Loan modifications

The change makes it easier for borrowers exiting forbearance to get access to home retention options that might otherwise be out of reach due to skyrocketing home prices.

Though the government-sponsored enterprises have some of the lowest forbearance rates in the market, they expect to contend with a significant population of borrowers who face steep financial setbacks after the pandemic ends.

However, the share of new impairments increased, likely as a result of the high concentration of these loans given to self-employed borrowers.

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.

Some homeowners who sought relief as a result of COVID-19 may owe a lump sum when their forbearance period ends, according to a report from the Committee for Better Banks. The group is calling on banks to instead extend the repayment periods for affected customers.

More consumer and commercial borrowers are paying their loans, increasing the likelihood that charge-offs will be manageable for banks despite the ongoing pandemic.

Mortgages taken out to fund business operations can now be modified in bankruptcy. That’s a relief to borrowers — particularly with business failures expected to increase as the pandemic drags on — but a possible headache for banks and investors that hold the loans.

With no way of knowing just how many borrowers will need the mods after the coronavirus forbearance period ends, lenders are deploying artificial intelligence and servicing protocols to tame the ferocious piles of paperwork awaiting them.

Lenders that scrambled to grant forbearance as the coronavirus pandemic took hold are unsure about the extent of potential losses.

Over 236,000 prime and subprime vehicle-loan borrowers received payment deferrals of between 30 and 120 days during the early economic turmoil of the coronavirus pandemic, according to the ratings agency.