Since the beginning of the pandemic, a significant number of people have had difficulty paying down their mortgage. While it had previously started to decline after limited reopening, a surge in coronavirus infections has caused forbearances to skyrocket. As a result, mortgage lenders are staring down a potential economic crisis due to the sheer number of mortgagees who are no longer able to keep up with their mortgage payments.
Looking at the Statistics
In the last two months, the rate of forbearance (in other words, the rate of mortgagees seeking agreements to put off foreclosure due to nonpayment) has stayed roughly at 5.5%. This is down from a high of 8.5% in June, but is still significantly higher than it normally would be. Moreover, with the economy showing signs of slowing down, some experts fear the number of mortgagees failing to make their mortgage payments will only increase over time.
Explanations for the High Rate of Forbearances
The biggest reason that forbearances rose during the coronavirus pandemic has a great deal to do with COVID-19 itself, as well as the quarantine measures that were implemented to try to slow its spread. These measures resulted in businesses closing or limiting their business operations, while employees were furloughed or laid off. As a result, many people lost their sources of income, which in turn impacted their ability to pay for their mortgages, among other issues.
This is a major problem for mortgagees and mortgage holders alike. For mortgagees, falling behind on their mortgages means risking foreclosure, although that is currently delayed thanks to a federal moratorium on foreclosures. For mortgage holders, the situation is also dire, as they fail to generate expected income, with many resorting to forbearances and other methods to stave off the risk of getting bogged down in foreclosure proceedings.
What Can People Do?
For people struggling to pay down their mortgages during the pandemic, there are legal solutions available to alleviate the economic strain. The coronavirus crisis will not last forever, and when it does come to an end, you should put yourself in the best position possible. That is why you should consult an attorney with knowledge of foreclosure defense who can advise you on the best course of action for you.
At David J. Lorber & Associates, PLLC, we assist clients throughout New York who are at risk of losing their homes to foreclosure. We will explain your options and guide you in making the best decision for your circumstances. Call us at (631) 750-0900 orcontact us online to schedule your Free consultation at our Setauket office.