Mortgage rates soar to the highest level in nearly six months and 6 million people aren’t eligible for a COVID-19 pause on student-debt payments – MarketWatch

Hi there, MarketWatchers. Don’t miss these top stories:

Personal Finance
‘I will continue happily shopping there forever’: Costco customers react to retailer’s new $16 minimum wage

Some 180,000 U.S.-based Costco employees will begin earning $16 an hour starting next week, the warehouse retailer’s CEO announced Thursday.

We put our spendthrift neighbors in touch with our financial adviser. They called her ‘lousy.’ So how come WE are the ones who retired early?

‘Warren Buffett and Harry Potter couldn’t get those two retired early.’

‘Greed is rearing its ugly head and killing brotherly love’: My husband and his brother are at war over an inheritance from a beloved neighbor. What can we do?

The brother says his ‘early inheritance’ should not be taken into consideration ‘because it cost him so much trouble and work.’

Low wages are just the start of the problems for millions of U.S. workers during COVID-19 — here’s why

Prior research on wage inequality ‘understates the true level of inequality, said Ioana Marinescu, a University of Pennsylvania economics professor, and co-author of a new report.

Disaster tax-relief measures in the latest pandemic aid bill could help people impacted by the South’s deep freeze

You or your business may qualify for disaster tax-relief provisions included in the Consolidated Appropriations Act.

Borrowers with Fannie Mae, Freddie Mac mortgages can receive up to 18 months of forbearance, regulator says

The FHFA also amended its separate payment deferral option for homeowners so they can now miss up to 18 months of payments.

Pending home sales fall in January as inventory constrains buyers

Fewer Americans are applying for mortgages — a sign that some buyers may be dismayed by rising home prices and mortgage rates.

Mortgage rates jump to the highest level since August — is the refinance boom over?

Rates continue to be low by historical standards, but perhaps not low enough to make refinancing attractive for many homeowners.

My wife has homeschooled our son and our best friends’ son since September due to COVID-19. Is it too late to bring up money?

‘She’s putting in about 15 to 20 hours each week. The two families have shared the costs of the curriculum, school supplies and art supplies.’

‘It feels predatory’: 6 million people are not eligible for a COVID-19 pause on student-debt payments — even if they work in public service

One student-loan borrower is slated to pay off her debt when she’s 87, despite a career in public service.

Elsewhere on MarketWatch
State of the States: Are rainy days here again? In four charts, the pandemic’s pain

States and localities had only just recovered from the Great Recession when the coronacrisis erupted. One year on, how are the states doing?

The Trump tariffs aren’t going away quickly, Biden’s top trade nominee signals

The Biden White House is in no rush to roll back the stiff tariffs former President Trump imposed on China, Europe and other countries.

This is the best way to fix the chaos surrounding COVID-19 vaccine appointments

States must move to a one-stop preregistration system and then notify residents when it’s their turn to schedule appointments.

Goldman Sachs CEO: Working from home is an ‘aberration’

David Solomon cited collaboration as a reason for bankers to return to the office.


Black Homeowners Charged Higher Mortgage Rates Than White Counterparts With Similar Incomes – ValuePenguin

Inequality is also prevalent in mortgage refinancing

The U.S. housing market continues to see historically low mortgage interest rates and rising home prices, locking many out of finding affordable real estate. Another challenge? The mortgage rate disparities between Black and white homeowners.

When compared with white homeowners with similar incomes, Black homeowners have first mortgages — the loan used to buy or refinance a home — with higher interest rates, according to a new analysis from Harvard University’s Joint Center for Housing Studies (JCHS). What’s more, white homeowners with a significantly lower income than Black homeowners also have lower interest rates.

Lending discrimination lingers in mortgage market

The analysis, authored by JCHS research analyst Raheem Hanifa, found that although mortgage rates drop as incomes rise, race can impact the rate attached to a borrower’s home loan. The median interest rate for a Black homeowner with a household income of at least $100,000 was 4.169%, while a white homeowner with the same income had a median rate of 3.946%, a 22-basis-point discount.

The largest disparity exists between Black and white homeowners earning a household income between $30,000 and $45,000. Black homeowners with this level of household income had a median interest rate of 4.506%, while the rate for white homeowners was 29 basis points lower, at 4.213%.

Not all refinances are created equal

A mortgage refinance can help you snag a lower mortgage rate and monthly payment, cash out some of your available equity or get rid of your mortgage sooner. But, according to JCHS’ analysis, Black homeowners are not reaping the same level of refi benefits as white homeowners.

While the analysis found that Black homeowners were able to refinance into a mortgage with a rate that was 22 basis points lower than their old rate, that was still 20 basis points higher than rates for white homeowners who refinanced. Additionally, refinance rates for Black homeowners were similar to those of white homeowners who didn’t go through the refi process.

