COVID-19 and the CARES Act: racial disadvantage, mortgage relief, and foreclosure in Tuscaloosa county, Alabama

ABSTRACT

The 2020 CARES Act provided mortgage relief to financially distressed borrowers whose loans were insured by the U.S. government. We used cumulative disadvantage theory to examine the effects of mortgage relief in a Deep South County with a history of racial disparities in mortgage lending and homeownership. We collected property and open-access data for a five-year period (2016–2020) to compare pre-moratorium and in-moratorium trends in foreclosure. Fifty-eight (58) foreclosures took place during the moratorium year of 2020, a 50.7% drop from the year before. Non-lender foreclosures, typically initiated by HOAs and utility companies for nonpayment of fees and services, accounted for 40% of the in-moratorium foreclosures, and were spatially defined by race. Trigger events included divorce, death, and incarceration, as well as high debt loads that led most foreclosures to file for bankruptcy prior to foreclosure. Overall, mortgage relief mitigated the risk of foreclosure, suggesting that the Act had blunted the effects of housing disadvantage. The effects were greater for non-Hispanic Black borrowers who experienced higher rates of foreclosure prior to the COVID-19 pandemic. On balance, the Act helped borrowers who qualified for mortgage forbearance, but its exclusions and caveats meant that other borrowers did not receive similar relief.

KEYWORDS:

• Foreclosure
• CARES Act
• racial disparities
• deep south

Disclosure statement

No potential conflict of interest was reported by the author(s).

Correction Statement

This article has been corrected with minor changes. These changes do not impact the academic content of the article.

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Notes on contributors

Bronwen Lichtenstein

Bronwen Lichtenstein is a medical sociologist and Professor of Sociology in the Department of Criminology and Criminal Justice at the University of Alabama, Tuscaloosa, AL. Her research on the social determinants of health and illness includes stigma as a barrier to health care, domestic violence and HIV, and racial inequalities in health, housing, and aging. Dr. Lichtenstein has published extensively in quality journals and received numerous grants and awards for her programmatic research. As a member of the National CommuniVax Alliance, Dr. Lichtenstein and colleagues recently received funding from the Chan Zuckerberg Initiative for work on vaccine hesitancy and community responses to Covid-19 vaccination.

Joe Weber

Joe Weber, PhD, is professor of geography at the University of Alabama, Tuscaloosa, AL. His research focuses on individual and household mobility, accessibility within changing urban environments, transportation networks that sustain and limit mobility, and the social geography of foreclosure in the U. S. Deep South. Joe Weber has published numerous articles in leading geographical journals such as Annals of the Association of American Geographers, Professional Geographer, Geographical Analysis, Journal of Geographical System, Urban Studies, Urban Geography, Journal of Historical Geography, Geographical Review, Social and Cultural Geography, and Journal of Transport Geography. Dr. Weber teaches transportation geography, national parks, and Geographic Information Systems.