Some of America’s biggest banks have said they’ll start resuming foreclosures on delinquent mortgages this summer when COVID-19 forbearance programs expire.
The Mortgage Bankers Association says over 2.1 million American homeowners are still in forbearance plans that suspend their mortgage payments and protect them from eviction. Meanwhile, around 1.8 million more are not in forbearance but are already 90 days behind on their mortgage payments, according to data from Black Knight.
Those homeowners are currently protected from foreclosure by a federal moratorium, but that protection is set to expire on June 30. After that date, banks will be free to start legal proceedings to evict anyone who is behind on their mortgage payments.
In a Senate hearing last week, Bank of American Chief Executive Brian Moynihan said the bank’s suspension of foreclosures would run until the end of the current quarter, which ends June 30. After that time, it will start resuming foreclosures on some homes, he said.
Still, he said the number of customers who are still in forbearance and at risk of losing their homes is down 90% from their peak. And he promised to work with those customers to try and assist them to avoid foreclosure if possible.
“The good news is the amount of deferrals is way down, and most of the clients have become current,” Moynihan said. “Irrespective of that deadline passing, we’ll continue working with a few clients we have left to help them.”
A spokesperson for Bank of America later confirmed to CNBC that Moynihan’s policy applies to both bank-owned and government-backed loans that it services.
There was similar ominous news from JPMorgan Chase CEO Jamie Dimon, who, in written testimony to the Senate, did not comment on when his bank planned to restart foreclosure proceedings and evictions.
What he did say was that the bank has extended forbearance to around 2 million mortgage, auto and credit card accounts since the pandemic began last year, and that 90% of those have since exited and resumed making payments.
A spokesperson for Chase later told CNBC the bank will continue to respect federal and state foreclosure moratoriums for all loans in its portfolio.
Wells Fargo CEO Charles Scharf, at least, was much more compassionate in his response to the Senate’s inquiries. He said the bank has taken the initiative to extend foreclosure protection beyond the current federal moratorium.
“For loans that we own, we have extended our moratoriums for foreclosures and evictions until the end of the year,” Scharf told Senators at the hearing.
A spokesperson for Wells Fargo later confirmed to CNBC that the bank has paused all foreclosure-related activity on occupied properties until the end of the year. Similarly, it has halted all evictions too, with the exception of a few, “very specific cases”.
Wells Fargo went further and said it also supports a proposal by the Consumer Financial Protection Bureau that all U.S. lenders should be prevented from starting foreclosure proceedings until 2022.
“We support the CFPB’s efforts to make this apply for the whole industry, but we are not waiting for them to make this decision where we service mortgages for ourselves,” the bank spokesperson said.
Bank of America and JPMorgan Chase both declined to comment when asked if they support the CFPB’s proposed rule.