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74 Lessons learned from past recessions tell us that neighborhood blight can lower surrounding property values and create havens for crime and illegal activity. Abandoned homes can also threaten the public health and safety of our communities. Never has this been more concerning than at the present time. We are living in an unprecedented era in which schools are shut down across America. Some economists predict true unemployment rates could again reach double digits, and the very strategy that can help Americans stay in their home could unintentionally harm neighborhoods. While coronavirus kept most Americans at home during "Stay at Home" orders, many cities experienced temporary reductions in property related crimes. New York City, as the "hardest hit" municipality, was not so lucky. NYC experienced a 31.6% increase in burglaries in April, up +28.9% YTD. With May 2020's unemployment rate peaking at 14.7% (higher than it had been since 1940), "property-related" crimes are expected to increase. August numbers looked more favorable, down to 8.4%, but many relate this reduction to short-term U.S. Census workers. According to a Bankrate economist survey in June, many expect rates to go back up into double digits. e U.S. airline industry's $50 billion CARES Act bailout was contingent on airlines keeping workers employed through September 30. Most have already announced large layoffs eminent, with up to 100,000 workers due to lose their jobs. Additionally, small businesses continue to shut down permanently. WHY IS THIS CONCERNING? For the first time in U.S. history, the government has mandated that banks and servicers provide up to 12 months of mortgage forbearance, with the only requirement being that the borrower must state that they have a COVID-19 hardship. While typically these programs are not available for investment properties and second homes, the CARES Act states that these borrowers also qualify. Per the MBA, as of September 21, forbearances accounted for 6.93% of mortgages, with over 3.5 million homeowners now in active forbearance plans. It is estimated that 35% are investment properties and almost 6% are second homes. e U.S. had a 9.5% nationwide vacancy rate in 2019. Black Knight recently reported serious past-due loans rose by 1.92 million, to 2.37 million—a 426.67% increase as compared to pre-pandemic numbers. e five top states with the highest 90+ day seriously delinquent loans are Missouri, Louisiana, Arkansas, Nevada, and Hawaii, five of which are in the top 10 list for highest vacancies in 2019 (Hawaii15.2%; Arkansas 14.6%; Louisiana 14.4%; Missouri 13.2%, and Florida 11.9%). New York was at a 9.4% vacancy rate in 2019 but has had a significant increase post-pandemic due to many New Yorkers fleeing the state. A COMMUNITY BLIGHT NIGHTMARE? Unmonitored forbearances could be setting the market up for a wave of challenges for neighborhoods and servicers. Quick Take By: Denia Ray