Banking

Deals, trends and research in structured finance and asset-backed securities for the week of Dec. 11-17

The agency's rule outlines steps collectors must take to inform consumers about an outstanding debt, and prohibits companies from pursuing lawsuits after a statute of limitations has ended.

With infection rates rising and unemployment claims increasing since Thanksgiving, mortgages in coronavirus-related forbearance rose by 37,000 last week, according to Black Knight.

Investment firms and hedge funds are increasingly engineering bankruptcy loans and side deals to take control of Chapter 11 reorganizations from the outset, locking in rich rewards for themselves while potentially locking out rivals and lower-ranking creditors with little transparency. The trend is sure to speed up cases, but it also forces judges to make quick decisions that may shortchange some valid claims.

The percentage of seriously delinquent loans hit 5.8% in the third quarter, up from 1.5% a year earlier but down from 6.8% in the second quarter.

Promising vaccines may not reach the general public fast enough to save a number of struggling companies next year, and workout professionals and distressed investors are expecting smaller private companies will search for cash in 2021. They’re also anticipating that businesses of all sizes may struggle to adjust to changing consumer habits in a post-pandemic world.

The architects of two major loan deals featuring Black banks, one involving multiple lenders and a pro sports franchise and another backed by Citigroup, say more transactions like these are in the works.

While 12,000 mortgages exited forbearance, the most borrowers entered forbearance protection in a week since early September, according to Black Knight.

The president-elect’s plan to eliminate $10,000 of debt would help borrowers meet other loan obligations, reducing their risk of default. Yet the banking industry seems wary of the precedent it could set.

The new revolving platform will allow the credit-card issuer to periodically assign new accounts into the existing collateral pool without having to establish a new trust for each issuance.