Theresa Battle had to close her day care center in the Jamaica Queens neighborhood of New York last March when the COVID-19 pandemic shut down the economy, and by May she had to ask her lender to temporarily suspend her roughly $2,200 monthly mortgage payment that she couldn’t afford to pay.
After resuming her payments in September, she is paying nearly $1,400 more a month to make up for her missed payments and to meet requirements to have her loan modified.
“Even though I have the money, it’s giving me anxiety so bad,’’ Battle says. “Every morning when I get up, I’m worried … And then at night, when you’re trying to sleep, I’m lying there counting. I’m adding and subtracting because I still have bills.’’
Just as Black Americans lost their jobs and health at a higher rate than whites during the COVID-19 pandemic, Black homeowners also struggled more to hold onto their homes.
Between August 2020 and March, 17.6% of Black homeowners fell behind in their mortgage payments compared with 6.9% of white homeowners, according to a report by the Center For American Progress, which analyzed U.S. Census Bureau's Household Pulse Survey data.
The gap offers another glimpse of how the pandemic took a greater financial toll on Black Americans, who typically had less of a financial safety net to help them weather the crisis than their white counterparts.
"Many homeowners were working class workers who lost their jobs…so loss of income means that you're going to fall behind on your payment,'' says Andre M. Perry, a senior fellow with the Brookings Metropolitan Policy Program and an author on the hurdles Black homebuyers often encounter. "Black people don’t have the same amount of wealth to absorb these economic shocks as our white peers.''
Missed mortgage payments ultimately can lead to foreclosure and the loss of an opportunity to build equity and narrow a gap that has resulted in the typical white family having eight times the wealth of the typical Black family, experts say.
“You fall behind on your payments, it makes it more likely you'll lose your home,'' Perry said. "It impacts your credit score, which reduces your ability to get another home …or a good interest rate on any other items that you need. So it can be devastating.''
"A lot of things went wrong''
The pandemic exacerbated and exposed longstanding systemic inequities, says Christian Weller, a senior fellow with the Center for American Progress who co-authored the analysis and is professor of Public Policy at the McCormack Graduate School at the University of Massachusetts, Boston.
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"A lot of things went wrong for a lot of households, especially Black and Latino households, during the pandemic. They were more likely to lose their jobs. They experienced longer spells of unemployment. And they faced more widespread, and more costly, health care emergencies due to greater exposure to the virus and less access to health care in their communities.''
Those financial hardships made it more difficult to stay current on bills, such as a mortgage, he says.
And because Black workers have higher unemployment than white workers, and tend to earn less than their white peers even when they have a college degree, it's more difficult to build up a sizable emergency fund to cover expenses, Weller says.
The CAP analysis found that roughly 28.5% of Black households that used their savings during the pandemic also had to borrow from relatives and friends. That was compared with 16.1% of white households who did the same.
Black homeowners also may be paying higher mortgage payments relative to the value of their property, Weller says.
"Black homeowners have less money for a down payment, get less help from their families for a down payment, and they still face outright mortgage market discrimination…steering them to more costly mortgages," he says.
To sell or not to sell
While Weller says he hasn't seen an increase in foreclosures, and there is limited foreclosure data based on race, federal Census data showed ''most of those who fell behind on their mortgage said that they expected to be foreclosed on in the coming two months.''
In the current housing market, where buyers are getting into bidding wars to take advantage of historically low interest rates, some struggling homeowners may be able to sell their property "before they are foreclosed on to avoid ruining their credit,'' Weller says.
But ultimately, the loss or premature sale of a home can hinder an owner's ability to build equity that can be passed on to children, or used to sustain a family during a lay off or illness.
"Households that lose their house to foreclosure will find it increasingly difficult to get credit for other things such as starting a business,'' Weller says. "Those households that decide to sell their house will not be able to see wealth gains from home equity increases…This could contribute to rising wealth inequality both within the Black community, and between Black and white households.''
Battle, from Jamaica Queens, is determined to hold on to her home.
She remembers being a renter, who dutifully took care of the property only to have to move when the landlord died.
"I said, 'OK. I'm not going to argue. I will find my own house,' and that's what I proceeded to do,'' she said. "That's important to me, to have my own.''
Need for "a multipronged approach''
A variety of steps, from better enforcement of fair housing laws to tax credits that can help bolster savings, could help more Black Americans buy and hold onto homes, experts say.
"It means putting an end to housing market discrimination by enforcing fair housing standards so that Black homeowners do not overpay for their house,'' Weller says. "And it will require sustained attention on labor market equality so that Black workers truly have access to the same stable, well-paying jobs with good benefits that white workers (have)…The challenges are systematic and require systematic changes.''
Follow Charisse Jones on Twitter @charissejones
This article originally appeared on USA TODAY: COVID-19 led to more Black homeowners falling behind on mortgages