New York City Has Nation’s Second-Highest Mortgage Delinquencies

When a new coronavirus relief bill fell apart last week amid political squabbling in Washington, the most obvious losers were the unemployed, renters facing evictions, and small businesses relying on the Paycheck Protection Program (PPP). Co-ops and condos who had hoped to start receiving PPP benefits under the new bill were merely collateral damage. But one group whose suffering has been overlooked during the political wrangling is homeowners with mortgages. And their suffering is real.

At 12%, New York City has the nation’s second-highest percent of mortgage borrowers who were at least 30 days behind payments in May. That’s second only to Miami’s 14%, according to an analysis of delinquency in the nation’s 10 largest metropolitan areas conducted by data provider CoreLogic Inc. They were followed by Las Vegas at 10.5% and Houston at 10%, Bloomberg reports.

Big cities have been hit hardest by the shutdowns that went into effect in March to limit the spread of the virus. The shutdowns hit restaurants, bars, theaters and hotel workers especially hard, with tourism in areas like South Florida and Manhattan vanishing overnight.

 “The national unemployment rate soared from a 50-year low in February 2020, to an 80-year high in April,” Frank Nothaft, chief economist at CoreLogic, says in the new report. “With the sudden loss of income, many homeowners are struggling to stay on top of their mortgage loans, resulting in a jump in non-payment.”

 Nationally, 7.3% of mortgage borrowers were in some stage of delinquency, including those in the federal forbearance program. The mortgage giants Fannie Mae and Freddie Mac have allowed homeowners facing hardships during the pandemic to delay payments for as much as 12 months. A year ago, the national delinquency rate was 3.6%, roughly half the current rate.

The “seriously delinquent rate” – meaning borrowers are at least 90 days late – rose slightly to 1.5%, the first annual increase since November 2010 during the depths of the Great Recession, according to the report. Nothaft expects that rate to quadruple by the end of 2021 without additional government support.

Given the current toxic atmosphere in Washington, homeowners and others suffering from the pandemic should not expect help from the federal government any time soon. Referring to a possible new coronavirus relief bill at a news briefing earlier this week, President Trump said, “The bill’s not going to happen because (the Democrats) don’t even want to talk about it, because we can’t give them the kind of ridiculous things that they want that have nothing to do with the China virus,” the Washington Post reports.

After meeting with Treasury Secretary Steven Mnuchin, House Speaker Nancy Pelosi (D-Calif.) issued a statement accusing the administration of “refusing to budge.” That was followed by a statement from Mnuchin proclaiming that Democrats “have no interest in negotiating.”

Welcome to Washington, where your tax dollars are always hard at work.