Although the Families First Coronavirus Response Act, which was recently signed into law, does not address what steps financial institutions should take to assist customers in light of this pandemic, several lawmakers and regulators have weighed in with their guidance and suggestions.
Several members of Congress have been vocally pushing measures to address the collection of consumer debt and ameliorate the potential negative effect of the pandemic.
House Financial Services Chairwoman Maxine Waters published a memo on March 18 outlining her proposals to assist the economy, including her recommendation to suspend all consumer credit payments during the pandemic.
According to Chairwoman Waters, “[b]orrowers with payment suspensions should not accrue any interest or fees during the payment suspension period, and should be provided with affordable options to repay arrearages.”
Chairwoman Waters is also recommending that all debt collection efforts, including garnishments and repossessions, be suspended for 120 days after the pandemic ends, and that owners of rental properties receive forbearances on their mortgages to allow renters to remain in place for as long as possible.
And on Monday, March 16, Sen. Brian Shatz introduced a bill to amend the Fair Credit Reporting Act to provide for disaster protection for workers' credit. The “Disaster Protection for All Workers’ Credit Act” would mandate a four-month moratorium on negative credit reporting and allow consumers to pull free, unlimited credit reports and scores for a year.
On Wednesday, March 18, President Trump directed the Department of Housing and Urban Development (HUD) to suspend all evictions and foreclosures on HUD-backed properties until the end of April. And, on the same day, the Federal Housing Finance Agency (FHFA) directed Fannie Mae and Freddie Mac to suspend all foreclosures and evictions for at least 60 days for homeowners with mortgages backed by the government-sponsored enterprises. It is important to note, however, that this moratorium does not apply to commercial loans or conventional residential loans.
The Consumer Financial Protection Bureau (CFPB) had been relatively quiet until Trump and the FHFA’s announcements on March 18. Later that day, the CFPB issued its first press release since the COVID-19 pandemic started to applaud the joint action by HUD and the FHFA to establish a moratorium on evictions and foreclosures. In a hearing before the Senate on March 10, CFPB Director Kathy Kraninger indicated that she had not used her authority to ask financial institutions to provide forbearance plans to consumers who lose their jobs or become unable to pay their debts because of COVID-19.
Aside from the eviction/foreclosure moratorium, the most robust guidance right now is coming from the Office of the Comptroller of Currency (OCC), who issued a bulletin on Friday, March 13. In short, the OCC is encouraging financial institutions to work with “affected customers and communities” and consider waiving certain fees, such as automated teller machine (ATM) fees for customers and non-customers, overdraft fees and late payment fees on credit cards and other loans. The OCC is also supporting efforts to increase credit card limits for creditworthy borrowers and “offer payment accommodations, such as allowing borrowers to defer or skip some payments or extending the payment due date, which would avoid delinquencies and negative credit bureau reporting caused by COVID-19-related disruptions.”
The Federal Deposit Insurance Corporation (FDIC) has launched a COVID-19 information page with FAQs for customers as well as financial institutions. Like the OCC, the FDIC is encouraging financial institutions to accommodate customers and suggests that institutions “consider addressing any deferred or skipped payments by either extending the original maturity date or by making those payments due in a balloon payment at the maturity date of the loan. When deferring or skipping payments, providing borrowers with accurate disclosures that are consistent with federal and state consumer protection laws will help to avoid any misunderstandings relative to the changes in the terms.”
In terms of upcoming audits and examinations, the Federal Financial Institutions Examination Council (FFIEC) issued a statement reminding financial institutions that they should have a specific portion of their business continuity plans dedicated to pandemic planning. This strongly suggests that future examinations will include a review of pandemic planning efforts.