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3 in 10 Americans missed their June housing payment – study

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DISCLAIMER: As the COVID-19 public health situation evolves, new regulations are being continually issued. This page/story/information may not include the most recent information.by Ryan Smith12 Jun 2020

Americans are feeling a high level of housing insecurity amid the COVID-19 pandemic despite its economic impacts beginning to soften, according to a new report from Apartment List.

“Social distancing restrictions have started to ease across the country and some of those who faced layoffs were able to get back to work in recent weeks,” Chris Salviati, Apartment List housing economist and co-author of the report, said in an email to MPA. “However, despite these positive signals, the degree to which Americans are struggling to make their housing payments has yet to show any notable improvement.”

The report, based on a survey of more than 4,000 homeowners and renters, found that three in 10 Americans – both homeowners and renters – missed their housing payment or made only a partial payment in June.

These numbers are far outside the norm. According to data from the most recent American Housing Survey, collected in 2017, in a typical month only 3.9% of renters fail to pay their full rent, and the typical delinquency rate among mortgage borrowers is even lower. However, those rates skyrocketed in April, with 24% failing to make their housing payments. Mortgage delinquencies alone posted their largest single-month jump in history in April. The missed-payment rate spiked to 31% in May before creeping down to 30% in June.

Salviati said that 19% of survey respondents had not made their housing payment for June at the time of the survey, and an additional 11% made only a partial payment.

“Missed payments remain common for renters and homeowners alike,” he said.

Whether or not homeowners had the flexibility to work from home was “an important predictor of financial hardship,” Salviati said. Twenty-five percent of those who could not work from home made none of their June housing payment, compared to just 14% of those who were able to work remotely.

The financial stress faced by these renters and homeowners is causing many to worry about losing their homes, the study found.

“As the struggles with housing payments continue, we now find that 37% of renters say they are at least somewhat concerned about facing eviction in the next six months, while 26% of homeowners are concerned about foreclosure,” Salviati said.

Foreclosure concern was greatest among homeowners under 30 at 48%, indicating that first-time home buyers may be feeling the strain more than other groups, the study found.

The study did find a ray of hope, however – most people who missed their housing payment last month had made up the difference with late payments. Of the renters and homeowners who didn’t pay a full payment on time in May, only 11% left a portion of their rent or mortgage unpaid by the end of the month.

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Michigan license number:   DM-0016282 Available to the public and licensed in Michigan.

Section 13(1)  When a licensee establishes a debt management plan for a debtor, the licensee may charge and receive an initial fee of $50.00

Section 13(2)  A licensee shall attempt to obtain consent to participate in a debt management plan from at least 51%, in number or dollar amount, of the debtor’s creditors within 90 days after establishing the debt management plan. If the required consent is not actually received by the licensee, the licensee shall provide notice to the debtor of the lack of required consent and the debtor may, at its option, close the account. If the debtor decides to close the account, any unexpended funds shall be returned to the debtor or disbursed as directed by the debtor.

Sec. 14. (1) A contract between a licensee and debtor shall include all of the following:

(a) Each creditor to which payments will be made and the amount owed each creditor. A licensee may rely on records of the debtor and other information available to it to determine the amount owed to a creditor.

(b) The total amount of the licensee’s charges.

(c) The beginning and termination dates of the contract.

(d) The principal amount and approximate interest charges of the debtor’s obligations to be paid under the debt management plan.

(e) The name and address of the licensee and of the debtor.

(f) Any other provisions or disclosures that the director determines are necessary for the protection of the debtor and the proper conduct of business by a licensee.

Sec. 18. (1) In addition to the fee described in section 13(1), a licensee may charge a reasonable fee for providing debt management services under a debt management plan. The fee under this subsection shall not exceed 15% of the amount of the debt to be liquidated during the express term of the plan.

(2) A licensee may offer a debtor the option to purchase credit reports or educational materials and products, and charge a fee to the debtor if the debtor elects to purchase any of those items from the licensee.  Fees charged under this subsection are not subject to the 15% limitation on fees described in subsection (1).

(3) Except for a cancellation described in subsection (4), in the event of cancellation of or default in the performance of the contract by the debtor before its successful completion, a licensee may collect $25.00 in addition to any fees and charges of the licensee previously received by the licensee. This $25.00 fee is not subject to the 15% limitation on fees and charges under subsection (1).

(4) A contract is in effect when it is signed by the licensee and the debtor and the debtor has made a payment of any amount to the licensee. The debtor has the right to cancel the contract until 12 midnight of the third business day after the first day the contract is in effect by delivering written notice of cancellation to the licensee. A cancellation described in this section is not subject to, and a licensee shall not collect, the fee described in subsection (3).

(5) If a debtor fails to make a payment of any amount to a licensee within 60 days after the date a payment is due under a contract, the licensee may, in its discretion, cancel the debt management contract if it determines that the plan is no longer suitable for the debtor, the debtor fails to affirmatively communicate to the licensee the debtor’s desire to continue the plan, or the creditors of the debtor refuse to continue accepting payments under the plan.

(6) A licensee shall not contract for, receive, or charge a debtor an amount greater than authorized by this act. A person that violates this subsection, except as the result of an inadvertent clerical or computer error, shall return to the debtor the amount of the payments received from or on behalf of the debtor and not distributed to creditors, and, as a penalty, an amount equal to the amount overcharged.

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