MReport May 2020

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M R EP O RT | 15 FEATURE COVER STORY SPECIAL REPORT: COVID-19 Homeowners Receive Additional Relief From HUD Department to allow payments to be deferred or reduced for up to a year. T he U.S. Department of Housing and Urban Development (HUD) announced a tailored set of mortgage relief options for homeowners with FHA- insured mortgages who have been impacted by COVID-19. HUD states, effective im- mediately for those who cannot make mortgage payments due to the virus, servicers must extend deferred or reduced mortgage payment options for up to six months and also pro- vide an additional six months of forbearance if requested by the borrower. This measure implements provisions contained in the CARES Act signed by President Donald Trump on March 27. "The last thing any of us wants is for Americans to lose their homes unnecessar- ily while we continue to fight this invisible enemy. If you're struggling, immediate help is now available. The FHA will continue to work with stakeholders to ensure that the loss mitigation options that are offered for both forward and reverse borrowers are appro- priately tailored for the present situation," said Dr. Benjamin Carson, Secretary of HUD. Additionally, the FHA implemented the COVID-19 National Emergency Partial Claim, an option to be used by servicers when the COVID-19 forbearance period ends. This will help eligible homeown- ers who have been granted forbearance to reinstate their loans by authorizing servicers to advance funds on behalf of homeowners. This claim will defer the repayment of those advances through an interest-free "sub- ordinate mortgage" that the borrower does not have to pay until their first mortgage is paid off. "For American families impacted by the COVID-19 virus and unable to pay their FHA-insured mortgage, im- minently losing their homes is now one less fear they should have," Assistant Secretary for Housing and Federal Housing Commissioner Brian Montgomery said. "Today's actions will ease the immedi- ate pressures faced by many Americans who, through no fault of their own, are struggling with financial uncertainty." A recent study by the Harvard Joint Center for Housing Studies (JCHS) found that 13 million Americans are at risk of losing their jobs due to the virus. "The loss of service jobs would undoubtedly worsen af- fordability for households who already must spend an out- sized portion of their incomes on rent each month," Whitney Airgood-Obrycki, Research Associate, JCHS said. Forty percent of households (5.2 million) whose wages came exclusively from at-risk jobs were cost-burdened as com- pared to 22% of households (13.1 million) whose income came only from other jobs. Virus Impacting Residential Construction Industry Survey finds 93% of respondents say traffic of prospective buyers is affected. T he National Association of Homebuilders' (NAHB) latest survey revealed that 93% of respondents said COVID-19 has impacted the traffic of prospective buyers. Responses for the survey were collected online between March 24 and March 30. The largest share of responses came from single-family home builders. Following traffic of prospective buyers, 89% of respondents said the virus was having a noticeable impact on homeowners' concerns about interacting with remodeling crew, and 86% said inquiries about remodeling have been impacted. Additionally, 64% of respon- dents said the virus has impacted the willingness of workers to report to a construction site—an increase from 42% the prior week. Every region increased when compared to the prior week. The Midwest reported the larg- est increase in the issues, rising from 40% last week to 73% in the current survey. COVID-19's impact was felt in Friday's jobs report, with the U.S. Bureau of Labor Statistics revealed the unemployment rate rose to 4.4% with total employment de- clining by 701,000. The reported increase of 0.9 percentage points in March is the largest month-over-month increase since January 1975, when it rose by the same margin. First American Chief Economist Mark Fleming called Friday's report, "a shock to the services sector this large is like nothing we've ever seen before." "While many stay-at-home orders exempt construction, hous- ing is not immune. Homebuilding and remodeling lost 4,500 jobs," Fleming said. Odeta Kushi, Deputy Chief Economist at First American said on Twitter, "this is an additional headwind to builders who were already facing labor shortages." The NAHB reported that residential construction lost 4,300 in March following an increase of 24,100 in February. The NAHB says residential construction em- ployment now stands at 3 million in March. The Bureau's report comes 24 hours after the U.S. Department of Labor announced jobless claims doubled to 6.6 million for the week ending on March 28—an increase of 3.3 million. Despite the passing of the $2.2 trillion CARES Act, Tendayi Kapfidze, Chief Economist at LendingTree, said these claims rep- resent a significant loss of income to many Americans and disrupt their ability to meet financial obligations.

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