Teresa Buttle was forced to close her daycare center in the Jamaica Queens area of New York last March when the COVID-19 pandemic closed economy, and by May she had to ask her lender to temporarily suspend her monthly mortgage payment of about $ 2,200. that she cannot afford to pay.
After resuming payments in September, she pays another nearly $ 1,400 a month to offset missed payments and meet loan change requirements.
“Even though I have money, it gives me great anxiety,” says Battle. “Every morning, getting up, I worry … And at night, when you are trying to fall asleep, I lie and count. I add and subtract because I still have bills. ”
Just like black Americans lost their jobs and health to a greater extent than whites during the COVID-19 pandemic, Black homeowners have also struggled to hold onto their homes.
Between August 2020 and March, 17.6% of black homeowners delayed mortgage payments, compared with 6.9% of white homeowners. according to the report Center for American Progress, which analyzed data from the US Census Bureau Household Survey.
The gap provides another insight into how the pandemic has evolved. big financial losses black Americans, who generally had less financial protection to help them get through the crisis than their white counterparts.
“A lot of homeowners were workers who lost their jobs … so losing income means you’re going to delay payments,” says André M. Perry, senior fellow at the Brookings Urban Policy Program and author of the book, Barriers Commonly Faced by Black Home Buyers: black people do not have the same wealth to withstand these economic shocks as our white peers. ”
Missed mortgage payments can ultimately lead to foreclosures and loss of opportunity to build capital and close the gap, leaving the typical white family with eight times the wealth of the typical black family, experts say.
“You delay payments, it increases the likelihood that you will lose your home,” Perry said. “It affects your credit rating, which reduces your ability to get another home … or a good interest rate on any other subjects you need. So it can be devastating. “
“A lot of things went wrong”
The pandemic has exacerbated and exposed long-standing systemic inequalities, says Christian Weller, a senior fellow at the Center for American Progress who co-authored the analysis and is a professor of public policy at the McCormack graduate school at the University of Massachusetts in Boston.
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“During the pandemic, a lot went wrong for many households, especially black and Hispanic households. They were more likely to lose their jobs. They had longer periods of unemployment. And they faced more common and more costly health. for greater exposure to the virus and less access to health care in their communities. ”
These financial pressures have made it harder to keep track of accounts such as mortgages, he said.
And because Black workers have higher unemployment rates than whites.And generally earning less than their white counterparts, even if they have college degrees, it is more difficult to create a sizable emergency fund to cover expenses, Weller says.
The CAP analysis found that approximately 28.5% of black households who used their savings during the pandemic were also forced to borrow from relatives and friends. By comparison, 16.1% of white households did the same.
Black homeowners can also pay higher mortgage payments compared to the value of their property, Weller said.
“Black homeowners have less down payment money, less help from their families as a down payment, and they still face clear discrimination in the mortgage market … forcing them to switch to more expensive mortgages,” he says.
Sell or not sell
While Weller says he has not seen an increase in foreclosures and foreclosures data are limited by race, data from the federal census showed that “most of those who did not pay their mortgages said that they expect them to be foreclosed in the next two years. months. ”
In the current housing market, where buyers are in a rate war to take advantage of historically low interest rates, some struggling homeowners may be able to sell their property “before being foreclosed to avoid ruining their credit,” Weller says.
But in the end, the loss or premature sale of a home can prevent an owner from creating equity capital that can be passed on to children or used to support a family during a layoff or illness.
“Households that have lost their home to foreclosures will find it increasingly difficult to get credit for other things, such as starting a business,” Weller says. – Those families who decide to sell their home will not be able to see an increase in wealth from their own capital. increasing … This can contribute to increasing inequality in wealth both within the black community and between black and white households. ”
Battle of Queens Jamaica is determined to keep his home.
She recalls being a tenant who obediently took care of the property only to move when the landlord died.
“I said,“ Okay. I’m not going to argue. I’ll find my own home, ”and that’s what I started doing,” she said. “It’s important for me to have my own.”
The need for a “multidimensional approach”
Experts believe that a variety of measures, from stricter enforcement of fair housing laws to tax breaks that can help boost savings, could help more black Americans buy and hold homes.
“This means ending discrimination in the housing market by ensuring fair housing standards so that black homeowners don’t overpay for their home,” Weller says. “ And that will require a sustained focus on equality in the labor market so that black workers do indeed have access to the same stable, well-paid and well-paid jobs that (have) white workers … The challenges are systematic and require systematic change. ” …
Follow Charisse Jones on Twitter @charissejones
This article first appeared in the US TODAY: COVID-19 Causes More Black Homeowners To Delay Mortgage Payments