Supersedes Working Paper 21-09 – Inequality in the Time of COVID-19: Evidence from Mortgage Delinquency and Forbearance

We quantify how much the pandemic has exacerbated inequalities with a difference-in-differences analysis. We then show that forbearance programs mitigated inequalities as minority and lower-income borrowers took up forbearances at higher rates, reducing their delinquency rates more than White and higher-income borrowers in 2020. Finally, we show that minority and lower-income borrowers are more likely to fall into delinquency and default after exiting forbearance and that fast-tracking FHA modifications with 40-year terms could best help these borrowers obtain longer term debt relief.