When the COVID-19 pandemic reached the U.S. early in 2020, the public health crisis was accompanied by an economic disaster as well. As businesses scaled back their operations or closed permanently in response to stay-at-home orders and decreased consumer demand, millions of people lost hours or had their jobs eliminated altogether, putting their personal finances in danger. For many of these hard-hit individuals, one of the biggest worries was housing, with renters fearing evictions if they could not afford rent and homeowners concerned about falling behind on mortgage payments.
The government ultimately stepped in with robust stimulus measures to stabilize the economy and keep people from losing their homes. Notably, the CARES Act passed by Congress in March 2020 created eviction and foreclosure moratoriums and provided an option for homeowners with federally backed mortgages to request COVID hardship forbearance. The forbearance option allowed homeowners to pause or reduce loan payments for a temporary period—in some cases, up to 18 months. Both the moratorium and the forbearance options have been extended through June 2021 to provide more support to borrowers. And while the CARES Act only covered federally backed mortgages, many private lenders followed suit and voluntarily offered their own relief.
Forbearance and other government supports like stimulus checks and expanded unemployment benefits have so far kept homeowners from falling into delinquency on their mortgage payments. During the last recession, the collapse of the housing bubble and subprime mortgage crisis led to a spike in mortgage delinquency rates in the first few years of the downturn, followed by a gradual improvement over the last decade. But in 2020, mortgage delinquency rates actually took a noticeable turn downward in the months after the pandemic struck and the passage of the CARES Act. From January to June 2020, the percentage of mortgages that were 30+ days delinquent each month dropped by more than half, from 3.1% to 1.4%. Put another way, mortgage delinquency rates declined at the same time that job loss and economic uncertainty were at their highest.
This has been important during the pandemic because under more normal conditions, an area’s economic characteristics are a strong indicator of how likely it is that a homeowner in that area will fall behind on their mortgage payments. In particular, there is a noticeable negative correlation between mortgage delinquency rates and median household income, meaning that as income rises, delinquency rates decline. The correlation between poverty rates and mortgage delinquency is positive, meaning that they move upward together. The same point is true by either metric: if members of a household have more economic resources, it is less likely that they will fall behind on their home loan payments.
For that reason, many of the nation’s most economically distressed regions show higher rates of mortgage delinquency. Low-income, high-poverty states like Mississippi, West Virginia, and Louisiana lead the nation in mortgage delinquency, while more economically prosperous West Coast states Washington, Oregon, and California have the lowest rates. Interestingly, one factor that does not appear to increase the chances of mortgage delinquency is higher home value. Homes are least expensive in West Virginia and Mississippi among states, while typical housing prices in the West are significantly higher than in the rest of the country. This fact helps reinforce the impacts of income and poverty on mortgage delinquency: even when loan amounts are much larger, having more resources available means that well-off households are better able to keep up with their payments.
To identify these locations, researchers at Roofstock used data from the National Mortgage Database (NMDB) to analyze delinquency rates. The researchers also gathered data on home values in each state from Zillow, along with data on household income and poverty from the U.S. Census Bureau.
The analysis found that in Georgia, the overall mortgage delinquency rate sits at 1.6%. Out of all U.S. states, Georgia has the 19th highest mortgage delinquency rate. Here is a summary of the data for Georgia:
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Percentage of mortgages 30+ days delinquent: 1.6%
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Percentage of mortgages 90+ days delinquent: 0.6%
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Percentage of mortgages 30-89 days delinquent: 1.0%
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Median home value: $228,599
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Median household income: $61,980
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Poverty rate: 13.3%
For reference, here are the statistics for the entire United States:
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Percentage of mortgages 30+ days delinquent: 1.4%
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Percentage of mortgages 90+ days delinquent: 0.6%
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Percentage of mortgages 30-89 days delinquent: 0.8%
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Median home value: $269,440
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Median household income: $65,712
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Poverty rate: 12.3%
For more information, a detailed methodology, and complete results, you can find the original report on Roofstock’s website: https://learn.