Remember to shop around

Your mortgage interest rate affects your loan affordability and several factors are used to calculate that rate, including, but not limited to:

  • Your credit score
  • Your down payment amount
  • Your loan type
  • Your repayment term

A higher credit score can help you get a better interest rate. Generally speaking, mortgage borrowers with credit scores of 740 or higher may be eligible for the lowest available mortgage rates. A larger down payment can also drop your rate because it reduces your lender’s risk by shrinking the loan amount you’ll need to buy your home.

Mortgages with shorter terms tend to have lower interest rates. For example, the typical 15-year fixed-rate mortgage has an average 2.21% rate, while the average 30-year fixed-rate loan has a 2.81% mortgage rate, according to Freddie Mac’s latest Primary Mortgage Market Survey.

Rates also vary by mortgage lender, which is why it’s crucial to shop around. Identify three to five lenders and reach out for price quotes. Pay attention to and compare interest rate and closing costs estimates; you may end up saving thousands over your loan’s lifetime.

Still, if you believe you’re experiencing lending discrimination, consider filing a complaint online with the Consumer Financial Protection Bureau or by reaching out to your state’s attorney general.

Methodology: The Joint Center for Housing Studies of Harvard University’s report analyzed 2019 data from the U.S. Census Bureau’s American Housing Survey. The analysis was published in February 2021.


‘How Can We Catch Up?’ Mortgage Denials Stack the Deck Against Black and Hispanic Buyers

The American dream of homeownership is not an equal opportunity ambition.

Black and Hispanic home buyers are more frequently denied mortgages than white buyers—even when their financial pictures are similar, according to a® analysis of 2019 mortgage data. When they are able to secure mortgages, Black and Hispanic borrowers are more likely to pay higher fees and interest rates on their loans than white and Asian borrowers.

“What we call it in my community is the ‘Black tax,'” says Donnell Williams. He is president of the National Association of Real Estate Brokers, an organization for Black real estate professionals, and a broker with Destiny Realty in Morristown, NJ.

“Even if we have a college degree, we’re still getting the same treatment as a white high-school dropout,” he says.

Black buyers were twice as likely to be refused mortgages than whites, according to the analysis of 7.2 million loan applications in 2019. Only about 5.5% of whites had their loan applications rejected, compared with 6.8% of Asians, 9.3% of Hispanics, 11.7% of Blacks, and 10.8% of multi-minority race individuals hoping to be approved. These denials were only for applicants where all the data was available for fully completed applications that weren’t withdrawn.

Decades of discrimination against people of color have resulted in lower homeownership rates among minorities than among whites in America. And that has a deep, long-term impact on wide swaths of America, since homeownership is traditionally how generations have catapulted themselves into the middle class, as their properties appreciate in value over time.

Nearly three-quarters of whites, 74.5%, owned their homes in the last quarter of 2020, according to a quarterly report from the U.S. Census Bureau. However, just 44.1% of Blacks, 49.1% of Hispanics, and 59.5% of Asians were homeowners in the last three months of the year.

“There are a lot of obstacles that are working against buyers of color,” says Brett Theodos, a senior fellow at Urban Institute, a nonpartisan research group based in Washington, DC.

On top of racial discrimination, “they’re less likely to get help with the down payment from the bank of Mom and Dad,” says Theodos. “They’ve also [often] entered adulthood with higher student loan debt, less inheritance, and are on average in professions that earn lower wages.”

Many of these problems took root generations ago. Whites who served in World War II were offered low-cost mortgages for single-family homes in newly built suburbs when they returned. Blacks and other minorities were often denied access to these loans. In many cases, Blacks, in particular, were explicitly barred from living in white communities through a toxic combination of racial covenants written in deeds and government-supported redlining.

Black Americans, like these Tuskegee Airmen, served their country in World War II but returned home to face discrimination.
Black Americans, like these Tuskegee Airmen, served their country in World War II but returned home to face discrimination.

Bettmann/Getty Images

So Blacks who wanted to become homeowners often had to buy homes at inflated prices in less desirable areas. If they were able to get mortgages at all, they typically paid more for them. And homes in these areas haven’t appreciated nearly as much as homes in white areas, except in the places that have seen significant gentrification. As homeownership is used to catapult folks into the middle class and build wealth, that’s left many minorities with less money to pass down to future generations in the form of college tuition assistance or a down payment.

“How can we catch up? How can we be on par? We didn’t have that head start of generational wealth,” laments the National Association of Real Estate Brokers’ Williams. “You want a piece of the American dream, and it’s hard. You feel like your efforts are in vain.” took a hard look at which races are most likely to be denied mortgages and the reasons provided for those rejections as well as who is paying the most for those loans. To do so, we analyzed 2019 mortgage application data available through the Home Mortgage Disclosure Act. The act, passed in 1975, requires most larger lenders to collect mortgage data and make it public. We looked at only first-lien mortgages on purchases of one- to four-family homes built on site, so manufactured homes wouldn’t be included.

