Up to a fifth of borrowers have asked investment bank, Goldman Sachs, to defer monthly payments on loans and credit cards.
About one in six small businesses that have loans with Bank of America are now in some sort of payment deferral program, the bank said Wednesday, according to ABC News. Bank of America said last week that 3 percent of consumers with auto loans had asked to defer payments, as had 3 percent of its consumer and small business card customers, as of April 8, FT reported.
JPMorgan Chase said last week that about 4 percent of its mortgage customers had asked for forbearance and that it had “approved payment relief for hundreds of thousands of accounts across consumer lending.”
Wells Fargo said it was deferring payments and waiving fees for more than 1.3 million consumer and small business customers as of April 10. The bank has more than 30 million customers, suggesting about 4.3 percent of them have taken up offers of forbearance, FT reported.
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Wells Fargo analyst Mike Mayo said a higher rate of forbearance “could be an indicator of inferior underwriting but could also be indicative of an extra effort to work with customers through a period that would be deemed transient”.
The U.S. economy is at a virtual standstill and most economists and bank CEOs expect the U.S. to go through a depression, ABC reported. Second-quarter gross domestic product is expected to drop as much as 40 percent and the unemployment rate to rise as high as 25 percent.
Consumer spending accounts for about 70 percent of U.S. GDP. Retail sales fell by 8.7 percent in March, the worst monthly drop on record, according to sales data from the government.
Goldman Sachs’ quarter-one profit dropped by 46 percent from 2019 due to significant losses on its own investments as well as a buildup in reserves for potential loan defaults, ABC News reported. Goldman’s provisions for loan losses more than tripled to $937 million in Q1.
Bank of America and Citigroup said last week that their profits fell more than 40 percent in Q1 as both set aside billions of dollars for potentially bad loans. JPMorgan Chase and Wells Fargo also set aside large amounts to cover loan losses.
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In the interest of safeguarding your credit, Bankrate.com advises you to reach out to your credit card issuer and ask for help if you’re facing financial uncertainty. Many issuers have personalized solutions for cardholders facing hardship due to the coronavirus outbreak. Ask your issuer directly at the beginning of the process how your long-term credit will be affected.
You won’t have to pay for your credit score, at least for the next year. The three major credit bureaus (Equifax, Experian and TransUnion) are giving free weekly credit reports. That will help you keep your information accurate and up-to-date.
“These programs aren’t automatic,” said Ted Rossman, an industry analyst at Bankrate. “You need to ask, and with long phone wait times reported, online chat and social media may be better options.”