In February, the number of LegalShield plan members who sought legal assistance or advice for financial challenges jumped to its highest level since July.
Evictions and foreclosures remain low, but millions have fallen behind by at least three months on their mortgage payments, with many in forbearance for over a year.
“The use of legal services has consistently proved to be a leading indicator for subsequent economic and financial activity,” said Jeff Bell, LegalShield CEO. “Unfortunately, as our members use our service for advice on foreclosures, evictions, and landlord/tenant issues, we believe we will see a rise in these events. The large number of delinquent mortgages and borrowers in forbearance further supports that there is trouble on the horizon. People are fearful of facing enormous past due bills when federal eviction and foreclosure moratoria end. But, at some point, this debt must be addressed. Even if those who are currently in debt suddenly find jobs and can start paying off their debts, borrowers are unlikely to be able to make a lump-sum payment to cover any missed months.”
Key takeaways from the February 2021 LegalShield Economic Stress Index include:
- The Consumer Stress Index worsened by 1.3 points while the Conference Board’s Consumer Confidence Index improved 2.4 points. This suggests that stress will remain low for one to three more months as stimulus payments are received and vaccines are more widely distributed.
- The Foreclosure Index worsened by 5.5 points, though it is 42% lower than the same time last year. While federal eviction and foreclosure moratoria are in place, numbers are expected to stay low, but recent data indicates they may rise as these stopgaps are lifted.
- The Housing Sales Index fell 2.4 points but remains elevated. Existing home sales are 24% higher than they were last year and demand for existing homes continues to remain strong. Supply chain challenges and high demand have led to an all-time low of existing home inventory.
- The Housing Construction Index fell more than 6 points, its lowest level since summer. Low interest rates and pandemic lockdowns have encouraged the buy and build of single-family homes, and the housing industry continues to lead the country’s economic recovery. Data suggests that homebuilding activity will continue to be healthy over the next three to six months.
- The Bankruptcy Index is near an all-time low. Stimulus payments have helped protect consumers, but financial stress is still a real threat.
Leveraging its proprietary data surrounding demand for legal services to provide intel about the direction of the U.S. economy, the LegalShield Economic Stress Index forecasts economic indices around “consumer confidence, housing starts, bankruptcies, existing home sales, and foreclosures.”
