Coronavirus impact: Unemployed homeowners at risk of losing homes amid pandemic

The Mortgage Banker's Association estimates just under four million Americans are in forbearance, which allows them to skip paying their mortgage due to the pandemic.

ByRandall Yip KGO logo

Friday, July 31, 2020

Unemployed homeowners at risk of losing homes amidst pandemic

The CARES Act gives most distressed homeowners up to a year to get back on their feet. So why are so many at risk of losing their homes?

HAYWARD, Calif. (KGO) -- The latest figures from REReport.com show a significant drop in sales of single-family homes and condos in the Bay Area. Sales are down anywhere from 10.9% to 34.1% in San Francisco, Alameda, and San Mateo Counties from July 2020 to the year before. Condo sales are also down double digits in Santa Clara County, and home sales there are flat.

Unfortunately for many already in a home, this is a stressful time. Many distressed homeowners are getting into deeper trouble.

Robert Benavides walks into his meeting with a housing counselor from A-1 Community Housing Services in Hayward.

The Union City man is struggling to keep up with his mortgage payments. The independent plumber has seen much of his work dry up during the pandemic.

"It just started to slow up, but this just made it worse," he told us.

Benavides asked us not to show his home, but just recently succeeded in getting a loan modification to save it from foreclosure.

"I was threatened and dates were given for auctions of my house on four different occasions," Benavides recalls.

He's fearful the current situation could push him back into foreclosure.

"It's tight, it's close. It is affecting my income," said Benavides.

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His situation may not be unique.

The Mortgage Banker's Association estimates just under four million Americans are in forbearance, which allows them to skip paying their mortgage due to the pandemic.

Lenders gave them three months to get back on their feet.

Those three months are about to expire for many, but under the CARES Act homeowners with federally-backed loans could get another three months and ultimately a total of one year.

Executive director Nancy Rivera of A-1 Community Housing Services fears that could cause more harm.

"The way I'm seeing it is you, you're just buying time. You're just buying time and once that's due, unless you have $20,000, $30,000 in back payments. I mean, we're going back to 2009," she warned.

The Great Recession began in 2007.

By 2010, 120,000 homes were repossessed in the month of September alone.

A-1 Community Housing Services fears a repeat. So for the next seven months, it's hosting monthly webinars for individuals in danger of foreclosure.

"So we're starting to offer more direct one-on-one counseling with individuals to help with a loan modification," said Rivera.

Homeowners who lack the funds to pay back mortgage can request a deferment to put the payments owed on the back end of their mortgage.

"It's almost like starting all over again. That's a deferment," she explained.

Christina Tetreault of Consumer Reports emphasizes that may be the preferred option for many.

Still, Benavides is uneasy.

He's dipped into his retirement savings to keep up.

"I'm staying afloat, but sometimes it's just, yeah, I get a little nervous," he told me.

Consumer Financial Protection Bureau: Find a housing counselor

Take a look at more stories and videos by Michael Finney and 7 On Your Side.