Inequality in the Time of COVID-19: Evidence from Mortgage Delinquency and Forbearance

Xudong An, Lawrence R. Cordell, Liang Geng and Keyoung Lee

No 21-09, Working Papers from Federal Reserve Bank of Philadelphia

Abstract: Using a novel database that combines mortgage servicing records, credit-bureau data, and loan application information, we show that lower-income and minority borrowers have significantly higher nonpayment rates during the COVID-19 pandemic, even after controlling for conventional risk factors. A difference-in-differences analysis shows how much the pandemic has exacerbated income and racial inequalities. We then find that government and private-sector forbearance programs have mitigated these inequalities in the near term, as lower-income and minority borrowers have taken up the short-term debt relief at higher rates. Finally, we examine modification options for an estimated 2.8 million loans in forbearance, most with terms expiring by mid-year 2021.

Keywords: mortgage forbearance; inequality; COVID-19; loan modifications (search for similar items in EconPapers)
JEL-codes: D12 D63 G21 G50 (search for similar items in EconPapers)
Pages: 45
Date: 2021-03-02
Note: REVISED 2022-02-03
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedpwp:90064

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DOI: 10.21799/frbp.wp.2021.09

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