Foreclosures in the U.S.: The Calm Before the Storm?

Foreclosures in the U.S.: The Calm Before the Storm?

Economists and housing specialists are closely watching the impact of the COVID-19 crisis on current and impending foreclosure rates. Certain regions of the country are more at risk than others, with areas along the West Coast, clustered around New York, Massachusetts, Baltimore, and Washington, D.C., and numerous markets in the Chicago area,  more likely to see foreclosures as the pandemic continues. A recent poll conducted by NPR shows that 34% of households in Houston and 25% in Chicago are having serious difficulties paying their mortgage or rent; these trends hold throughout the country and are more severe for Black and Latino households.

For the first several months of the crisis, forbearance programs were in place in many markets. In April, homeowners stopped paying their mortgages in record numbers, culminating in almost one in ten mortgages being placed in forbearance. While 3.6 million mortgages continued to be in forbearance as of August 30, accounting for 7.6% of all mortgages, this is down from previous months. At some point, however, these programs will end — and at that point, we might begin to see major spikes in foreclosure rates. While the potential for large-scale evictions in the rental market looms larger in our collective consciousness, there remains a very real threat of a coming foreclosure crisis. SpringFour has seen some signs of this in its application usage data, and continues to monitor trends to uncover potential foreclosure issues.

Take, for example, the chart of SpringFour referrals below. This graph shows a sharp decline in demand for foreclosure counseling services in Q2 of 2020 over Q1, while other homeownership-related categories of need remained relatively constant. Through our partnerships with housing counselors and lenders, we know that this is because mortgage forbearance programs were in effect during Q2 as the pandemic took root, and households began to focus on other basic needs with the knowledge that at least temporarily, they would not lose their homes due to COVID-19. SpringFour has started to see demand for foreclosure counseling rise in Q3, however — and this is a trend that we are watching closely. 

As SpringFour is well aware, the COVID-19 crisis is very different from the 2008 financial crisis that led to record foreclosures and community disinvestment across the country. SpringFour was founded in 2005 as MortgageKeeper, and was built to help families stay in their homes by offering access to local financial resources that could help address the root cause of the inability to pay a mortgage or other monthly bills. We saw the devastation wrought by the 2008 crisis and helped thousands of families through that difficult time. 

But this time, things are different. First, this is a different type of crisis. In 2008, the crisis was created within the financial and housing markets themselves, through unscrupulous practices and pricing. The markets were bifurcated in such a way that collapse was practically built into them. Thus, in the first half of 2010, 1.65 million American homes went into foreclosure, according to ATTOM Data Solutions. In the first half of 2020, barely 165,000 loans were hit with foreclosure actions, and ATTOM is predicting a total of 200,000-500,000 total foreclosures from COVID-19. This time, we are dealing with a global pandemic that is first and foremost a public health crisis, as opposed to a crisis of inflated market values or negative home equity. Due to the far-reaching nature of the current crisis, the housing market is just one component of the economy experiencing a shock, and this is due largely to the surge in unemployment and uncertainty in longevity of the small business sector. 

This crisis is a jobs crisis, brought about by a public health crisis. Low-and moderate-income households have been particularly hard hit by job and income loss. A SpringFour survey of LMI households shows that more than a quarter of these households have been furloughed or had hours reduced due to the pandemic, causing 40% to delay nonessential purchases.

Thus, while the financial and housing markets did not create this crisis, they definitely could, and SpringFour believes, should, play a major role in helping to mitigate it. In addition to continuing to offer mortgage forbearance programs, banks and other lenders can help customers potentially stave off foreclosure by limiting or eliminating fees on a temporary basis, allowing payment deferrals, freezing interest rates, and instituting other hardship programs. History has shown us that doing so, is not only good for the customer but business as well. 

We know, for example, that housing and foreclosure prevention counseling programs work. A 2018 study by the Urban Institute of the National Foreclosure Mitigation Counseling (NFMC) program found that counseled homeowners were 67% more likely to remain current on their mortgage nine months after receiving a loan modification–and that counseled borrowers were more likely to get a modification in the first place.  Building off of this knowledge and the lessons of the 2008 crisis, banks and lending institutions are in a much better position to work with partner organizations to help stave off another foreclosure crisis.  And we know through our work that borrowers who receive SpringFour referrals are twice as likely to engage in foreclosure prevention programs than those who do not receive our referrals.