When possible, we compared borrowers with similar financial profiles to see who was getting loans—and who wasn’t. However, our analysis doesn’t take into account certain discrepancies like credit scores.

Blacks most likely to be denied mortgages—even with good-sized down payments

According to our analysis, even aspiring home buyers of color with sizable down payments are more likely to be denied mortgages.

Black borrowers with 10% to 20% to put down were more than twice as likely to be denied than whites offering the same down payments. Lenders rejected 6% of whites and 9% of Asians—compared with 11% of Hispanics and multi-minority race borrowers and 13% of Blacks.

These higher denial rates may be due to minority borrowers having lower credit scores, more debt, or some other financial black mark. But lending experts believe that racial discrimination also plays a part.

For example, a loan officer might tell white borrowers to improve their credit before submitting an application, be more understanding of alternative forms of income, such as a family member contributing or a side gig, or wait until mortgage rates fall a little so their monthly payment is lower. The latter would increase such borrowers’ shot at getting a loan. But a loan officer may not do the same for customers of color.

“Some of it is decisions being made by the lending officers,” says sociology professor Lincoln Quillian of Northwestern University in Evanston, IL. “They have powerful stereotypes of who is likely to repay loans.”

Black and Hispanic borrowers often pay more for their mortgages

Black and Hispanic borrowers were more likely to receive higher mortgage interest rates on their loans—which can add up to big money over time.

About 59% of white borrowers and 52% of Asian borrowers received rates within 1 percentage point of the best (i.e., lowest) possible rate. However, only 51% of multi-minority race borrowers, 47% of Hispanics, and 44% of Blacks fared as well. (It’s unknown whether some of these borrowers pre-paid or bought down their interest rates during the closing process.)

Even the smallest differences in rates can really add up. A single percentage point difference can lead to a larger monthly mortgage payment and tens of thousands of dollars more paid out over the life of a 30-year fixed-rate loan. (The exact difference depends on the purchase price of the home, the exact mortgage rates, and the size of the down payment.)

A recent study found that wealthier Blacks were given higher mortgage rates than low-income whites.

Black households making between $75,000 and $100,000 a year were saddled with a median 4.215% mortgage interest rate in 2019, according to a report from the Joint Center for Housing Studies at Harvard University. However white households earning $30,000 or less had a lower median mortgage rate of 4.16%. The study looked at 2019 U.S. Census Bureau data.

Even Black households raking in $100,000 a year or more paid slightly higher interest rates, 4.169%, than low-income whites. Whites with six-figure incomes had median 3.946% rates—about 22 basis points less than Blacks who were also earning $100,000 or more.

“We have some deep problems in the mortgage market,” Raheem Hanifa, a research analyst at the center who wrote the study.

“Some of the differences in mortgage [costs] is due to differences in who the lenders are. There’s evidence that Black and Hispanic buyers are more likely to be marketed to by lenders who are higher-cost,” says sociology professor Quillian. “White and Asian borrowers are more likely to go to traditional banks.”

Predatory lending and the proliferation of subprime mortgages doled out to communities of color led to the last housing crash, and plunged the world into a financial crisis more than a decade ago. But at least some of today’s pricier lenders may simply be smaller operations that need to charge more since they’re not dealing with the economies of scale of the bigger banks.

People of color more likely to be denied loans due to debt

Minorities are more likely to be denied mortgages due to their debt. Before deciding whether to grant loans, lenders look closely at potential borrowers’ debt loads. Their goal is to make sure borrowers can afford to pay back their credit card, student loan, car, and other payments—on top of a mortgage.

Only 1.6% of potential whites borrowers had their applications rejected because of their debt loads—compared with 2.5% of Asians, 3.1% of Hispanics, and 3.8% of Blacks. About 3.7% of multi-minority race applicants were also rejected.

While that does not sound like that much of a difference, it means that 1 in 64 white applicants is denied versus 1 in 26 Blacks.

Some minority borrowers may simply carry more debt than white borrowers. Many face discrimination in the workplace that can manifest in lower salaries and fewer promotions. Also, they may not receive the same level of financial help from their families when they get into a tough financial spot.

Black households were more than twice as likely to have student loan debt than white households, according to a recent report from the National Association of Realtors®. About 43% of Black households had student debt, at a median $40,000, compared with 21% of whites, at a median $30,000 in student debt. (The report was based on a survey of more than 8,200 home buyers who purchased a primary home from July 2019 to June 2020.)

Employment and credit histories also led to higher mortgage denial rates for minorities

Blacks and Hispanics were also more likely to be denied a loan due to their employment history. One in 568 white applicants was rejected due to their work history, compared with 1 in 282 Blacks.

