Baton Rouge homeowners vulnerable to foreclosure, report says

Nearly 110,000 Louisiana homeowners were unable to pay on their mortgages in September—including some 15,000 in East Baton Rouge Parish—suggesting that the state could be on the brink of a foreclosure crisis when forbearance periods come to an end next year.

According to an analysis released today by national consulting firm Urban Footprint and the Baton Rouge-based Center for Planning Excellence, the mortgage gap in Louisiana—the difference between what is owed on monthly home loans and what mortgage holders are able to pay—is currently an estimated $140 million per month.

In Baton Rouge, as well as in Lafayette and on the Northshore, the gap is nearly $20 million.

In the Greater New Orleans area, which has the largest mortgage gap in the state, the amount is $34 million.

“The findings of this report put more numbers to a housing crisis that we knew was coming,” CPEX Executive Director Camille Manning Broome says.

The study predicts the crisis will hit in early 2021, when a federal forbearance program that was part of the CARES Act relief package expires. The program permits homeowners with federally backed home loans who have been impacted by the pandemic to postpone their payments for up to one year.

While the expiration of the program is still several months away and is not expected to hit all at once, the study includes data showing that as of Sept. 30, 3.6 million homeowners nationwide remain in pandemic-released forbearance plans.

That’s nearly 7% of all active mortgages and represents more than $750 billion in unpaid principal.

The study builds on data, released by CPEX and Urban Footprint in late June, which highlighted the vulnerability of renters to evictions as a result of the pandemic. The problem is particularly acute in low-income communities, which have been disproportionately impacted by COVID-19. Louisiana is among the poorest states in the U.S.

“Like rental stress and eviction risk, homeowner risk and mortgage stress is concentrated in communities with high levels of socio-demographic risk factors such as poverty, unemployment and underlying health conditions,” the report concludes.

CPEX officials are encouraging elected officials to utilize the information in the study as they formulate policies to help deal with the pandemic.

“With limited resources available, it is critical that our leaders and decision-makers take full advantage of all such data to help them understand the place-based complexities of this crisis  and to support development of coordinated policies and programs that proactively and equitably address the impacts of the pandemic,” Manning Broome says.