“BALANCE is preparing for a significant increase in foreclosure prevention and rental counseling once the moratoriums and forbearances conclude in January. It is important for those in need to have access to a knowledgeable and unbiased resource, such as a HUD certified housing counselor. We would also encourage those impacted by COVID-19, whether they are currently struggling or think they will be struggling with their mortgage or rent, to reach out to discuss their options now. There is no need to wait until the New Year. Time is of the essence, as we learned during the previous crisis. It is important for those impacted to maintain communication with their mortgage servicer or property owner.” 

 

-Linda Davis-Demas, Senior Director of Housing, BALANCE

Moreover, now more than ever, financial institutions should partner with experts in the field who know how to help families access the resources they need and deserve in order to get through a widespread crisis outside of their control. For example, with its financial institution partners, SpringFour has already provided well over  2 million referrals to struggling families in the year 2020. Almost half of these referrals are in the basic need categories of food assistance, financial assistance, employment services, and rental resources. Our survey of LMI households shows us that families feel they need a large safety net that they do not have access to currently, they do not know where to turn for help, and they would welcome assistance from their bank or lender to get them through this long-term crisis:

Key takeaways from SpringFour survey of LMI households, August 2020:

While families struggle to pay for basic necessities, banks and lenders can and should help them avoid the most devastating consequence of any financial crisis–the loss of their home through foreclosure and the potential for not only homelessness but overall community disinvestment that could last a lifetime and impact future generations. SpringFour is here to help banks and lenders be that partner in financial wellness, and to do everything we can to ensure people can stay in their homes. SpringFour offers a wealth of resources that can help prevent foreclosure, including:

 

  • Referrals to local HUD-certified counselors that can help people budget before foreclosure hits and also help them navigate their options;
  • A tip sheet with information about mortgage relief options during the pandemic; and
  • A wide range of financial health resources that can help families save money in other areas so that it is easier to stay on top of mortgage payments
Please feel free to contact Katy Jacob at katy@springfour.com to talk about how we could work together to help families hold on to their American dream of homeownership.

Katy Jacob

VP of Research & Impact, SpringFour

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Spending the Summer with SpringFour

Spending the Summer with SpringFour

In the heat of COVID-19, I thought finding an internship experience this summer would be nearly impossible. It took hundreds of applications, almost 100 cold emails, a few “no”’s, and countless emails and applications with no response to end up where I did. I feel fortunate to have not only found an internship in these crazy times, but to have found something I feel so mission-aligned with and have learned so much from. My experience at SpringFour has been nothing short of amazing.

As a Communications and Impact Intern, I’ve had the opportunity to complete a variety of projects from writing, social media, editing, design, website changes, and so much more. The small team environment allowed me to try so many different things and gain experience in diverse skills. I am so thankful for the personal relationships I built with every team member and the extra time each employee has taken to help me learn as much as possible. Without each team member’s intentional effort, my experience would not have been nearly as impactful.

 

Industry Insights

As my first internship within the financial services industry, my experience at SpringFour has been incredibly eye-opening when it comes to how financial struggle is viewed and treated in America. One of the most surprising things I learned is how much stigma still surrounds financial struggle. Working at SpringFour makes me proud to be part of a team that recognizes that financial challenges are usually a product of external circumstances. We’re all just a day away from a financial crisis, making the work SpringFour does even more critical because you never know when you may be the one who needs assistance.

 

In the Workplace

Beyond learning new insights about this industry, I’ve also learned so much about the workplace in general. One aspect of this internship that has impressed me the most is how much empathy and personal investment our staff pours into their work and the people they interact with. Particularly during a global crisis, compassion and whole-person value in the workplace have meant so much to our team, our customers, and end-users.

SpringFour has also shown me how impactful responsiveness and customer service can be to customers. One of SpringFour’s differentiators is the personal touch our employees provide and their willingness to go the extra mile to accommodate our subscribers. Catering what we do to our partners’ specific needs has significantly impacted our client relationships. Beyond that, it’s also changed how I want to treat customers in my future job.

