Introduction
The report examines the experiences of mortgage borrowers during the COVID-19 pandemic, focusing on their interactions with servicers to access loss mitigation programs. While many distressed borrowers entered extended forbearance programs, some did not, despite these programs being available.
Data
The analysis uses data from the 2020 American Survey of Mortgage Borrowers (ASMB), which oversampled distressed borrowers. The survey was conducted from October 2020 to February 2021 and included questions about mortgage payment distress and experiences with servicers.
Borrower Characteristics
Distressed borrowers differed significantly from non-distressed borrowers in several ways:
Demographics: Distressed borrowers had a lower share of White non-Hispanic borrowers and higher shares of Hispanic borrowers.
Financial Metrics: They had higher debt-to-income ratios, lower credit scores, and lower income at origination.
Loan Characteristics: Distressed borrowers had lower loan amounts, higher interest rates, higher loan-to-value ratios, and were more likely to have government-insured loans.
Borrower Experiences Addressing Payment Difficulties
Challenges: Nearly half of the distressed respondents reported difficulties in accessing loss mitigation programs, either because they did not think they qualified or did not know how to apply. More than a quarter found the application process too cumbersome.
Language Barriers: Over 20% of distressed borrowers spoke a language other than English at home, and around 6.4% had limited English proficiency, slightly higher than non-distressed borrowers.
Borrower Experiences with Forbearance
Forbearance Understanding: More than one-third of distressed borrowers in forbearance were unclear about what would happen at the end of the forbearance period and how to repay suspended payments.
Conclusion
The report highlights significant challenges faced by distressed borrowers during the pandemic, including difficulties accessing and understanding loss mitigation programs and the impact of language barriers on these processes. These findings suggest areas for improvement in borrower communication and support.
Appendices
The appendices include supplementary analyses and comparisons of the ASMB respondent sample to the overall population of mortgage borrowers, showing that the ASMB respondents tended to have lower loan amounts, higher interest rates, and a higher prevalence of government-insured loans.