Karen LeSage needs a car.
LeSage, a 57-year-old single mom from East Hartford, Connecticut, needs to drive to the hospital and pick up her seizure-prone teenage daughter from school because of a leg injury.
“I have to pick her up,” says LeSage. Without her car, “I wouldn’t have been able to do it,” she adds.
But last year, LeSage was told that his car was at risk of being seized because he missed payments.
“For me, every penny counts, and losing even a few cents on gas can be devastating,” says LeSage.
LeSage is one of a growing number of Americans facing financial hardship as the US economy slows. On Thursday, the U.S. Bureau of Economic Analysis reported that first-quarter gross domestic product fell to her 1.1%, the lowest in nine months. GDP, the final value of goods and services produced in a country, is a powerful indicator of the health of the US economy.
tied up for cash
A slowdown is beginning to appear in Americans’ personal finances. According to a recent Bankrate survey, 49% of U.S. adults are saving less than they did a year ago. 10% of those surveyed said they had no savings at all.
The bottom line: The most dire consequences for U.S. households, such as car foreclosures and home foreclosures, are starting to rise.
“As a result of the government’s stimulus package and current policies, [economic] Margaret Lowe, senior director at Fitch Ratings Group, has seen delinquencies increase in the sector over the past few months, following headwinds.
Delinquencies on auto loans for U.S. subprime borrowers are almost back to pre-pandemic levels from a record low set in the summer of 2021, according to Fitch data.
Meanwhile, foreclosure applications are starting to surge. According to the data of A.Tom, a real estate analytics firm, U.S. foreclosure filings totaled 95,712 in the first quarter of 2023. This is 6% higher than the previous quarter and 22% higher than a year ago.
36,617 US properties were foreclosed in March alone, a 20% increase from February and 10% more than a year ago. It was the 23rd consecutive month that foreclosure activity increased year-over-year.
Attom CEO Rob Barber said in an emailed statement that some of the increase in foreclosure activity was due to the backlog accumulated while a pandemic-era federal foreclosure moratorium was in place. This could be explained by the lender who has That suspension he will end in July 2021.
By that point, an estimated 2 million homeowners were behind on their mortgages amid job losses and other hardships brought on by the pandemic, he said.
Overall, the increase since then has been less severe than some economists and industry experts had expected, Barber said. Many homeowners have benefited from a strong economic recovery during the pandemic. This included his year-long home purchase during a period of low interest rates. The unemployment rate remains at historically low levels. Relative job stability has allowed many delinquent homeowners to keep up with their mortgage payments.
Homeowners’ wealth has also increased as home prices have skyrocketed over the past few years. It offers incentives for delinquent homeowners to “find a way to get their loans back up to date,” Barber said.
According to ATTOM data, 94% of mortgaged homeowners had at least some equity built into their property in the fourth quarter of last year. worth.
“With more income, more equity and fewer payments, the increase in foreclosures will be slower than expected,” Barber said.
But the outlook for the rest of the year remains bleak given the changing housing market, rising mortgage rates and inflation, he said.
Referring to the beginning of the financial crisis in 2008 and 2009, Barber said, “Foreclosure filings are likely to continue to rise, but nothing like 2008 when the bubble burst.
Rick Burroughs, The 61-year-old from St. Charles, Missouri, had about $23,000 left to pay off his loan when his lender began foreclosure proceedings on his home late last year.
Burrows lives alone and has lived in her current home for over 20 years. In 2020, he contracted his Covid-19 and was on oxygen for about seven weeks. The experience left him unemployed for several months and caused his credit score to plummet.
In 2021, his car he used to serve legal papers was remanded.
“Every time I turn around financially, when I’m able to get back on solid footing, something else seems to happen,” Burroughs said.
Today, he still struggles with the long-term effects of COVID-19 and often feels fatigued at work. With fluctuating prices for everything from groceries to gasoline, he struggles to sustain himself while managing additional medical bills for physical therapy.
recession is coming
Fitch economists expect a “moderate recession” in the second half of the year, but analysts expect the unemployment rate to remain relatively low, Lowe said.
Still, she said, “What is expected is to get worse. [in credit quality] Continue. “
In January, Tukwetta Crowley, 43, lost her home in Hampton, Connecticut, to foreclosure. She fell into predatory loans and when the pandemic hit she had no means of paying her mortgage and her mortgage skyrocketed from her $95,000 to her $250,000.
Crowley now lives with his sister.
“I literally live off other people’s philanthropy,” she says. “This is how I exist.”
She said she hopes people will be more compassionate towards those experiencing foreclosure.
“I have so many investors, so many wholesalers, and at least three scammers have come to my house and are trying to stop them from making money. , treated me like complete trash. [who didn’t allow] To maintain dignity for what I was about to lose,” she says.
Looking back, she wished she had known the options available to her, and is now refocusing her efforts on educating others experiencing similar difficulties.
help location
Homeowners can actually get help, said Sarah Bolling Mancini, senior staff attorney at the nonprofit National Center for Consumer Law. These resources include Homeowner Assistance Fund, Covid-era support programs. Mancini says homeowners should be proactive in talking to lenders and mortgage servicers, most of whom have access to tolerance programs that can help distressed homeowners buy time.
“It’s important that consumers reach out proactively,” she said.
Unfortunately, there isn’t much help for renters, Mancini said, because pandemic-based assistance programs have all but been exhausted.
Crowley says her biggest wish now is financial stability for her daughter.
“I want people to understand that a foreclosure or eviction does not indicate that the person is untrustworthy or unworthy of empathy or sympathy,” Crowley said. Situations happen, and there are people who don’t have the support system in place, they don’t have that village, they don’t have the resources, they don’t have the jobs that can handle everything perfectly.”
Looking back, Missouri resident Burroughs said he wished he had saved more money.
“I would have tried to save more money, or at least find a way to put it back where I could have a cushion,” he said. No cushion at all. ”