Lastly, I’ve learned that working on a team full of mission-aligned employees makes all the difference. I was most excited about working at SpringFour because of their emphasis on social impact. Having employees who are just as focused on making a positive difference in others’ lives as they are on any other business practice allows for our work to create a fundamental difference in the lives of people in need. I am proud to work for a company that’s inclusive, driven, and truly listens to the need and responds with the consumer at the forefront of creating solutions.

 

Individual Growth

Personally, I have learned that taking a shot at a project you feel underqualified for can teach you so much. This summer, I took on many projects that I thought there was no way I’d do well with — but I wouldn’t have even known where to start on projects like that without trying them for the first time. Pushing myself outside my comfort zone and receiving constructive feedback has not only boosted my confidence and willingness to try new things, but it’s also helped me learn quickly and effectively.

 

In Conclusion

Finding an internship in the middle of a global pandemic is hard. Thousands of students across the country formatted their resumes, worked hard to gain experience in their field, sent in job applications, and did everything right, only for nothing to work out. It’s a challenging process that can make you feel totally discouraged and unworthy.

Although part of landing this summer internship came from hard work, determination, and persistence, I also recognize that I couldn’t have had this experience without a little bit of luck, too. Many other students just like me had their internships canceled or could never find one due to the insane circumstances we’re living in. I’m proud of myself for receiving this internship, and I’m so thankful that SpringFour took a chance on me from a cold email giving me this transformative experience. Though every aspect of working for SpringFour has been fantastic, I’ve learned the most from the SpringFour team who has mentored me, encouraged me, and helped me grow more than I ever thought I could through a remote internship during a global pandemic.

I had no clue how deeply impactful this experience would be for me personally, academically, professionally and more. I’m proud to be a part of the SpringFour team and excited to continue being a part of this fantastic work during my senior year at Purdue University!

Morgan Pierce

Communications & Impact Intern, SpringFour

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Financial Health Survey of LMI Families

Financial Health Survey of LMI Families

SpringFour, the only social impact fintech that helps financial institutions give customers the support they need to regain financial control, today published the results of its COVID-19 financial health survey, which shares how the pandemic has impacted low- and moderate-income households. 

The insights reveal that the pandemic has impacted families’ ability to cover their monthly expenses and pay for basic resources, including food, prescriptions, and utilities. Households state that they need $4,000 in an emergency fund. Many families are unaware of financial resources that exist to help, but trust their banks to provide financial guidance and support. SpringFour commissioned Competiscan for this survey, which included a nationally representative sample of 105 individuals with household incomes of under $50,000 per year.

A complimentary copy of the report can be accessed here.

“The pandemic has made financial challenges even more acute for low- and moderate-income families. The government’s stimulus payments have not alleviated their financial pressures and many are unaware that local resources exist to help them cover basic needs,” said Rochelle Gorey, SpringFour Co-Founder and CEO. “The good news is that families feel confident in their banks’ ability to help, giving banks the opportunity to step up and meet their clientele’s challenges.”

Key takeaways include:

Unemployment has greatly impacted low- and moderate-income families: 26% have been furloughed, let go, or had their work hours reduced.

Households are facing challenges in making regular payments: 30% of families are unable to cover their monthly expenses completely and on time.

Families expressed concern about covering the following expenses:

70% are not confident that they can set aside money for emergencies.

55% are concerned about paying for basic necessities, like food, utilities, and health care.

40% are concerned about paying their credit card bills on time.

Households expressed a need for financial assistance to cover basic resources, including food (47%), heating/utility costs (47%), prescription savings (40%), health care savings (40%), and home repair (39%). 

Families do not know where to turn for financial assistance. 40% are unaware of local resources to reduce household expenses.

Households want to receive financial guidance and support from their financial institutions: 83% expressed interest in receiving support from their banks.

Families lack the necessary emergency funds. 47.6% stated that they need more than $4,000 in an emergency fund.

Families expect the pandemic to have long-term implications. 41% stated that once the country opens up, their financial situation will not change.  

