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Single borrowers versus coborrowers in the pandemic: Mortgage forbearance take-up and performance

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  • Goodman, Laurie
  • Zhu, Jun

Abstract

Early in the COVID-19 pandemic, policymakers initiated a forbearance program—that allowed borrowers to pause their mortgage payments—to prevent a large-scale foreclosure crisis. Using detailed loan-level performance data, we study forbearance take-up and subsequent performance among two distinct group of mortgage borrowers: single borrowers versus coborrowers. We provide stylized facts that compared to coborrowers, single borrowers have lower incomes, lower credit scores, higher loan-to-value ratios and higher debt-to-income ratios and are hence more financially vulnerable. We find that single borrowers are more apt to elect forbearance, all else constant. We further find that forbearance had a stronger positive effect on helping single borrowers avoid or recover and exit delinquency than coborrowers.

Suggested Citation

  • Goodman, Laurie & Zhu, Jun, 2023. "Single borrowers versus coborrowers in the pandemic: Mortgage forbearance take-up and performance," Journal of Housing Economics, Elsevier, vol. 59(PB).
    • Handle: RePEc:eee:jhouse:v:59:y:2023:i:pb:s105113772200081x
    DOI: 10.1016/j.jhe.2022.101909
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    References listed on IDEAS

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    1. Jun Zhu & Jared Janowiak & Lu Ji & Kadiri Karamon & Douglas McManus, 2015. "The Effect of Mortgage Payment Reduction on Default: Evidence from the Home Affordable Refinance Program," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 43(4), pages 1035-1054, November.
    2. You Suk Kim & Donghoon Lee & Tess C. Scharlemann & James Vickery, 2022. "Intermediation Frictions in Debt Relief: Evidence from CARES Act Forbearance," Finance and Economics Discussion Series 2022-017, Board of Governors of the Federal Reserve System (U.S.).
    3. Jakučionytė, Eglė & Singh, Swapnil, 2022. "Bowling alone, buying alone: The decline of co-borrowers in the US mortgage market," Journal of Housing Economics, Elsevier, vol. 58(PB).
    4. Tzioumis, Konstantinos, 2017. "Mortgage (mis)pricing: The case of co-borrowers," Journal of Urban Economics, Elsevier, vol. 99(C), pages 79-93.
    5. Raj Chetty & John N Friedman & Michael Stepner & Opportunity Insights Team & Camille Baker & Harvey Barnhard & Matt Bell & Gregory Bruich & Tina Chelidze & Lucas Chu & Westley Cineus & Sebi Devlin-Fol, 2024. "The Economic Impacts of COVID-19: Evidence from a New Public Database Built Using Private Sector Data," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 139(2), pages 829-889.
    6. Kadiri Karamon & Douglas McManus & Jun Zhu, 2017. "Refinance and Mortgage Default: A Regression Discontinuity Analysis of HARP’s Impact on Default Rates," The Journal of Real Estate Finance and Economics, Springer, vol. 55(4), pages 457-475, November.
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    Cited by:

    1. Jason Allen & Kyra Carmichael & Robert Clark & Shaoteng Li & Nicolas Vincent, 2024. "Housing Affordability and Parental Income Support," Staff Working Papers 24-28, Bank of Canada.

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