“People of color, notably Native Americans, Blacks, and Hispanics, face higher rates of discrimination in hiring,” says the Urban Institute’s Theodos. “It can be more difficult to be promoted or advanced.”

That plays a big part in how much they’re earning. In 2019, Asian households had the highest median incomes of $98,174, followed by non-Hispanic white households at $76,057, according to U.S. Census Bureau data. Hispanic households had a median income of $56,113, while Black households brought in the least, at $45,438.

Blacks and Hispanics are also more likely to lose out on a loan due to their credit scores. About 0.6% of Asians and 1% of whites were denied due to their credit histories compared with 1.6% of Hispanics, 2.9% of Blacks, and 2.4% of multi-minority races.

Typically, people build good credit by paying off their student loans, car loans, and credit card bills on time each month. However, many lower-income Americans are less likely to have graduated from college or have credit cards. And what folks do pay every month—their rent, utility, and cellphone payments—often aren’t counted toward credit profiles.

“It’s not just discrimination today that is why we see denials at higher rates for Blacks and Hispanics. It’s the byproduct of generations of systemic racism,” says Theodos. “We have a long way to go in overcoming the deep, historical divide of opportunity for people of color in this country.”


How to Retire in South Africa: Costs, Visas and More

How to Retire in South Africa – SmartAsset

Tap on the profile icon to edit
your financial details.

Home to both lively landscapes and a highly diverse and fascinating culture, South Africa stands out as a place of opportunity for many potential retirees. Bask in a glowing sun while out on the golf course or relax in the shade on a beach. If you are a foodie or oenophile, you can enjoy this country’s culinary treats and excellent wines. Between all the things to do and see, this southernmost African nation, where English is widely spoken, can sound like a dream. So, if you’re considering how to retire in South Africa here are a few areas to look into first. A financial advisor can help you determine if your U.S.-based assets will cover expenses in the Rainbow Nation.

Cost of Living and Housing

A common draw for U.S. expats when selecting a country to settle down in is a low cost of living, and South Africa tends to suit that criteria. Generally, its cost of living is 41.77% lower than that in the U.S., with rent 60.88% lower on average as well.

According to Numbeo, one of the largest cost-of-living databases, these averages stay relatively consistent across the country’s most important cities. Whether you examine one of its three capital cities, Pretoria, Bloemfontein and Cape Town, or its most populated urban location, Johannesburg, both the average cost of living and rent remain low.

For example, Johannesburg’s cost to rent a one-bedroom apartment in a city center averages around $470.22, and the price to purchase an apartment, by foot, in the same location is $92.53. According to World Population Review, Johannesburg’s 2021 population sits around 5,926,668. A comparable city is the U.S.’s New York City with 8,622,357. The cost of living in comparison to New York is less than half at 54.59%. For example, the average single bedroom in New York City is $3,269.65 for rent and $1,515.09 per square foot to purchase.

So, if your ideal retirement location has lower-cost housing, regardless of whether you want to rent or buy property, South Africa may be a suitable location.

Retire in South Africa – Visas and Residence Permit

While South African does have a visa that foreign nationals can apply for in the hopes of retiring there, there is no set age range for such a visa. Anyone of any age can apply for the retired persons’ visa as long as they meet other requirements.

It’s important to note that none of these rules concern working in South Africa. Generally, to retire in a foreign country and obtain a retirement visa, work is barred from the applicant. They have to have a sustainable pension to support them instead. However, while you still must prove a set amount of assets or funds, you are free to work.

Retirees tend to take two routes when retiring in South Africa: a retired permit or an independent financial person permit. The main difference between the two is that the retired permit allows for a temporary residency basis. A retired visa for a temporary residence is valid for up to four years and asks for a minimum income per month or year to be proven. Similarly, a retired permit application for permanent status asks for an increased minimum monthly income. Still, it lasts forever as long as the holder visits South Africa once every three years.

Lastly, the independent permit requires a minimum net worth of about $800,000 at time of writing and fee of about $8,000 at time of writing, but it has the same lifespan as the retired permit.

Retire in South Africa – Healthcare

The majority of South Africa’s hospitals are public, which tend to be overcrowded and under-resourced. They often have issues you would expect from an overburdened staff, including a need for updated equipment.

Expats are more likely to find excellent healthcare through the country’s private hospitals and practitioners, which can mostly be found in major urban areas. There, you’ll find several well-established, nationwide hospital chains that offer a high standard of care. You also won’t run into the issue of non-English speaking staff at these hospitals. However, their services are expensive. While South Africa’s Bill of Rights demands healthcare for all, it is based on a sliding scale. Typically, expats are put into a category that forces them to pay for healthcare out of pocket, so it’s a better idea to have private health insurance.