“Research in the financial health field has long shown that families are one step away from a financial emergency and that they do not have sufficient funds to cover an unexpected expense. The survey results show that a crisis like COVID-19 uncovers the need for long-term, ongoing solutions,” said Katy Jacob, SpringFour Vice President of Research & Impact. “Families know they don’t have enough money saved and they need financial support and specific, targeted resources that help reduce household expenses and create opportunities to save for emergencies.” 

Learn More

For more information, download a copy of the report here.

Katy Jacob

VP of Research & Impact, SpringFour

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SpringFour Partners with Enova to Help Customers Save and Move Forward

SpringFour Partners with Enova to Help Customers Save and Move Forward

At SpringFour, we believe it is essential to recognize the many ways in which our subscribers work to help their customers achieve financial wellness. Since founding our company, our intent was to bring an innovative solution to the table to assist lenders when borrowers were experiencing payment challenges. It’s been exciting to see lenders embrace partnerships that seek to better understand the root cause behind their customers’ financial challenges and adopt the technology that allows them to connect their customers with vetted resources to help resolve the issue creating the payment challenge. SpringFour is proud to be the leading provider for the financial industry that offers vetted financial health solutions for its customers on an entirely cloud-based platform. Throughout the current crisis, we have seen our partners working hard to find unique solutions that can assist their customers. One of the many great examples that highlight this work is SpringFour’s partnership with Enova.

Enova is a state-licensed fintech lender headquartered in Chicago whose simple online application process has helped more than 5 million hardworking people get access to fast, trustworthy credit. Enova and SpringFour began to explore a partnership in October of 2019. As the COVID-19 pandemic intensified in early 2020, Enova wanted to implement resources for customers who might be struggling with the economic impacts of the virus. In addition to finding a credit plan that works best for each customer, Enova knew SpringFour would be an excellent tool for continuing the conversation and providing customers with free and effective solutions. By the spring of 2020, Enova was offering SpringFour resources through its CashNetUSA and NetCredit brands. By partnering with SpringFour, Enova now provides its customers with local resources that help them save on utilities, food, childcare, and more through COVID-19 and beyond. Within the first three months of partnership, Enova customers accessed more than 65,000 SpringFour referrals.

At Enova, Customer First has always been one of our core values. Throughout the COVID crisis, we’ve worked with our customers to expand our flexible payment options and provide our customers with resources to navigate heightened financial insecurity. As part of these efforts, we were thrilled to offer our customers access to SpringFour’s platform of trusted, local resources to better help them stay on track financially through COVID and beyond.

 

– Kelly Jordan, Head of Consumer & SMB Marketing, Enova

Since the start of the partnership, Enova customers have been most interested in finding ways to save on expenses such as utilities, food, and healthcare, as well as finding employment. This trend directly correlates with what SpringFour is seeing from an overall need perspective during COVID-19: families need help accessing basic necessities, and they need that help today. We are proud to help Enova meet its customers’ needs. When lenders think outside the box and provide financial resources that can help get their customers back on track, the impact is powerful — for the company and the consumer.

We are all in this together, and working with Enova is a powerful example of how we can achieve more when we join forces. Helping people in need has always been the mission of SpringFour, and now with the pandemic, we must do more and look to partnerships to scale and expand impact.

 

– Rochelle Nawrocki Gorey, CEO & Co-Founder, SpringFour

Rochelle Nawrocki Gorey

Co-Founder & CEO, SpringFour

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COVID-19 Impact Report Executive Summary

COVID-19 Impact Report Executive Summary

Back to Basics: Providing Resources to Struggling Families

COVID-19 has led to unprecedented levels of unemployment and upsurges in payment delinquencies for households all over the country. May marked the largest one month increase in mortgage delinquencies in history. A third (33%) of Americans have lost income because of COVID-19. An estimated 5.4 million Americans have lost health insurance as a result of job loss during the COVID-19 pandemic. These trends reveal that the safety net in the US is precarious, and families are often one small shock away from financial insecurity or peril. 

SpringFour is in a unique position to help address these issues, as its mission and business model has always been to partner with financial institutions and others to provide specific, local resources to families who need financial assistance. To this end, in late July, SpringFour issued a report of findings related to trends in resource need following the COVID-19 pandemic.

