Coronavirus

A slower-than-expected rollout of the COVID-19 vaccines and the threat of social unrest after the Jan. 6 riot at the U.S. Capitol could threaten the recovery, according to an American Bankers Association panel.

Commercial real estate portfolios have held up better than expected during the pandemic. But rising delinquencies and fears of a delayed economic recovery are renewing questions about credit quality.

While the balance of newly delinquent loans fell by 50% from November, the ratings agency warned that many borrowers will likely struggle to bring loans current under ongoing pandemic conditions.

With limited plan removals due to the holidays, mortgages in coronavirus-related forbearance rose by 15,000, according to Black Knight.

The Georgia runoffs and resulting balance of power in Congress will help determine which bills on bankers’ wish list gain traction. But regardless, existing coronavirus relief such as the Paycheck Protection Program and a push for more economic aid will remain top of mind for lawmakers and the industry.

The Federal Reserve is credited with containing damage to the financial system from the coronavirus pandemic, but experts say the limits of the central bank’s power to prop up the economy will likely become more apparent in the new year.

The legislation would let banks postpone the start date of the Current Expected Credit Losses accounting standard and delay categorizing pandemic-related loan modifications as troubled debt restructurings.

The Pennsylvania senator, who will chair the Banking Committee if Republicans hold their majority, agreed to modify an amendment restricting the Federal Reserve’s emergency powers that Democrats had criticized as too extreme.

The company expects a good year ahead for mortgage insurers, assuming that rising employment, higher home prices and payment timing deferrals will help them to mitigate risk.

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.

The Federal Reserve has already agreed to shut down emergency credit programs funded by the Coronavirus Aid, Relief and Economic Security Act, but Sen. Pat Toomey, R-Pa., and others want Congress to ensure the central bank cannot revive them.

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.

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.

But existing deals are likely to experience issues resulting from higher defaults, faster prepayment speeds.

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.

U.S. consumer borrowing rose in October by less than forecast, reflecting a decline in credit card balances as the pandemic continued to limit some purchases.

Risk premiums for new transactions, which package and sell leveraged loans into tranches of varying risk and potential return, have tightened to pre-pandemic levels and Wall Street predicts a rise in sales in 2021.

Lower cure rates and possible rises in foreclosures and claims could force these companies to raise capital next year, Fitch Ratings said.

The third-quarter forbearance rate of the refinanced private student loans fell to 2.58% from the 8.36% average during the second quarter of the year – which is an approximate 70% decline.