If you are a lender who entered the crisis with an active loan portfolio, you have without a doubt been thinking about managing credit stress in your portfolio. Providing payment relief to distressed borrowers was likely an integral part of your reaction, and it has several considerations like I discussed in an earlier blog post. Recent data from Transunion now shows an enormous spike in the percentage of accounts in hardship across loan categories. It is noteworthy that some banks have deferred payments for more than 15% of their loan portfolios, according to Janney Montgomery Scott in this Bloomberg article. Trends in serious delinquency rates are however nowhere close to such extremes, masking the true nature of risk here.

Read More