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Skilled workers have lost jobs or been on reduced hours, and the visas of one family who had been in the country for more than a decade expired while they were out of the country.
Meanwhile, the government said it was now unlikely to announce its new residence policy before the election.
About 39,000 people and their families are waiting for news on their residence applications, 32,000 of them as skilled migrants.
Some of the applications not yet allocated to an immigration officer for assessment date as far back as December 2018.
She is worried that by the time her application is assessed, her job as a marketing specialist could have fallen victim to the coronavirus downturn.
"Personally, I feel that the government is doing this just because they don't want to proceed our applications and they just let us wait forever and maybe you know some of us will give up.
"Because the way they do it right now they just pick the priority applications like people who earn a huge amount of salary or registered occupations.
"So I'm just waiting, it's like a non-future for me because I can't plan anything right now, getting married or settling down. I was thinking of running my own small business, but now I can't do anything."
When coronavirus came along, her company agreed to keep her on with reduced hours.
"I'm really worried that the company can't really survive in a few months, so I don't know where my future will be - even in the best scenario, my company's doing well but my visa will end in May next year.
"If I can't get the residency by then, I don't know if I will be able to apply for a new visa with the company or look for a job - it's so unknown and everything is just a mess."
Diego Rodriguez and his wife, Carolina, are concerned their path to residence may be spirited away because of an ill-timed trip to see family in Colombia.
They arrived in New Zealand in 2009 and their daughters, Sophia and Olivia, were born in Christchurch.
"Last October we had the opportunity to apply for residency through a unique category Work to Residence South Island Contribution pathway," said Mr Rodriguez, an assistant farm manager. "It is a policy that recognises long and strong work connections in the South Island.
"I am in a tricky and vulnerable situation. Being offshore means my visa hasn't been processed and I didn't get the automatic extension granted until September, if I were onshore.
"The last three months have been really hard, stressful and difficult. This situation has put us in economic hardship, our main income comes from my salary which was stopped when my visa expired on April 9."
They are worried their 11 years of work in New Zealand may count for nothing, as they struggle to get back through the border to their farm near Ashburton in time for calving.
Another woman, who works in IT and asked not to be named, applied for residence in April last year when the expected waiting time was about seven months.
"They told me that it will take like six months for the case officer allocation," she said. "That didn't happen. I called them after eight months. They say that it will take one year, so I was like, okay fine.
"I call them after one year, and now they're saying we don't know when it will happen."
She said it's a money making trick to charge $3500 to apply for a residence visa, then more than $400 when temporary visas expire in the meantime.
"Why? Why the hell am I paying all of this extra amount just because they didn't process it in time? I just feel that it's a big scam. Taking money from us, just waiting - telling us to go back home in a different way."
She and her partner were due to get married this spring, but she said she now found herself Googling her mental health problems instead of wedding dresses.
No information provided to some applicants - adviser
Immigration adviser Erin Goodhue said people had no information on what happened if they lost their job.
"Given the circumstances, it would be kind of immigration to have a bit of leeway and allow those people to find new jobs within a certain timeframe, but there's just been no announcement made."
The backlog was causing stress even for those who felt their jobs were stable.
"If you recognise that there is a failure, where is the plan to improve things and get things moving?
"I think that's what's creating a lot of anxiety and people are thinking 'how can we have such a huge backlog and not have any intent to fix it?'
"There is a lot of anxiety amongst the migrant community that immigration are going to do what they did back in 2012 and just wipe the slate clean essentially and start again, and all those applications will just be wiped out.
"I don't know whether that's a reality or a possibility but that is the fear - that while these people are waiting any number of things can happen to them."
The residence programme (NZRP) expired in December and the immigration minister, Iain Lees-Galloway, said back then he wanted to review how it operated.
He said the government was now taking its time to work through the new residence policy.
"Residency is an important policy, it's not something that should be rushed," he said.
"The main thing is that residency applications continue to be processed as per the last residency planning range, so on that issue, nothing changes. I am advised that processing has been affected by Covid-19 as you would expect."
His spokesperson said a decision had been expected before September's election, but that was now unlikely.
Applications still being processed - immigration boss
In a statement, Immigration New Zealand (INZ) rejected the suggestion there had been a failure of service by INZ.
"INZ's role as a regulator is to process applications in line with the NZRP planning range set by the government of the day," said Nicola Hogg, general manager border and visa operations.
"The government is currently working through the new NZRP. In the meantime, INZ will continue to process applications at the same volume and with the same level of resourcing the previous NZRP allowed for."
All applicants had to meet immigration requirements for residence at the time their application was decided, she said.
"When processing residence applications, if not already provided, INZ will often request further or updated information from individuals to ensure a decision is being made based on the latest information available.
"INZ also engages with the applicant if there are concerns with the application (ie job loss, the job doesn't meet immigration requirements) and provides the applicant an opportunity to comment before a decision on the application is made.
"Over the last year, demand for the SMC and Residence from Work sub-stream has risen significantly and the number of on-hand applications has increased considerably. This has resulted in longer decision times for applicants.
"It is the responsibility of the individual to ensure they remain lawfully in New Zealand while their residence application is being decided."
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