FEDERAL AGENCIES ENCOURAGE FINANCIAL INSTITUTIONS TO WORK WITH CUSTOMERS DURING GOVERNMENT SHUTDOWN

FROM:  FEDERAL DEPOSIT INSURANCE CORPORATION 
Regulators Encourage Institutions to Work with Borrowers Affected by Government Shutdown

Five federal regulatory agencies encourage financial institutions to work with customers affected by the federal government shutdown.

Prudent workout arrangements that are consistent with safe-and-sound lending practices are generally in the long-term best interest of the financial institution, the borrower, and the economy.

Affected borrowers may face a temporary hardship in making payments on debts such as mortgages, student loans, car loans, credit cards, and other debt. The agencies encourage financial institutions to consider prudent workout arrangements that increase the potential for creditworthy borrowers to meet their obligations. The agencies realize that the effects of the federal government shutdown on individuals should be transitory, and prudent efforts to modify terms on existing loans should not be subject to examiner criticism.

Those affected by the government shutdown are encouraged to contact their lenders immediately should financial strain occur.

FDIC ENCOURAGES LENDERS TO WORK WITH STUDENT BORROWERS

FROM:  FEDERAL DEPOSIT INSURANCE CORPORATION 
Agencies Encourage Lenders to Work with Student Loan Borrowers 

WASHINGTON — The federal bank regulatory agencies today issued a statement encouraging financial institutions to work constructively with private student loan borrowers experiencing financial difficulties. Prudent workout arrangements are consistent with safe and sound lending practices and are generally in the long-term best interest of both the financial institution and the borrower.

Student loan borrowers who are unemployed or underemployed may face hardship in making payments on their private student loan debts after separation from school or during periods of economic difficulty. Current interagency guidance permits prudent workout and modification programs for retail loans, including student loans, and provides that extensions, deferrals, renewals, and rewrites may be used to help borrowers overcome temporary financial difficulties. Institutions that have private student loan workout programs should provide borrowers with information that clearly explains the programs, including eligibility criteria and the process for requesting a modification.

The statement is being issued by the Federal Deposit Insurance Corporation, the Federal Reserve Board, and the Office of the Comptroller of the Currency.