Retire in South Africa – Taxes

South Africa experiences extreme income inequality. The Gini coefficient, the standard index to measure inequality, of the country is 0.58 – one of, if not the, highest among any nation. South Africa, as a result of this and historical instability, is only just beginning to recover. However, because of this wealth disparity, personal income tax and most forms of revenue are only collected from a small percentage of the population.

South Africa’s personal income tax rates for residents are progressive and range from 18% to 45%, depending on your income bracket. Non-residents are only subject to taxes on income made from South African sources. The country defines a resident as someone present in the country for more than 91 days during the current and preceding five years.

It’s important to keep in mind that the U.S. requires all of its citizens to file taxes regardless of where they currently are in the world.

Retire in South Africa – Safety

The U.S. Department of State warns its citizens that South Africa is a location that experiences crime and civil unrest. More than the petty theft you may find in a travel advisory, South Africa experiences violent crimes, such as rape and mugging, which generally only occur at a higher frequency in central urban locations after dark. It’s also possible to find a demonstration or protest that has devolved into violence, disturbing the area and its traffic in the process.

On a lower level, some crimes, such as scams, also call for caution. It’s essential to be careful with your money, where you walk (especially at night) and keep your wits about you when interacting with things such as ATMs. Some are tampered with to obtain your cards and information.

The Takeaway

South Africa offers many potential benefits to the average retiree. It’s a naturally beautiful country that hosts a number of exciting sights and events to keep anyone entertained. Not only that, it’s a low-cost option in comparison to many countries and doesn’t put as many regulations in place for its retired foreign-born residents. There are legitimate safety concerns for the average tourist and a healthcare system that needs fine-tuning. Depending on your preferences for your retirement, the benefits may outweigh the difficulties or vice versa.

Tips for Achieving Your Retirement Goals

  • Finding the right financial advisor who can help you towards your goals shouldn’t be hard. SmartAsset’s free tool pairs you with financial advisors in your area in as little as five minutes. If you’re ready to be matched with your local advisor, get started now.
  • Retiring can come with all sorts of unexpected costs and obstacles. This is true even when you’re looking at a low cost of living country like South Africa. To prepare yourself, stop by our retirement calculator. All you have to do is input a few details about where you want to retire, when you want to retire and the value of your savings.

Photo credit: ©, ©, ©

Ashley Chorpenning Ashley Chorpenning is an experienced financial writer currently serving as an investment and insurance expert at SmartAsset. In addition to being a contributing writer at SmartAsset, she writes for solo entrepreneurs as well as for Fortune 500 companies. Ashley is a finance graduate of the University of Cincinnati. When she isn’t helping people understand their finances, you may find Ashley cage diving with great whites or on safari in South Africa.

Read next article

About Our Retirement Expert

Have a question? Ask our Retirement expert.

U.S. Housing Market Will Withstand a Wave of Foreclosures When Forbearance Ends

December 7, 2020 December 22, 2020 by Daryl Fairweather

Updated on December 22nd, 2020

Investors and first-time homebuyers will quickly buy up an impending wave of foreclosures from homeowners saddled with debt during the pandemic 

More than 3.3. million of U.S. homeowners will be on the hook for delinquent payments when mortgage forbearance ends. While some of those homeowners who are overleveraged or unaware of their options will contribute to a wave of foreclosures, most will be able to work with their lenders to either refinance their mortgage or sell to cash in on rising home values. American homeowners have gained $2 trillion dollars in home equity since the beginning of the pandemic alone, thanks to double-digit price growth driven by soaring homebuyer demand as the supply of homes for sale fell to historic lows. And an impending wave of foreclosed homes will only make a small dent in the inventory drought. First-time homebuyers and investors will likely quickly buy up any foreclosed homes, leaving the larger housing market unimpacted. While this is good news for the housing market and economy, it highlights a growing inequality between Americans who have suffered deeply during the pandemic recession and Americans who have been largely unaffected or have even become wealthier.

At the peak of the foreclosure crisis in 2010, the national average loan-to-value ratio was 94%,  meaning the average homeowner owed her lender nearly as much (94%) as the value of her home. As a result, many financially stressed homeowners couldn’t even afford to sell their home after paying agent fees of 6% and closing costs, so they often ended up in foreclosure. Currently the average loan-to-value ratio, among metros that report data, is 70%, meaning that the average homeowner has built 10% additional equity beyond an initial 20% down payment. 

Currently the metro with the highest loan-to-value ratio is Virginia Beach at 86.2%, but that is likely due to the high volume of low-downpayment mortgages for local veterans. But because military employment has been unaffected by the pandemic, just 0.3%  of homeowners say they are somewhat likely or very likely to be in foreclosure in the next two months, according to the Census Household Pulse Survey (see table below for data on each metro). The metro with the next highest loan-to-value is St. Louis at 78.1%, which is low enough that most homeowners could refinance their mortgage or sell to pay off delinquent mortgage payments. This explains why only 1.8% of St. Louis feel they are somewhat likely or very likely to face foreclosure, even as 9.2% of homeowners are not current on their mortgage payments. 

