Difficult housing is shrinking at a slower rate, new data shows
Renewed federal consumer assistance has reduced the chances that many current housing loans will become past due or later canceled, a TransUnion executive said.
A report released Tuesday by the Chicago credit bureau found the percentage of accounts in some form of withholding hardship housing was 2.87% on Dec.31, up from a peak of 2.87% on May 30. However, the pace of the decline has slowed.
Jason Laky, executive vice president and chief financial officer of TransUnion, said those accounts aren’t counted against defaults or write-offs, and lenders are hoping few people will join them later.
“Lenders and consumers alike expect this to be a temporary difficulty created by the impact of COVID. In the end, the consumer will be in a good position to make their payments again, ”he said.
The outlook for those outstanding loans has improved with federal relief in December that included direct payments of $ 600, and will improve further if another relief plan is passed by Congress, Laky said.
TransUnion’s latest monthly financial services industry snapshot included all homes registered at the end of the month and all accounts that were in homes before the COVID-19 pandemic. While the percentage of accounts in this status has declined, declines have slowed in recent months.
A TransUnion survey of consumers with loaner homes found:
- 25% of consumers want to resume their regular payments and work with the lender to extend the term of the loan;
- 19% of consumers want to extend hosting; and
- 17% of consumers would like to create a repayment plan to catch up while making larger payments.
The greatest percentage of hardship accounts is found among mortgages. It went from 0.48% on March 31 to a peak of 7.48% on May 30. The percentage gradually decreased and stood at 5.36% on December 31.
“Imagine sitting in mid-March facing the pandemic. Your employer has temporarily closed or reduced their hours, ”Laky said.
“It makes perfect sense that you are looking for accommodation on your highest monthly payment – even if you don’t need it, or you may not know whether you need it next month or not.” , did he declare.
The Mortgage Bankers Association Forbearance and call volume survey showed 2.7 million homeowners were on forbearance plans, or 5.37% of mortgages, as of Jan. 10, up from 5.46% of 5.46% of agent portfolio volume a week earlier .
MBA chief economist Mike Fratantoni said the abstention exit rate rose in early January, but remains well below the October and early November exit rates.
“Labor market data continues to point to weakness, meaning that many homeowners who remain unemployed will need continued relief in the form of forbearance,” Fratantoni said. “While new forbearance requests remain relatively low, the availability of relief remains a necessary support for many homeowners. “
Many of these accounts that TransUnion counts as difficult are held by consumers who pay some, most or all of their obligations. Others still need the help, which for many will start to run out in March or April.
To help lenders get a better idea of who borrowers are using housing and need help, TransUnion has started selling an add-on service called CreditVision Acute Relief Suite. It shows what accommodations borrowers use in other financial institutions, their balances and payment behavior.
“There are still hundreds of thousands of consumers in some form of financial hardship, and the more lenders can do to understand their clients’ financial situation, the better they can help them and build reliable and lasting relationships,” said Laky.