Most homeowners have lost patience, but those who remain are vulnerable.

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As of March 2021, about two-thirds of homeowners who signed up for some form of mortgage waiver during the Covid-19 pandemic have withdrawn from the programs. new study by the Federal Reserve of New York… Only 35% of borrowers, or about 2.2 million homeowners who signed up for abstinence, remain in these programs. New York Fed discovered

But those who remain tolerant tend to have lower credit ratings and live in low-income areas, making them more vulnerable to home loss when these programs end later this year.

“Borrowers in subprime credit rating segments are much more likely to be lenient and continue to be lenient,” said Joel Scully, New York Fed financial and economic analyst and author of the report on Wednesday. report.

In contrast, homeowners with the highest credit ratings tend to have given up on leniency.

Many of the current tolerance programs were created in the CARES Act last year and apply for federally backed loans offered through agencies including Fannie Mae, Freddie Mac, the Federal Housing Authority, and the Department of Housing and Urban Development. Private lenders and service centers also create their own abstinence programs.

The report found that those with FHA-backed mortgages are more prone to leniency. This is because these mortgages usually belong to first-time home buyers who live in low-income areas.

About 70% of homeowners still in disgust make no payments, and the researchers estimate that in the worst case, about 2.9% of all mortgage borrowers could be in arrears. This means that the serious delinquency rate, which is defined as payments over 90 days late, will rise from 0.9% currently to 3.8%.

This is still much lower than the 6.3% delinquency rate seen in 2010 at the height of the Great Recession.

But “even if we don’t see levels of delinquency that are comparable to those of the Great Recession, it could still pose significant challenges for the households involved, and it would still be a relatively dramatic increase to where we are today,” says Andrew Howout, co-author of the report and senior vice president of Research and Statistics at the New York Fed.

The good news is that this may not be the foreclosure wave that some experts predict will occur this fall as these abstinence programs begin to wind down.

In fact, to prevent a sharp increase in the number of Americans losing their homes, Financial consumer protection proposed a rule earlier this year this will prevent creditors from starting foreclosure proceedings before 2022. The CFPB’s proposed rule would cover all homeowners, including those who have mortgages through private lenders such as banks.

However, the CFPB plan is only a proposal at the moment. The agency sought public comment by May 11 before publishing a final rule.

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