Loan modifications, consumer protection considerations focus of updated interagency guidance amid COVID-19 pandemic


Financial institutions, including credit unions, banks and savings associations are being encouraged by federal financial regulatory agencies to work constructively with borrowers affected by COVID-19, and were provided with additional information regarding loan modifications on Tuesday.


The April 7 revised interagency statement from NCUA, Federal Reserve System, Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau also provides the agencies’ views on consumer protection considerations.

The statement follows previous guidance from the federal financial regulatory agencies released March 22 that encouraged financial institutions to work prudently with borrowers and described the agencies’ interpretation of how current accounting rules under U.S. GAAP apply to certain COVID-19-related modifications. The revised interagency statement clarifies the interaction between the March 22 interagency statement and section 4013 of the CARES Act, Temporary Relief from Troubled Debt Restructurings (section 4013), as well as the agencies’ views on consumer protection considerations.

“When working with borrowers, lenders and servicers should adhere to consumer protection requirements, including fair lending laws, to provide the opportunity for all borrowers to benefit from these arrangements,” the updated guidance states. “When exercising supervisory and enforcement responsibilities, the agencies will take into account the unique circumstances impacting borrowers and institutions resulting from the National Emergency.”

The guidance also states that the agencies expect that supervisory feedback will be focused on “identifying issues, correcting deficiencies, and ensuring appropriate remediation to consumers,” and that they do not expect to take consumer compliance public enforcement action against  institutions, “provided that the circumstances were related to the National Emergency and that the institution made good faith efforts to support borrowers and comply with the consumer protection requirements, as well as responded to any needed corrective action.”


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