Las Vegas has the highest unemployment rate at 14.8%, but Las Vegas homeowners have plenty of equity with an average loan-to-value ratio of 67.9%. As a result, many Las Vegas homeowners are tapping their home equity and downsizing. New listings are up 6.9% from last year, but for every seller there are buyers moving in, which has kept the housing market strong — home sales are up 9.3% from last year. 

“I’ve worked with some people who are downsizing, finding something that fits their new budget,” said Redfin Las Vegas Agent Marco Di Pasqualucci. “Many have lost a job and aren’t sure if or when it’s going to come back. The common plan for these people is to take the equity out of their current home and rent something very affordable for a while. For some people, it’s a move for survival.”

Homeowners in forbearance have options to avoid foreclosure

Atlanta has the highest share of homeowners reporting they feel they are very or somewhat likely to face foreclosure in the next two months at 3.8%, and the fourth highest share of homeowners behind on mortgage payments at 13.5%.

“There was a misunderstanding in Atlanta for what the different options are for people in forbearance,” said Atlanta Redfin agent Ronisha Carson. “People didn’t know they could refinance, do a prorated monthly payment or tack it on to the end of their loan.” 

“In my experience selling foreclosed properties, some people don’t take advantage of forbearance because they aren’t educated on what it entails,” said Redfin agent Gina Sapnar. “There are people who are in forbearance who don’t understand how repayment works. For some people payments are tacked on to the end of the loan, but for others it may be a large payment due immediately at the end of forbearance as a lump sum, which could be very tough for people to repay. Some homeowners are underwater because they took on more debt than they could handle. I know of a restaurant owner who took equity out of his home to pay his workers during the pandemic. There are people suffering who have depleted their entire life savings, are drowning in debt and they aren’t paying their mortgages. But even those people have options. The lenders are really trying to work with occupants and educate them on how to avoid the scarlet letter of a foreclosure.”

Fannie Mae and Freddie Mac will allow borrowers in forbearance to defer repayment until the time the home is sold or refinanced. With record-low mortgage rates, homeowners behind on payments could theoretically refinance their mortgage debt into monthly payments lower than before the pandemic began. And if a borrower is in severe debt she may still be able to do a short sale or take advantage of cash-for-keys, where borrowers get a one-time payment to vacate their home.

Homebuyers and investors will snatch up foreclosed homes because of the shortage of homes for sale 

Even if there is a wave of foreclosures, those foreclosed properties will have little impact on the overall housing market because there is a shortage of homes for sale — the total number of homes for sale is at a record low.

“There are investors just waiting to buy distressed properties,” continued Sapnar. “I have one investor constantly reaching out, they are even looking for off-market homes because once a distressed home hits the market it gets multiple offers.”

And it’s not just investors who could benefit from a surge in foreclosures. Fannie Mae’s First Look program renovates distressed homes and offers them first to buyers who will occupy the home.

“The First Look program is great for first-time homebuyers who don’t want to compete with investors,” continued Sapnar.

