About a third of homeowners withheld on mortgages managed by Citizens Bank While the COVID-19 pandemic has shut down large swathes of the US economy, their payments are being kept up to date anyway.
In total, about 7% of clients of the lender’s $ 18.7 billion residential mortgage portfolio as well as those paying the $ 5.3 billion in loans managed by Citizens have been granted such a stay, the CEO said. Bruce Van Saun at FOX Business.
“If you give people a free option which, no questions asked, we’ll forbear you, I think a lot of borrowers have said, ‘I’m just going to take them and if I don’t need them, I won’t’ I don’t need it, but I’ll keep paying until I can’t anymore, ”Van Saun told FOX Business.
Nationally, 8.53 percent of all mortgages went into forbearance as the economy slipped into the worst downturn since the Great Depression, according to a report released Monday by the Mortgage Bankers Association.
|CFG||CITIZENS FINANCIAL GROUP, INC. (RHODE ISLAND)||49.62||-0.69||-1.37%|
Forbearance was approved by regulators earlier this year, as stay-at-home orders designed to slow the spread of COVID-19 have forced non-essential businesses across America to shut down and, in many cases, to lay off workers.
The US economy came to a halt in the last weeks of March, causing gross domestic product to contract 5% annually in the first quarter of the year.
Economists at major Wall Street banks all predict the economy will shrink at least 30% in the three months to June, as more than 42 million workers filed their first jobless claims since the start closures.
While economic uncertainty has prompted borrowers to suspend mortgage payments, the bank has not seen a sharp increase in defaults.
They are able to keep their payments up to date in part thanks to the stimulus checks sent to Americans earning less than $ 100,000 a year as well as the Paycheck Protection Program, which grants forgivable loans of up to $ 10 million to small businesses to help them keep their employees on the payroll while they are shut down.
“The big question is what happens to these people when they come out of abstention. Are they able to resume their payments or do their payments need to be restructured in some way? Said Van Saun.
He added that Citizens sees positive signs from US consumers, suggesting the economy is getting back on track.
Last week, the drop in spending on Citizens credit cards had narrowed to 10%, from 35% at the height of the lockdowns.
“People spend money,” said Van Saun. “They may be spending in different areas than they used to, but the good news is that we are seeing people starting to resume real economic activity.”