In a matter of weeks following the onset of the pandemic, SpringFour added 3,000+ COVID- specific resources in: Food Assistance; Financial Assistance; COVID-related health resources. SpringFour finds that families are looking for referrals to cover basic needs in light of the pandemic. In Q2 2020, these three new categories accounted for nearly half of all referrals (44%). Employment Services was the third-highest category of need in May 2020. Families are also struggling to pay for basic services such as heating and utility bills – the fourth-highest referral category.

And demand for these resources is exploding. SpringFour has seen a fourfold increase in referrals in Q2 this year versus Q2 of 2019. SpringFour provided nearly 1 million referrals to families in need in Q2 2020 alone, compared to 1.1 million referrals in the year 2019 as a whole. In the first half of 2020, SpringFour has provided over 1.6 million referrals.

Impact of COVID-19 on Referral Demand by Quarter

Unfortunately, the COVID-19 pandemic and its impacts are likely to reverberate throughout the economy and our culture for years to come. But just because the world has changed doesn’t mean that we can’t work together to make people’s lives better. In fact, innovative partnerships are our best bet for lifting up families and businesses during COVID-19 and beyond.

“If something good is to come from this, it’s that companies now understand that most people are just a day away from a financial emergency, and that providing help and assistance is not only the right thing to do — it’s good for business.”

 

– CEO & Co-Founder of SpringFour, Rochelle Nawrocki Gorey

For more information on this report of SpringFour’s research and insights, contact Katy Jacob at katy@springfour.com.

Read the full COVID-19 Impact Report here.

Katy Jacob

VP of Research & Impact, SpringFour

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A Looming Crisis: Unprecedented Levels of Eviction

A Looming Crisis: Unprecedented Levels of Eviction

The United States might very well be on the brink of an unprecedented eviction crisis, with as many as 23 million renters at risk of losing their homes, and Black and Latinx households being hit disproportionately. The CARES Act, which included a temporary eviction moratorium, stopped protecting renters from eviction on July 31. This moratorium covered more than a quarter of all renters in the country. More than 26% of households have already missed a rent or mortgage payment and have no idea if they will be able to pay their next housing payment on time. Given the fact that the next stimulus bill is currently stalled in Congress, there is no sign that the federal government will be able to stave off an eviction crisis that puts tens of millions of households at risk of homelessness. Eviction causes a cascading series of related social issues, from mental and physical health risks to difficulty enrolling in school to disenfranchisement. In addition to the social costs, the actual costs to the economy are staggering: For the worst-case scenario of 23 million evictions, experts have estimated a nationwide one-year cost of $128.7 billion. Being able to maintain adequate housing is a staple of financial security and financial health, so the effects of this crisis have the potential to be catastrophic.

SpringFour Recognizes the Need and is Working to Help

SpringFour and our Resource Integrity Team have been hard at work to figure out how we can use our expertise to help households in this dire situation. Since the onset of the COVID-19 pandemic, SpringFour has seen a sharp increase in usage of our Rental Resource Category. The Team has added more than 3,000 resources to address financial challenges since the pandemic began. The rental resource category is now consistently in the top five of all categories referred through SpringFour. In fact, we have seen a 48% increase in rental resource referrals in S4Pro since February 2020.  SpringFour has provided over 92,000 referrals to households needing assistance with rental resources since the onset of the pandemic.

Going even further, SpringFour’s data team developed a tenant tip sheet to help end users struggling to maintain adequate housing. This tip sheet, released on July 15th, was referred over 2,200 times in the first 3 weeks. It provides essential information on tenant rights and responsibilities under the CARES Act, provides links to local and state eviction moratoriums, and provides links to tenant advocacy organizations and rental resources available through SpringFour. Tip sheets like these go above and beyond SpringFour’s usual offerings and instead compile tips and resources that can help renters navigate their way through this crisis. Efforts to provide additional rental resources and create the tip sheet showcase the expertise of our incredible Resource Integrity Team, including Kate McCarthy, an experienced housing professional, and Jessica Williams, a talented systems management and operations guru.

For questions on the tenant tip sheet or if you have ideas for additional tip sheets, contact resources@springfour.com.

Rochelle Nawrocki Gorey

Co-Founder & CEO, SpringFour

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