![]() ![]() Richard Vague is Pennsylvania’s acting secretary of banking and securities. We need to give these Americans the lifeline of time. ![]() The reluctance of Congress to enact additional aid would seem to convey an unwillingness to provide the support most needed by average working Americans. The Federal Reserve, by its dramatic support of the credit markets, has given crucial support to the assets primarily owned by the wealthiest Americans. But additional congressional action is needed to prevent a recurrence of economic damage. The pandemic has been crippling to many, but it would have been far worse if not for the decisive actions of the Federal Reserve and the CARES Act passed by Congress. All can be protected - at least over the near term - by continued government support such as proposed in the HEROES Act now being debated in Congress. With that, individuals would be able to pay their rent and mortgages, and thus small landlords would be able to pay their loans, and community lenders could avoid major losses.Īdditional congressional support would give these Americans the lifeline of time. In economics, time is the most important commodity other than money itself. Time for their businesses to get back on their metaphorical feet. This all comes because the individuals who make up the first link in that chain can’t pay, often just temporarily. Then the lenders themselves - those that made mortgage loans to households and those that made property acquisition loans to the small landlords - suffer loss. For renters, their landlords are then hurt because of those missed rent payments, and so they in turn go into default on the loans they took out to buy the rental property, something felt especially by the small landlords who have little clout with their lenders. But that is just the start of what is a chain of impairment. When people go delinquent on their mortgage or rent because of COVID-based job loss or income reduction, their lives often become a proverbial hell. Since this assistance has now expired, a new wave of delinquency is before us, and millions more Americans could go delinquent in the months immediately ahead. Many of the resulting evictions that normally would have occurred have been forestalled by government mandate, and a major portion of the mortgage payments and apartment rental payments that would have been late have been staved off by the lifeline of the $1,200 checks from the CARES Act and augmented unemployment benefits. With the loss of income and unemployment support, it is reasonable to believe that number will increase by several million over the next few months. ![]() With more than 43 million renters, that means more than 7.4 million are behind on their rental payments. That compares with less than 7 percent in prior years. Census Bureau reports that, as of July, 18 percent were delinquent in their rent payments. With that, I estimate that at least 1 million to 2 million more of these loans will fall delinquent before the end of this year.Īs for renters, the U.S. Add to that the fact that, per Black Knight mortgage analytics, almost 5 million homes have been in forbearance. With 53 million mortgages in the U.S., that means more than 4.3 million mortgages are delinquent. had reached 8.2 percent, the highest since 2011 and almost double the 4.5 percent of a year earlier. “The one thing you can be sure of though is the financial stress is increasing all the time and, at some point, some households are going to break,” he said.With COVID-related income supplements and unemployment benefits now expired or reduced, we face a new wave of mortgage and rental delinquencies, many of which will come in the next few months.Īccording to the Mortgage Bankers Association, as of June 30, mortgage delinquency in the U.S. The Bank of Canada estimates Canadians have between $100 billion and $300 billion in savings, he said, pointing out those figures are “quite a range.”Ĭross pointed out who actually has the savings is unknown, but may be concentrated in wealthy families less affected by interest rates. “But nobody is really sure how much it is.”Īdding to the staying power is there have not been major job losses in Canada. “The wild card in all this is all those savings Canadians built up during the pandemic,” he said. ![]() Philip Cross, a senior fellow at the Macdonald-Laurier Institute in Ottawa and former chief economist at Statistics Canada, said Canadians loaded up on debt during the pandemic due to low interest rates and are now vulnerable to interest rate spikes.īut when that debt and the accompanying interest rate spikes could manifest in mortgage defaults is unknown, Cross said. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |