Senators: Banks need to be flexible in face of coronavirus
Concerns over the impact of the coronavirus on the economy, macro and micro, have the attention of a group of senators, including Sen. Mark Warner, D-Va.
The group is calling on regulators to provide financial institutions with guidance to help assist individuals and communities affected by coronavirus.
“As Americans seek to comply with CDC guidance and protect the well-being of their families, many consumers may face negative shocks to household finances, including challenges with paying their day-to-day bills, credit cards, student loans, small business loans and mortgage payments, among other financial obligations. Accordingly, we urge you to issue guidance to financial institutions encouraging them to work with consumers and businesses affected by the virus and to recognize that they may have difficulty accessing affordable credit and face temporary hardship in making payments on their credit obligations,” the group wrote in a letter to federal regulators.
The guidance, the letter advised, should encourage financial institutions to make efforts to modify terms on existing loans or extend new consumer-friendly access to credit to help consumers and businesses affected by the virus, consistent with safe-and-sound lending practices.
In a second letter, Sen. Warner and his colleagues urged trade associations representing the nation’s bankers and credit unions to work with their members to prioritize their employees’ health and safety in the event of coronavirus outbreak, and to offer flexibility and forbearance to customers whose finances may be negatively impacted as a result of following recommended CDC guidance to limit exposure and spread of the virus.
“We encourage your member institutions to commit to ensure that any employees or contractors who follow novel coronavirus-related guidance from public health authorities can count on basic protections like preservation of their employment status and basic financial forbearance,” the senators wrote.
In a third letter, Sen. Warner and Sen. Sherrod Brown, D-Ohio, urged HUD, Fannie Mae and Freddie Mac to provide servicers with guidance in order to help facilitate access to affordable mortgage credit to affected borrowers, consistent with safety and soundness of the housing finance system.
“As Americans seek to comply with CDC guidance and protect the well-being of their families, many borrowers may face negative shocks to household finances, including challenges with mortgage payments, among other financial obligations. Accordingly, we urge you to issue guidance to mortgage servicers in order to help borrowers navigate the broader financial effects of the coronavirus. This includes authorizing servicers to suspend or reduce a homeowner’s mortgage payments immediately if the servicer believes the homeowner’s financial circumstances are affected by the virus, waiving late fees, and suspending credit bureau reporting, foreclosures and other legal proceedings as necessary, in order to help families cope with the effects of this health emergency,” Warner and Brown wrote.