As it becomes harder for America's 120 million households to pay off their bills in the midst of the coronavirus pandemic, it becomes more and more possible that the country will face a financial crisis much like the last Great Recession over a decade prior.
Estimates show that on April 1st this year, approximately $43 billion dollars in payments may have been due. How many of those households could still afford their share of the payment after possibly losing their job? It is possible that renters may ask for forgiveness on their landlords, but that leads to a trickle-down effect of stripping income from the property owners, and them reevaluating their potential cash flow from their properties.
This article proposes that the government intervention should allow many households to postpone payments. The vast majority of residential mortgages are held/backed by government sponsored entities like Fannie Mae and Freddie Mac. Is it beneficial in this instance that the government has a personal hand in the housing market, so that they may be able to postpone disaster of 2008 proportions? Or could it make the situation even worse?
https://www.economist.com/finance-and-economics/2020/04/03/what-missed-rent-and-mortgage-payments-mean-for-the-financial-system
3 comments:
I think postponing dues is helping current situations especially with those unemployed. However, it is hard to say what effect this will have in the long run due to less money flow, the housing market, and people paying off their debt in the future. There will not be a quick fix to our economy, so I think even if people get to pay late, they will still not likely be able to pay it in a few months.
I think during this point of the pandemic, unemployment is creeping every day and will continue to rise. People will need all the assistance they can get to cover their payments or have some form of delay. Postponing dues and establishing some form of assistance would be necessary, since there is no known time for this to end and people to get their jobs back
I do not think that the delay of payments are going to hurt anyone too badly. renters should be allowing people to go rent free for a couple months. We also see that many companies have found a way for their employees to work from home, which is somewhat alleviating the situation.
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