Number Of Borrowers In Financial Hardship Status Stabilizes

A new TransUnion consumer credit study finds the percentage of accounts in “financial hardship” started to level off for credit products such as mortgages during June 2020. Some of this leveling off was due, in part, to accounts coming out of financial hardship status in June.

 

The percent of mortgages in financial hardship stood at 6.79% in June compared with 7.48% in May, according to TransUnion. In June 2019, the level was .47%, according to TransUnion’s June Monthly Industry Snapshot Report. 

 

Accounts in financial hardship – defined by factors such as a deferred payment, forbearance program, frozen account or frozen past due payment – have largely kept delinquency numbers in check as consumers continue to navigate the ongoing impacts of COVID-19. TransUnion’s financial hardship data includes all accommodations on file at month’s end and includes any accounts that were in accommodation prior to the COVID-19 pandemic.

 

“In the early months of the pandemic, unemployment benefits and relief from the CARES Act gave consumers a bit of a cushion, leaving the consumer fairly well-positioned from a cash flow perspective,” said Matt Komos, vice president of research and consulting at TransUnion. “Lenders have been working with consumers during this time of uncertainty by extending financial hardship offerings that help them understand and manage their financial situation. These accommodations have been working as intended and have helped thwart a material breakdown in delinquency performance in the near-term.”