The US states where coronavirus is having the greatest - and least - economic impact have been revealed in a new survey. According to the latest Bankrate analysis, the states of New Jersey and New York - both early epicenters of COVID-19 deaths - are experiencing the most significant slowdowns as a result of the pandemic. At the other end of the spectrum, the index - which is compiled following the evaluation of mortgage delinquency and unemployment data - suggests that those residing in Idaho are the least affected.
What is the situation currently?
With the CARES Act requiring mortgage lenders Fannie Mae and Freddie Mac, the Federal Housing Administration and the Department of Veterans Affairs to allow borrowers to miss up to a year of payments without penalty, foreclosures currently remain low. At the same time, many of the best mortgage lenders have also voluntarily extended forbearance to more than a million borrowers with jumbo loans and other types of mortgages not backed by the federal government.
However, despite the flexibility afforded to mortgage borrowers, other pressures continue to grow, with disrupted incomes leading to a rise in household debt, as people look to the best personal loans and credit cards to bridge financial gaps. And with the $600 boost to unemployment benefit drawing to a close, the challenges only seem set to heighten further.
“States experiencing high unemployment will see mortgage delinquencies surge if unemployment remains elevated as forbearance periods expire,” explains Greg McBride, Bankrate chief financial analyst. “This year may see the worst for unemployment, but 2021 will likely bring the worst for mortgage delinquencies and defaults.”
Which states have been hit the hardest by coronavirus?
Further challenges undoubtedly lay in store, and are likely to pervade more states to a greater degree in the coming months and years. For now, however, the states enduring the greatest hardship, where real estate and labor markets have been most severely affected, are:
With unemployment rising to 16.6% in June, up from 15.2% in May, New Jersey takes over from Nevada at the top of the risk list. Small respite is delivered by a dip in the delinquency rate to 10.11%, down from 10.49%, but overall, its residents are suffering the most as a consequence of the pandemic.
The unemployment rate in the Big Apple was 15.7% in June, up from 14.5% in May, while its delinquency rate was 9.65%. Sadly, however, New York also leads the nation in COVID-19 deaths, reporting more than 23,000 fatalities as of July 22.
While continuing to struggle, the reopening of casinos has seen the jobless rate in the hospitality-driven state of Nevada drop to 15%, down from 25.3% in May. The Silver State’s mortgage delinquency rate has also improved, falling to 9.71%, from 9.99% previously.
New to the top five, Massachusetts had the worst unemployment rate in June of 17.4%, but a mortgage delinquency rate of just 6.37%. Sadly, the state had reported more than 8,200 deaths from COVID-19 as of July 22.
Having occupied the second spot in May, Hawaii has seen some improvement in the past month, particularly with unemployment falling to 13.9%, a sharp drop from 22.6% in May. Its mortgage delinquency rate also edged lower to 9.08%, down from 9.30%.
Which states have been affected the least?
On the other side of the coin, there are some states which have proven more resilient to the COVID-19 fallout, and are considered the least affected by the wider slowdown:
With a mortgage delinquency share of just 4.26%, and a jobless rate of 5.6%, Idaho has been least affected by the recession.
In Kentucky, an unemployment rate of 4.3% is the lowest in the nation, while just 5.64% of mortgages are late.
Also weathering the storm relatively well is Utah, where unemployment in June was 5.1%, and just 5.51% of mortgages were delinquent.
Recording a fall in the unemployment rate to 6.1%, down from 9.1% in May, Dakota is faring much better than a month ago. Its delinquency rate is 5.02%.
With an unemployment rate of 7.1%, which is well below the national average, and a mortgage delinquency rate of 4.88%, Montana completes the top five most resilient states.
What to do if you can’t pay your mortgage
While it is clear residents in some states are coping better than others amid the pandemic, there will be millions of homeowners across all states who are struggling to meet their monthly mortgage payments. So what should you do if this is you?
Evaluate your finances
It might seem obvious, but have you thought of absolutely everything that could save you money and potentially release some additional funds to pay for your mortgage? Have you filed for unemployment benefit if you’re out of work, and have you received your coronavirus stimulus check? Are you potentially owed a tax refund from the IRS that you are yet to claim - if so, load up your tax software and start filing. And if you’ve had your current mortgage for a while, it might be worth seeking out the best refinance mortgage companies to see if you can switch to a cheaper mortgage deal.
Speak to your mortgage lender
If you know you are struggling with your payments, and none of the solutions above apply, the next port of call must be to contact your mortgage lender - even if you are only worried about the prospect of missing a mortgage payment, give them a ring. Have ready details about your current situation, including your income and outgoings, and also be prepared to discuss why your situation has changed to give rise to your concerns. Importantly, however, you do not need to wait until a payment has been missed. With some lenders forbidden to enact foreclosures and evictions, most mortgage companies will be ready to listen.
Forbearance is the option most likely to be put forward by your lender - this involves your payments being paused or reduced for a certain period of time. As already mentioned, the CARES Act means payments toward mortgages backed by the federal government can be suspended penalty free for up to a year.
Besides telling your mortgage company that you are experiencing hardship due to the coronavirus, questions from your lender should be few and far between, and you shouldn’t need to complete any paperwork. Remember, however, that while there won’t be any penalties or interest added to your mortgage balance, your regular interest will still build up as normal.
Under a loan modification, your lender agrees to new payment terms without the need to refinance your mortgage.
The aim is to reduce your interest rate, extend your mortgage term, or alter your loan so that your payments become more affordable, but it is usually seen as an option of near last resort, to avoid foreclosure - forbearance will almost always be offered first. That said, the CARES Act has afforded lenders more flexibility to agree loan modifications than before COVID-19, so it is an option they could be willing to discuss.
Consolidate your debts
If your overall financial situation is spiraling out of control, particularly with regard to debt, do not simply put your head in the sand. Again, talking to those you owe money to is key, while the services of the best debt consolidation companies could help lower your monthly debt payments and help put you on the path towards a more stable financial footing in the future.