Suspension of loan payments during coronavirus produces mixed results


Jim Curran in Malvern, Pa., Lost his job in March and was granted permission to suspend his mortgage payments, freeing up thousands of dollars a month, without hurting his credit rating.
Patricia Orndorf in St. Louis Park, Minnesota, also lost her job in March. Her bank allowed her to temporarily skip her credit card bill, which had a minimum monthly payment of around $ 100, until July. But interest was still accruing, and late fees for August, September, and October were added to her balance.
The federal government helped millions of Americans during the first months of the pandemic by allowing them to defer payments, with little negative effect, on mortgages and student loans, two markets in which it exerts considerable influence. . But the government’s reach does not extend to credit card loans, auto loans, or personal loans, and borrowers with these forms of debt have found themselves with far less relief.
As a result, federal debt relief has been more beneficial to homeowners and college graduates, many of whom entered the recession with relatively good financial standing. Low-income workers, who are more likely to hire and not have a college degree, saw fewer benefits. Other programs, including expanded unemployment insurance, were more useful for low-income workers.
Deferral programs, on an unprecedented scale, are credited with temporarily keeping the economy afloat. But the divergence in the way programs play out reflects that the tools used to restart an economy are generally blunt and can have unintended effects.


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