Many homeowners avoided foreclosure in the wake of increased unemployment rates at the start of the COVID-19 pandemic in 2020 thanks to prompt efforts taken by the public and private sectors that offered urgent mortgage relief, according to the Mortgage Bankers Association’s (MBA). The study showed that over 80% of borrowers who had entered forbearance had either paid off their loans or started making payments by the end of 2021.
Experts report that some homeowners, however, continued to struggle financially and sought assistance from the Homeowner Assistance Fund (HAF). The MBA’s Research Institute for Housing America (RIHA) issued a new analysis today that looks at borrower outcomes after relief programs during the epidemic.
Key Findings:
- HAF programs served vulnerable homeowners, with more than 90% of HAF funds nationwide distributed to homeowners with incomes below the area median.
- HAF beneficiaries were geographically concentrated in areas that were more distressed during the COVID-pandemic, as measured by higher rates of unemployment and higher rates of mortgage delinquency.
- While the majority of HAF funds were used to cover past due or future mortgage payments, HAF programs also assisted with a variety of non-mortgage homeowner expenses, such as utility payments and property taxes.
- In addition to traditional mortgages, HAF mortgage assistance helped with payments for non-traditional types of credit instruments securing a principal residence such as reverse mortgages, land contracts, or mortgages with complex titles.
- More than one in ten of the 100,000 Ohio homeowners with mortgages as of the end of 2019 who subsequently received assistance for missed mortgage payments during the COVID-19 pandemic received.
- About 16 percent of Ohio HAF recipients received mortgage payment forbearance prior to receiving assistance through HAF.
- Ohio homeowners receiving mortgage payment forbearance disproportionately held government backed FHA, VA, or GSE loans.
- About one-third of the Ohio homeowners receiving assistance through HAF did not have evidence of a mortgage on their credit file. 80% of homeowners receiving assistance for non-mortgage expenses did not have evidence of a mortgage.
“There has been a lot of attention to COVID-era mortgage forbearance policies that are now a permanent part of the loss mitigation waterfall for homeowners with federally backed mortgages,” said Dr. Stephanie Moulton, Professor and Associate Dean for Faculty and Research at the John Glenn College of Public Affairs at The Ohio State University. “This is the first study to examine the $10 billion HAF program and the homeowners who benefited. The insights from this report help us think about potential gaps in the loss mitigation waterfall and the types of homeowners who may benefit from targeted support when they experience a crisis.”
The impact of the $10 billion federal program established in 2021 to assist homeowners impacted by the COVID-19 epidemic is examined in RIHA’s research, Stabilizing Vulnerable Homeowners in a Time of Crisis: Insights from the Homeowner Assistance Fund. The distribution and utilization of HAF assistance across the country, variations in state implementation, and the characteristics of borrowers who got support are all analyzed in the paper, with a focus on those who needed assistance beyond conventional forbearance and loss mitigation alternatives.
The characteristics of Ohio homeowners who got mortgage payment forbearance during the COVID-19 epidemic and those who received assistance through HAF, either in addition to or instead of forbearance, are compared in the report.
“Pandemic-era housing policy interventions proved highly effective in stabilizing the mortgage market and helping the vast majority of homeowners avoid foreclosure during an unprecedented economic shock,” said Edward Seiler, Executive Director, Research Institute for Housing America, and MBA’s Associate Vice President, Housing Economics. “The research highlights not only the success of broad-based relief efforts like forbearance, but also the critical role of targeted programs such as the Homeowner Assistance Fund in supporting more vulnerable borrowers. As we look ahead, these findings offer important lessons for how policymakers and industry stakeholders can respond to future economic disruptions while promoting sustainable homeownership.”
