The pandemic has put tremendous pressure on thousands of CT homeowners, struggling to keep up with mortgage payments, property taxes, and other housing-related costs. Who has been most affected? And what resources are available to help?
Like most of the country, Connecticut experienced a severe economic downturn following the outbreak of COVID-19 that began in March 2020 and, in many ways, continues to impact residents well into 2021. Seemingly overnight, thousands of households had their incomes reduced due to job losses or their hours reduced as a result of having to take care of loved ones, thereby limiting their ability to pay their mortgage and other housing-related costs. In a matter of months, Connecticut saw its unemployment rate spike to levels higher than at any time during the Great Recession (approximately 2009 to 2012). As the state begins to reopen, unemployment rates remain above pre-pandemic levels. The loss of jobs in industries like tourism, food service, and hospitality has primarily and disproportionately impacted lower-income people and people of color.
The economic downturn also caused a severe housing crisis in Connecticut, resulting in rising delinquency rates and the unequal recovery from the pandemic in the housing market, especially among lower-income homeowners and in communities of color. According to the US Census Household Pulse Survey, between April 23rd and May 5th of 2020, 48,390 Connecticut homeowners had no confidence in their ability to pay their next month’s mortgage payment. As of early June 2021, that number had improved only slightly to 34,787. According to the Harvard Joint Center for Housing Studies (JCHS), 38.1 percent of homeowners in Connecticut lost employment income and 11.2 percent were behind on housing payments during the pandemic.
As federal and state foreclosure moratoria and forbearance periods end, it is expected that delinquency and foreclosure actions will recommence. According to Black Knight Inc., Connecticut’s June 2021 30 day delinquency rate is 4.9 percent with significant concentration in communities of color and low-income communities. This analysis assembles disassociated data to describe current conditions faced by Connecticut homeowners in an effort to assess the needs of homeowners across the state who have been impacted by COVID-19.
Prior to the outbreak of COVID-19 and the subsequent economic downturn, Connecticut’s monthly 30 day mortgage delinquency rate averaged 4.1 percent. Beginning in April 2020, the state’s delinquency rate jumped to 8.2 percent and then 9.6 percent in May (Figure 1). Delinquencies in Connecticut remained high throughout 2020 and into 2021, although they have declined significantly from their spring 2020 peak. In March 2020, Congress enacted the Coronavirus Aid, Relief, and Economic Security (CARES) Act which implemented the first foreclosure and eviction moratoria and broadly expanded the opportunity for all homeowners to access forbearance. The foreclosure moratorium was extended several times before ending on July 31, 2021.
The Federal Reserve Bank of Atlanta aggregates Black Knight McDash data, a loan level mortgage performance dataset from Black Knight Inc., in its Mortgage Analytics and Performance Dashboard (MAPD). This dataset comprises roughly two-thirds of the mortgage market and includes flags for delinquency and forbearance. The data is filtered for active loans for owner-occupied residences that are secured by first liens. Zip codes with under 50 active loans are excluded from the sample.
Based on the MAPD data (Figure 2), which reflects approximately two-thirds of the Connecticut market, forbearance rates in Connecticut peaked in June 2020 at 12.3 percent and have steadily decreased. As of April 2021, forbearance rates have remained steady at 5.4 percent for the last several months with at least 13,000 mortgages either in forbearance or 30 days delinquent.