Percent of Homeowners Deferring Mortgage Payments by Metro

Metro Average Loan to Value (LTV) Average Home Value Appreciation (Annualized) New Listings YoY Growth Median Sale Price YoY Growth Unemployment Rate Pct Homeowners Very or Somewhat Likely to Foreclose in the next two months Pct Homeowners with Household Income Loss Pct Homeowners Not Current on Mortgage Payments
Virginia Beach, VA 86.2% 17.3% 23.2% 12.8% 7.1% 0.3% 32.6% 6.4%
St. Louis, MO 78.1% 7.0% -28.9% 14.1% 5.5% 1.8% 36.2% 9.2%
Baltimore, MD 77.7% 18.8% 22.0% 14.3% 6.5% 0.6% 33.8% 10.5%
Pittsburgh, PA 76.8% 13.2% -0.8% 17.6% 7.8% 0.6% 41.3% 3.9%
Oklahoma City, OK 75.9% 9.7% 0.6% 18.1% 4.9% 1.3% 38.8% 7.5%
Columbus, OH 75.8% 10.2% 4.9% 16.3% 7.5% 1.5% 41.8% 8.1%
Cincinnati, OH 74.8% 10.4% 17.3% 19.2% 6.9% 1.5% 41.8% 8.1%
Washington, DC 74.8% 17.6% 35.7% 11.6% 6.7% 0.4% 33.1% 9.5%
Cleveland, OH 74.4% 11.7% 5.9% 12.7% 9.9% 1.5% 41.8% 8.1%
Minneapolis, MN 74.3% 12.5% 18.2% 12.5% 5.9% 0.4% 38.0% 6.6%
Denver, CO 73.6% 14.4% 19.7% 12.2% 6.5% 0.8% 41.6% 6.0%
Chicago, IL 73.1% 17.1% 14.4% 14.4% 10.5% 3.0% 40.6% 13.6%
Portland, OR 72.9% 11.9% 29.8% 10.6% 7.7% 0.7% 38.0% 4.2%
Nashville, TN 72.3% 12.2% -7.7% 12.0% 5.9% 1.3% 43.8% 12.5%
Warren, MI 72.2% 15.0% 0.6% 12.4% 9.8% 0.7% 47.0% 8.4%
Charlotte, NC 71.8% 13.3% -21.0% 14.2% 7.0% 0.8% 34.8% 8.7%
Sacramento, CA 71.8% 13.5% 32.8% 17.1% 8.9% 1.7% 45.9% 9.6%
Philadelphia, PA 71.3% 20.6% 14.4% 19.7% 7.9% 1.1% 46.4% 10.0%
Riverside, CA 71.3% 20.2% 10.7% 14.0% 10.4% 1.5% 50.0% 11.1%
San Diego, CA 71.3% 19.6% 15.5% 11.9% 9.0% 1.7% 45.9% 9.6%
Montgomery County, PA 70.9% 19.1% 22.2% 15.9% 7.9% 0.6% 41.3% 3.9%
Detroit, MI 70.5% 17.5% -5.4% 14.3% 9.8% 1.5% 52.1% 12.0%
Oakland, CA 70.1% 13.6% 41.4% 9.8% 8.6% 1.7% 45.9% 9.6%
Jacksonville, FL 69.6% 16.0% 0.9% 10.0% 5.1% 2.0% 46.1% 8.6%
Seattle, WA 69.6% 13.1% 37.8% 13.4% 7.4% 0.7% 39.9% 8.7%
Newark, NJ 69.2% 17.3% 25.6% 23.5% 9.5% 2.2% 45.0% 13.3%
Orlando, FL 68.1% 11.9% 0.5% 10.5% 9.8% 2.0% 46.1% 8.6%
Los Angeles, CA 68.0% 18.0% 25.1% 14.0% 13.6% 2.7% 49.2% 13.4%
Las Vegas, NV 67.9% 14.0% 6.9% 9.3% 14.8% 2.9% 51.0% 10.8%
Providence, RI 67.7% 18.7% 14.6% 15.5% 10.0% 2.5% 41.2% 14.8%
Atlanta, GA 67.3% 16.0% -1.2% 16.3% 6.7% 3.8% 37.5% 13.5%
Tampa, FL 66.5% 14.1% 6.6% 14.9% 6.1% 2.0% 46.1% 8.6%
New York, NY 66.2% 14.4% 40.6% 10.0% 9.5% 0.9% 45.9% 9.4%
Milwaukee, WI 65.8% 11.7% 13.6% 11.4% 6.0% 0.6% 34.1% 6.3%
Phoenix, AZ 64.3% 22.0% 10.8% 17.3% 6.3% 3.4% 40.2% 9.2%
San Jose, CA 64.2% 10.0% 48.6% 15.7% 7.1% 1.7% 45.9% 9.6%
Anaheim, CA 62.5% 17.6% 28.9% 12.0% 13.6% 1.7% 45.9% 9.6%
Fort Lauderdale, FL 61.1% 15.1% -2.5% 11.5% 10.1% 2.0% 46.1% 8.6%
Miami, FL 60.8% 13.5% -10.0% 12.9% 10.1% 2.3% 47.5% 15.4%
San Francisco, CA 56.6% 4.5% 40.5% 0.0% 8.6% 0.4% 40.3% 5.0%
West Palm Beach, FL 53.5% 14.1% -2.8% 19.3% 10.1% 2.0% 46.1% 8.6%
Boston, MA 52.6% 12.6% 17.2% 13.4% 9.2% 2.1% 42.5% 8.9%
Nassau County, NY 40.4% 16.3% 20.6% 15.2% 9.5% 0.6% 44.6% 7.9%
Austin, TX n/a n/a 12.6% 13.2% 6.4% 2.3% 40.6% 11.3%
Dallas, TX n/a n/a 0.4% 12.4% 7.5% 1.7% 44.7% 11.3%
Fort Worth, TX n/a n/a -4.5% 9.6% 7.5% 2.3% 40.6% 11.3%
Houston, TX n/a n/a 13.6% 10.9% 9.6% 1.3% 45.9% 8.8%
Indianapolis, IN n/a n/a 2.4% 15.8% 6.0% 2.9% 39.0% 10.9%
Kansas City, MO n/a n/a -37.4% 15.2% 4.9% 1.8% 36.2% 9.2%
San Antonio, TX n/a n/a -5.8% 11.6% 7.8% 2.3% 40.6% 11.3%

