ALEXANDRIA, Va. – NCUA yesterday joined banking regulators in encouraging credit unions and banks to help members and customers in regions harmed by Hurricane Sandy with loan forbearance and other efforts.
When conducting examinations and other supervisory activities, examiners will consider the unusual circumstances institutions are facing in the affected areas, regulators said. An institution that implements prudent loan workout arrangements will not be subject to criticism for engaging in these efforts, even if the restructured loans have weaknesses that result in adverse classification or credit risk grade downgrade.
Credit unions and banks should take “all reasonable and prudent steps” to help borrowers’ cash and financial needs, the regulators said in a statement yesterday in Washington. The statement from NCUA, the Federal Reserve, FDIC and the Office of the Comptroller of the Currency said such steps may include modifying loans, waiving ATM fees, increasing ATM withdrawal limits or easing restrictions on cashing out-of-state checks.
Such steps “could help customers recover financial strength and contribute to the health of the local community and the long-term interests of institutions and their customers when undertaken in a prudent manner,” the regulators said. The actions “may not be feasible or desirable for all institutions,” they said.
The agencies said many persons displaced or adversely affected by a disaster or emergency may not have access to their normal identification and personal records. The agencies encouraged institutions to be “reasonable” in their approach to verifying the identity of individuals temporarily displaced by Hurricane Sandy.
When consistent with safe and sound banking and credit union practices, regulators said these efforts may include:
• Waiving ATM fees for customers and non-customers
• Increasing ATM daily cash withdrawal limits
• Waiving overdraft fees
• Waiving early withdrawal penalties on time deposits
• Waiving availability restrictions on insurance checks
• Easing restrictions on cashing out-of-state and non-customer checks
• Easing credit card limits and credit terms for new loans
• Waiving late fees for credit card and other loan balances
• Offering payment accommodations, such as allowing loan customers to defer or skip some payments or extending the payment due dates, which would avoid delinquencies and negative credit bureau reporting caused by storm-related disruptions
