In the wake of Hurricane Harvey, the Consumer Financial Protection Bureau released a statement to help supervised entities to assist consumers at risk in the wake of the destruction.
It begins by stating: “The Consumer Financial Protection Bureau encourages its supervised entities to work with consumers who may be at financial risk due to the major disaster caused by Hurricane Harvey. This event will cause financial strain on consumers and communities. By providing flexibility and other assistance to consumers in communities under such stress, supervised entities can lessen negative impacts and hasten recovery. These efforts may also build goodwill and provide other benefits to the institutions undertaking them. When communities thrive, so do the financial institutions that serve them.
“Supervised entities should, to the extent possible, maintain adequate staffing to address consumers’ needs following this major disaster. Additionally, to the extent consistent with applicable law, the bureau encourages supervised entities to address consumers’ needs by taking the following actions in the aftermath of Hurricane Harvey:
- Offering penalty-free forbearance or repayment periods with clearly disclosed terms;
- Limiting or waiving fees and charges, including overdraft fees, ATM fees, or late fees;
- Restructuring existing debt by, for example, extending repayment terms with clearly disclosed terms;
- Refinancing existing debt or extending new credit with terms favorable to the consumer. Terms could, for example, reduce costs, limit payment amounts, or offer consumers other flexibility;
- Easing documentation or credit-extension requirements;
- Increasing capacity for customer service hotlines, particularly those that serve consumers in languages other than English; and/or
- Increasing ATM daily cash withdrawal limits.”
The bureau also encouraged supervised entities to make use of existing regulatory flexibility “where doing so would benefit consumers affected by major disaster or emergency.”
“One example is under Regulation X, which implements the Real Estate Settlement Procedures Act,” the statement stated. It noted that Regulation X requires servicers to obtain a complete loss mitigation application before evaluating a mortgage borrower for a loss mitigation option, such as a loan modification or short sale.
“However, Regulation X permits servicers to offer certain short-term options based upon an evaluation of an incomplete application,” the statement continued. “In addition, a servicer may offer loss mitigation options to a borrower who has not submitted an application. A servicer also may offer loss mitigation options to a borrower when the offer is not based on any evaluation of information submitted by the borrower in connection with a loss mitigation application. This regulatory flexibility permits servicers to offer relief to borrowers affected by a major disaster or emergency without first having to collect a complete application. These borrowers in particular may have difficulty timely obtaining and submitting application documents and information.”
In addition, the bureau noted that it “recognizes that supervised entities may themselves experience difficulties due to a major disaster or emergency. To that end, when conducting examinations and other supervisory activities, the bureau will consider the circumstances that supervised entities may face following a major disaster and will be sensitive to good-faith efforts to assist consumers.”