Sources: “Share Homeowners with Deferred Mortgage Payments” and “Share Homeowners with Household Income Loss” is from the 10/12/2020 Census Household Pulse survey on homeowners with a mortgage, “Unemployment Rate” is from the September  BLS report, “Average Loan to Value” is from 2020 county records, “Average Home Value Appreciation (Annualized)” is calculated from the Redfin estimate and public records of sales in 2020, “Home Price Volatility (Annual)” is from FHFA HPI through Q2 of 2020 and is the standard deviation of annual appreciation, “New Listings YoY Growth” and “Median Sale Price YoY Growth” is from MLS and county records as of October 2020.


How President Biden Plans To End LGBTQ Housing Discrimination

President Joe Biden‘s first days in office have been pretty hectic, so it would be easy to miss that one of the Democrat’s top priorities is ending discrimination based on sexual orientation or transgender identity.

One of the executive orders that Biden issued on Day 1 of his presidency will ban most discrimination at the federal level against members of the lesbian, gay, bisexual, transgender, and queer community. In terms of housing, this means it would be illegal for landlords, real estate agents, home sellers, or mortgage lenders to refuse to rent to, sell to, or work with LGBTQ people. Those who break the law could wind up in court and face hefty fines.

“This is a significant step, the likes of which we’ve never seen, to address discrimination against the LGBT community,” says Luis Vasquez, a legal scholar at the Williams Institute, which operates out of the law school at the University of California, Los Angeles. “Discrimination against LGBT people is persistent. It’s something that’s definitely still prevalent here in 2021.”

Although same-sex marriage was legalized across the U.S. in 2015, people who identify as LGBTQ are not protected under the Fair Housing Act. Just 23 states, Washington, DC, and certain cities protect gay couples seeking homes. Only 21 states ban housing discrimination against transgender people.

“People should be able to access healthcare and secure a roof over their heads without being subjected to sex discrimination,” states the order. “All persons should receive equal treatment under the law, no matter their gender identity or sexual orientation.”

The order clarifies that sexual orientation and gender identity fall under the federal government’s definition of “sex.” Historically, sex typically referred to someone being male or female (as identified at birth), although previous lawsuits had challenged this. But in a ruling last summer, the U.S. Supreme Court confirmed that the definition includes sexuality and gender identity.

Biden is now requiring federal agencies to do a deep dive into their policies, programs, regulations, guidance, and past executive orders, and basically clean house. The agencies are to consider suspensions or revisions to ensure that anything that includes “sex” uses the Supreme Court’s definition covering the LGBTQ community. Anything biased is expected to be thrown out.

The new president also issued an executive order this week to eliminate racially biased housing and lending policies. This is a big change from the previous four years.

“During the course of the Trump administration there was a significant rollback of a number of civil rights protections,” says Claudia Aranda, senior research associate at the Urban Institute, a nonpartisan research group based in Washington, DC.

Currently, only seven groups are protected under the Fair Housing Act of 1968. The original act made it illegal to deny housing or discriminate against folks based only on race, color, religion, and national origin. Six years later, sex was added to the list, and in 1988 it was expanded to include disability and familial status (such as having young children).

The executive order will likely lead to homeless transgender people being placed in shelters according to the gender they identify with, rather than being forced into one based on the sex assigned to them at birth. If such a situation occurs, they would have legal recourse.

“It’s important that these activities be illegal because they do, in fact, cause harm,” says Aaron Tax, director of advocacy for SAGE, a national advocacy group for LGBTQ seniors. “It sends a message to LGBT [people] across the country … that they have a right as much as anyone else to find housing. If they do face discrimination, the federal government has their back.”

While the federal protections are a huge step, individual state and city laws are still important as well.

It’s often cheaper and faster to take a fair housing complaint before a state court, says Sarah Warbelow, legal director for Human Rights Campaign, a national LGBTQ advocacy organization.

A local law may provide more coverage than the federal one, as well. For example, the federal law doesn’t pertain to landlords who rent out fewer than four units in a property where they also live. Some city and state ordinances may include those renters, allowing them to bring lawsuits.

Even after federal agencies update their regulations and policies, change isn’t expected to happen overnight. But it will go a long way to ensuring a more equitable environment, says Jeff Berger, president of the National Association of Gay and Lesbian Real Estate Professionals.

“Since same-sex marriage passed in the Supreme Court, this may be one of the most important [actions] that affects the LGBT community,” says Berger. “People who don’t experience [the inequity] really don’t believe it would happen in today’s era. … [But] we’re living in a polarized time. Not everyone in the country feels the LGBT community should have equal rights.”