02:29 GMT25 June 2021
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    Following several weeks of layoffs, business closures and other economic fallout related to the COVID-19 pandemic in the US, the nation observed surging mortgage delinquencies and a significant uptick in “financial hardship” statuses for certain credit products in April, according to American consumer credit reporting agency TransUnion.

    In an effort to obtain a more accurate assessment of COVID-19’s impact on the US economy, TransUnion issued a supplemental Monthly Industry Snapshot Report alongside its Industry Insights Report for the first quarter of 2020

    The credit reporting agency’s industry snapshot highlighted a dramatic increase in accounts entering into financial hardship status for the month of April - particularly products such as credit cards, auto loans, personal loan and mortgages. 

    TransUnion noted “financial hardship” can be defined by a number of factors, including deferred payment, frozen accounts or frozen past due payment. 

    Industry snapshot data showed some 14.7 million credit card accounts had financial hardship status in April alone. This translates to 3.22% of all related accounts. 

    Similarly, 3.54% of all auto loan accounts had financial hardship status last month, representing around 3 million accounts whose owners were unable to post payments in April. 

    Some 2.7 million mortgages, or 5% of all loans in that category, were in financial hardship, the data showed.

    This economic snapshot of the credit market amid the pandemic comes alongside the US’ ever-growing COVID-19 death toll. As of Thursday, nearly 95,000 American deaths have been linked to the novel coronavirus, according to Johns Hopkins University, closing in on US President Donald Trump’s hopeful cap of 100,000 fatalities. 

    While economists and other industry experts are being consistently tapped to weigh in on how the novel coronavirus has crippled the economy, Matt Komos, vice president of research and consulting at TransUnion, expressed that a true evaluation should be a future concern. 

    “Americans are facing challenging economic times, but it is still too early to tell the long-term implications of this pandemic for the credit markets,” he said in a company release

    “Consumers are currently performing relatively well from a credit perspective, though this is likely due to their use of federal stimulus packages, tax refunds, unemployment benefits and forbearance programs.” 

    At the same time, the aforementioned aid programs are all temporary fixes, and eventually consumers will be faced with loan payments that were deferred - not canceled. 

    “A clearer picture regarding serious delinquency rates and other credit variables will help businesses and consumers transact with confidence,” Komos added. 

    According to a recent report from Black Knight, 3.6 million US homeowners were past due on their mortgages in the month of April, contributing to a historic near doubling of the national delinquency rate. 

    Andy Walden, economist and director of market research at Black Knight, appeared to be in agreement with Komos regarding the rush to evaluate the scale of COVID-19’s impact on the economy. 

    “The impact of COVID-19 on the housing and mortgage markets has already been substantial," Walden told USA Today. "It will be some months before we can gauge the full extent of that impact. Whatever the ultimate scope, it is almost certain the effects will resonate for many months to come.”

    Walden also warned of future fallout in connection to forbearance plans. He explained to the outlet that while the placement of loans in forbearance has historically resulted in positive outcomes for homeowners, the “sheer number of mortgage holders impacted” presents “a risk that some may progress into default and foreclosure further downstream."


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    life under COVID-19 quarantine, coronavirus, COVID-19, credit cards, loans, debt, US economy, US economy, mortgage
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