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

Posted: 3 Jun 2021

See all articles by Xudong An

Xudong An

Federal Reserve Banks - Federal Reserve Bank of Philadelphia

Larry Cordell

Federal Reserve Banks - Federal Reserve Bank of Philadelphia

Liang Geng

Federal Reserve Banks - Federal Reserve Bank of Philadelphia

Keyoung Lee

Federal Reserve Banks - Federal Reserve Bank of Philadelphia

Multiple version iconThere are 2 versions of this paper

Date Written: March, 2021

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.

JEL Classification: D12, D63, G21, G50

Suggested Citation

An, Xudong and Cordell, Larry and Geng, Liang and Lee, Keyoung, Inequality in the Time of Covid-19: Evidence from Mortgage Delinquency and Forbearance (March, 2021). FRB of Philadelphia Working Paper No. 21-09, Available at SSRN: https://ssrn.com/abstract=3843819 or http://dx.doi.org/10.21799/frbp.wp.2021.09

Xudong An (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

Larry Cordell

Federal Reserve Banks - Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

Liang Geng

Federal Reserve Banks - Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

Keyoung Lee

Federal Reserve Banks - Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

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