The numbers are startling. More than 654,000 Massachusetts residents either missed their July rent or mortgage payment or feared they wouldn’t pay August, according to the U.S. Census Bureau.
More than one-quarter of the country is in the same boat.
In the commonwealth alone, without continued federal help, homeowners and renters could fall short in their housing payments by $135 million a month, based on data from Boston’s Metropolitan Area Planning Council.
Multiply that out across the country and there’s a multi-billion-dollar housing crisis brewing, researchers say. At the federal and local level, groups are tabulating the potential human and economic toll the coronavirus recession could wreak — especially if Congress doesn’t deliver more financial assistance in the coming weeks and months.
More than 300,000 Mass. residents didn't pay their rent or mortgage in July.U.S. Census Bureau
“Millions of households are being affected,” said Alexander Hermann, a research analyst with Harvard University’s Joint Center for Housing Studies. The government’s $600 weekly unemployment benefit checks — which stopped last week — have staved off the worst, he said. Without them, the nation could face “a much larger crisis and a much larger issue.”
A state moratorium on evictions and foreclosures has been extended to Oct. 17. But as the pandemic drags on, and the economy remains partially shuttered, a staggering number of people could find themselves struggling to pay rent and mortgage bills that are piling up. Renters may ultimately face even more risk of eviction than during the Great Recession.
“The amount of evictions that we could face when that moratorium ends is astronomical,” said Sarah Philbrick, socioeconomic analyst at the planning council. “It’s just a different scale than what we saw in 2008-2009.”
In the commonwealth, about one in five people report feeling insecure about their housing — either having missed their latest payment or unsure if they can pay the next, according to the Census Bureau’s Household Pulse Survey (July 16-21), which estimates the pandemic’s impact on a weekly basis.
Gladys Vega, executive director of the Chelsea Collaborative, said she’s so worried about people in her neighborhood being evicted, she’s setting up air mattresses to provide temporary shelter at the nonprofit’s offices.
“If it comes to the worst, this is where we’re going to put people,” Vega said.
More than 570,000 Mass. tenants and homeowners doubted they could make August housing payments.U.S. Census Bureau
The human pain is bad enough: Lower-income workers are struggling most, as are families with children, according to the pulse survey. People of color also are disproportionately affected. And undocumented immigrants are suffering below the radar.
Financial assistance from the CARES Act, including $1,200 stimulus payments and the extra $600 a week for people on unemployment, has been a lifeline for thousands of people. But some of that money may be going to other urgent expenses, such as food and health care. And the pulse survey shows many people relying on credit cards to get by, as well as loans from friends and relatives.
Then there’s the domino effect that vast amounts of unpaid rent and mortgages could have on the broader economy.
“Eighty percent of landlords seem to be fine and are collecting all their rent,’’ said Douglas Quattrochi, executive director of Mass Landlords, an association of smaller landlords in the state. “But the 20% aren’t fine and are in a real bad way.”
Mitch Matorin is a Worcester property owner who’s part of a lawsuit fighting the state’s temporary ban on evictions. If his tenants stop paying, he said, “I’m going to be in a serious situation with this building.”
The Aspen Institute, a Washington think tank, says one in five Americans who rent are at risk of eviction by Sept. 30. But Framingham attorney Richard Vetstein, who's representing Matorin in the moratorium challenge, said warnings of mass evictions in Massachusetts are overblown. Housing courts are facing such large backlogs, he said, it will take months to start processing new eviction cases.
“There's not going to be a tsunami of evictions anytime soon,” Vetstein said.
Overdue rents are stacking up, however. Small landlords often depend on rents to pay their building mortgages. They, like individual homeowners, can go to their banks to seek “forbearance,” or a delay in making monthly payments, under the CARES Act.
Four million homeowners, or 7.5% of mortgages, have delayed payments through forbearance requests as of Aug. 3, according to Black Knight Inc., a Jacksonville, Fla., firm that tracks mortgage data. A homeowner's missed payments get tacked onto the end of a loan, like a balloon payment, without a penalty.
Some bankers call this “dead money.” That’s because it’s not earning interest for a period, and can’t be deployed to other loans.
“From a community bank standpoint, it can't be indefinite,” said Jon Skarin, executive vice president of the Massachusetts Bankers Association. “There's a limited amount of funds. And if banks have to do this for too long, they're going to have to reduce their lending in other areas.”
Forbearance could eventually have this dampening effect on bankers. But it’s aimed at avoiding foreclosures and the kind of chaos that followed the 2008 financial crisis, by giving borrowers a chance to catch up if they lose a job.
“We don’t know how long that can last,” said Philbrick, of the Metropolitan Area Planning Council. “But that’s really important, and something we did not see in 2008-2009.”
As for renters, she said, their fate may be largely determined by when the pandemic gets under control, “and what we decide to do to help families right now.”
This segment aired on August 7, 2020.