. “

“A lot of things have gone wrong”

The pandemic has exacerbated and exposed long-standing systemic inequalities, says Christian Weller, senior researcher at the Center for American Progress, co-author of the analysis and professor of public policy at the McCormack Graduate School at the University of Massachusetts in Boston .

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“A lot of things went wrong for many households, especially black and Latino households, during the pandemic. They were more likely to lose their jobs. They experienced longer spells of unemployment. And they faced challenges. more widespread and costly health problems emergency care due to greater exposure to the virus and less access to health care in their communities. ”

These financial difficulties have made it more difficult to stay up to date on bills, such as a mortgage, he says.

And because black workers have a higher unemployment rate than white workers and tend to earn less than their white peers even when they have a college degree, it’s harder to build a large emergency fund to cover. the expenses, says Weller.

The CAP analysis found that about 28.5% of black households that used up their savings during the pandemic also had to borrow from relatives and friends. This was compared to 16.1% of white households who did the same.

Black homeowners can also pay higher mortgage payments against the value of their property, Weller says.

“Black homeowners have less money for a down payment, receive less help from their family for a down payment, and they still face blatant discrimination in the mortgage market … steering them toward more expensive mortgages,” says he.

To sell or not to sell

While Weller says he has not seen an increase in seizures and that there is limited data on seizures based on race, federal census data showed that “most of those who took delay on their mortgage said they expected to be foreclosed within the next two months. ”

In today’s real estate market, where buyers engage in bidding wars to take advantage of historically low interest rates, some distressed homeowners may be able to sell their property “before they are foreclosed to avoid foreclosure. ruin their credit, ”says Weller.

But ultimately, the loss or premature sale of a home can hamper a homeowner’s ability to build equity that can be passed on to children or used to support a family during a layoff or retirement. a sickness.

“Households who lose their homes to foreclosure will find it increasingly difficult to obtain credit for other things such as starting a business,” says Weller. “Those households that decide to sell their homes will not be able to see the wealth gains from their home equity. increases … This could contribute to increasing wealth inequalities both within the black community and between black and white households. ”

Battle from Jamaica Queens is determined to keep her home.

She remembers being a tenant, conscientiously looking after the property before having to move out when the owner passed away.

“I said, ‘OK. I’m not going to argue. I’m going to find my own home, “and that’s what I started to do,” she said. “It’s important for me to have mine.”

Need for a “multi-pronged approach”

A variety of measures, from better enforcement of fair housing laws to tax credits that can help boost savings, could help more black Americans buy and keep homes, experts say.

“It means ending discrimination in the housing market by enforcing fair housing standards so that black homeowners don’t pay too much for their homes,” Weller said. “And that will require sustained attention to equality in the labor market so that black workers really have access to the same stable, well-paying jobs with good benefits that white workers (have) … The challenges are systematic and require systematic changes. ”

Follow Charisse Jones on Twitter @charissejones

This article originally appeared on USA TODAY: COVID-19 has led more black homeowners to fall behind on mortgages

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