Loan modifications

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.

With an unusually high number of unknowns to factor in, mortgage industry leaders offer a peek at their playbooks for the next year.

In order for investors to gain confidence in the health of the mortgage market and the broader economy, the industry needs a more modern and innovative approach to how we report modifications.

Frank Pallotta sold Wall Street services to lenders and later helped create programs to help underwater borrowers. Now he's running to represent a district both parties fight hard over.

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.

Measures designed to give banks and credit unions more flexibility to help customers weather the coronavirus pandemic are set to expire Dec. 31 unless Congress renews them.

Deferrals on residential mortgages and home-equity loans have been a common theme at JPMorgan Chase, Bank of America, Wells Fargo and Citigroup since the start of the coronavirus 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.

The mortgage company will provide up to $17 million in forgiveness to settle charges that modifications it applied to distressed government-related loans were not in keeping with state servicing regulations.

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.

Fannie Mae's profitability suffered but it managed to stabilize the mortgage market in the first quarter even with the coronavirus disrupting, among other things, certain credit-risk transfer vehicles it has used.

The government-sponsored enterprises are focusing on how loans can be repaid after the federal forbearance period ends, and projections for loan modification volumes suggest the larger industry should, too.

Homeowners reeling from coronavirus-induced economic shock are already enduring extremely long wait times while trying to get relief. Legislation passed last week could worsen the logjams.

JPMorgan Chase, Wells Fargo, Citigroup and U.S. Bancorp, along with 200 state-chartered banks and credit unions, have agreed to let borrowers skip payments for 90 days if their finances have been upended by the pandemic.

Accommodations for borrowers affected by the coronavirus pandemic, such as payment delays and fee waivers, are "positive and proactive actions that can manage or mitigate adverse impacts," the regulators said.

The Home Affordable Modification Program became a national blueprint for loss mitigation in the last crisis, but changes in the servicing landscape and circumstances call for a new approach now.

Forbearance and loan-modifications programs implemented after the financial crisis left borrowers bewildered and angry. Now the mortgage industry wants to create a common standard for providing relief to homeowners whose livelihoods have been upended by the coronavirus pandemic.

Default rates for prime jumbo mortgages will increase, but a strong economy and rising home prices will bail most borrowers and lenders out, Moody's said.

Mortgage foreclosure rescue schemes resulted in the second highest median individual loss to consumers among all types of fraud reported to the Federal Trade Commission in 2019.