Lack of emergency savings makes borrowers three times more likely than households with such resources to pay late, and twice as likely to face a foreclosure, according to a study released Wednesday.
These differences exist even after controlling for other factors that can impact mortgage payment behavior such as income, education and geographic region, according to the FINRA Investor Education Foundation.
The foundation’s study, which is based on data from a 2009 online survey of more than 28,000 respondents, also found that minorities were 52% more likely to make late mortgage payments and dependents in the household increased the likelihood of late mortgage payments by 48%.
“The Great Recession and the housing downturn devastated the finances of families across the country,” said foundation president Gerri Walsh in a press release.
“Data collected during this period, when many family budgets were stretched past the breaking point, suggest that having a rainy day fund can make the difference between being able to stay in your house…and facing foreclosure.”