Experts fear surge in foreclosures in Conn.

Tens of thousands of homeowners behind on mortgages

In a typical year as a foreclosure prevention counselor, Herman Gibson might help 30 people long past-due on their mortgages to renegotiate their loan, go to court, or sometimes find new housing. This year, Gibson has already aided three times that number of people.

It’s all because of the COVID-19 pandemic and the eco

The concern for Connecticut is greater than elsewhere because, for years leading up to the pandemic, the state’s 90-day delinquency rate — the percent of consumers in Connecticut with mortgages 90 days or more past due — was the second-worst in the country and roughly double the national average, according to an analysis of data from the Federal Reserve Bank of New York.

nomic setbacks that triggered for many homeowners across the state, said Gibson, who works at the Hartford-based Community Renewal Team, an anti-poverty nonprofit.

Now, as the end nears for mortgage deferrals that were put in place in early 2020 to help alleviate the pressure from lost income, tens of thousands of homeowners in Connecticut are facing a multi-thousand dollar crunch as skipped mortgage payments come due.

He and other experts fear many homeowners will ultimately be unable to pay off what they owe, setting the stage for a potential surge in foreclosures that could have a particularly significant impact in Connecticut.

The concern for Connecticut is greater than elsewhere because, for years leading up to the pandemic, the state’s 90-day delinquency rate — the percent of consumers in Connecticut with mortgages 90 days or more past due — was the secondworst in the country and roughly double the national average, according to an analysis of data from the Federal Reserve Bank of New York.

“If I haven’t paid my mortgage in three months, I’m not going to be able to pay that kind of money. I don’t think a lot of homeowners can,” said Jason Richardson, director of research and evaluation for the National Community Reinvestment Coalition.

Connecticut maintained the second-worst delinquency rate during the pandemic, through the end of 2020, even as delinquency rates dropped slightly with help from COVID-19 relief packages.

Gibson said many of his clients were on unstable ground before the pandemic, working jobs in service, for instance, that don’t provide income yearround. Many didn’t realize they would owe their missed mortgage payments when the federal relief period ended.

“All of this was just water building up behind the dam,” he said.

Nationwide, mortgage debt has grown substantially during the pandemic.

“Not even during the worst of the Great Recession have so many borrowers been so far behind,” the Consumer Financial Protection Bureau stated in late June.

In March 2020, Congress passed legislation designed to protect homeowners from losing their homes during the pandemic. Soon after President Joe Biden took office in January, his administration extended that aid, stopping foreclosures through the end of July.

Then, the Consumer Financial Protection Bureau enacted rules in late June that also aimed to stymie any surge in foreclosures.

During the pandemic, the federal government also gave borrowers the option to go into 18-month forbearance, or a temporary freeze on payments. Thousands in Connecticut took advantage, peaking at 66,000 properties in June of 2020, according to information from the financial services and analytics firm Black Knight, Inc. About 23,100 properties in Connecticut were still in forbearance as of Sept. 1.

Still, because of the relief that was available to homeowners in the first 18 months of the pandemic, it is difficult to estimate how many Connecticut mortgage holders could be in jeopardy of losing their homes in the coming months, in the absence of any aid.

But with forbearance opportunities beginning to dry up as the pandemic reaches its 18th month, borrowers will find themselves on the hook for the payments they deferred.

Some owners may face foreclosure. Others might refinance their loans or seek adjusted payment plans. For families who have suffered job losses and have fallen 90 days or more behind on mortgage payments, it will likely be difficult to catch up, Richardson said.