A tsunami of deferred debt is about to hit homeowners no longer protected by a foreclosure moratorium
Over 2 million homeowners are delinquent on their mortgage, and billions in federal aid has yet to be distributed
Only one week after New Orleans enacted a citywide stay-at-home order in March 2020, Laura Landry was hospitalized with covid-19, putting her out of work. Before she could recover, she was furloughed from her jobs as a nail technician and hotel employee.
When she found out she could enroll in forbearance — a provision that allowed those with federally backed mortgages facing covid-related hardships to defer their monthly payments — she took the opportunity. But now she owes over $20,000 on her home, and her forbearance ends next month, since the federal ban on foreclosures expired Saturday.
Landry is one of about 1.8 million homeowners still in forbearance as the safety net is removed. About a fifth of them will not be able to extend their forbearance past September. And among all homeowners, 1.5 million are 90 days or more behind on their mortgage payments but not in foreclosure.
Those who aren’t forced out will still be displaced if selling is their only option, and an estimated 1 in 10 borrowers in forbearance will not have enough equity to sell.