Millions Of Americans Skip Payments As Tidal Wave Of Defaults And Evictions Looms
SARAH MCCAMMON, HOST:
Americans are skipping payments on mortgages, auto loans and other bills. Normally, that could mean massive foreclosures, car repossessions, people's credit destroyed. But help from Congress and leniency from lenders have kept a looming financial disaster at bay for millions of people. Without more help, though, that might not last for long, as NPR's Chris Arnold reports.
CHRIS ARNOLD, BYLINE: Lawmakers and lenders of all kinds are trying to build a financial bridge to the future for people who've lost their income in the pandemic, but experts warn that the bridge is only half built. For one thing, the help isn't reaching some people that need it.
JONATHAN BAIRD: My name's Jonathan Baird. We live in Bruceton, Tenn., and I am a disabled veteran.
ARNOLD: Baird gets a small disability pension, but after the pandemic hit, his wife lost her job as a home health aide. That was most of their income. And, as a contract worker, she's run into delays with unemployment.
BAIRD: My wife has filed certified every week for her unemployment for 10 weeks now, and they have done nothing. We've struggled.
ARNOLD: Baird says his mortgage company told him that he didn't qualify for a federal program to postpone payments. But many homeowners have been given wrong or misleading information from lenders, and it appears that's what happened in Baird's case. He also called Ford Motor Company to try to get a break in the payments for his pickup truck.
BAIRD: When I contacted them, they told me that there was nothing they could do. Just basically make your payment or suffer the late fees.
ARNOLD: Baird says a call center worker told him that since he was late on a car payment last year, he didn't qualify for any help. After NPR contacted Ford, the company said that is not its policy. And Ford is now letting him skip a payment, which he says is a big help.
BAIRD: You know, we're paycheck to paycheck like most people. And when you take away that paycheck, especially for this length of time, we have to make the decision - a vehicle or food.
ARNOLD: And many people are getting help. According to the credit bureau TransUnion, about 3 million auto loans are in some kind of program to let people skip or make partial payments, as are 15 million credit card accounts. And those are low estimates. But looking ahead, advocates say that people could run into big trouble because the terms of these hardship programs can be all over the map.
ARACELY PANAMENO: Credit cards, auto loans, installment loans - there are no federal guidelines.
ARNOLD: Aracely Panameno is with the Center for Responsible Lending. She says, when it comes time to make up for all those skipped payments, there are federal rules for home mortgages but not for many other types of loans. So she says lawmakers need to protect people here, otherwise she says lenders could make demands beyond what people can afford.
PANAMENO: You must have a capacity to catch up with your payments in an affordable way.
ARNOLD: For their part, many lenders say, to keep helping people, they need a government conduit through which to borrow money themselves. Bill Himpler is president and CEO of the American Financial Services Association, which represents lenders who make car loans, personal loans, mortgages and offer credit cards.
BILL HIMPLER: If we can't keep the lights on because things have seized up, it's not good for anybody. It's not good for the customer. It's not good for the company. It's not good for the economy.
ARNOLD: One last big thing that lawmakers need to resolve is whether to extend expanded unemployment benefits. They're the biggest reason that most people who've lost jobs are able to pay rent and keep a roof over their heads. And while many people are going back to work, many others are still not. Andrew Jakabovics is with the nonprofit Enterprise Community Partners.
ANDREW JAKABOVICS: When the $600 a week unemployment insurance runs out at the end of July, most people expect tremendous displacement risk. Evictions are likely to go through the roof. Non-payment is going to be very, very significant.
ARNOLD: And with eviction moratoriums expiring in parts of the country, he says action is needed right away to help people who can't pay the rent as this pandemic drags on.
Chris Arnold, NPR News Transcript provided by NPR, Copyright NPR.