Regulators Turn Spotlight to Consumer Loans

May 14, 2020 at 8:29 am Leave a comment

Legislators and regulators have focused most of their attention on mortgage forbearances but yesterday included a reminder that regulators expect financial institutions to work with consumers having trouble keeping up with those credit card payments and other consumer loans.

“The bureau encourages financial firms to continue to provide the kind of assistance to their communities that many have been providing, such as waiving fees, lowering minimum-balance requirements, and implementing changes in account terms that benefit consumers.”

Incidentally, the Wall Street Journal dedicated a lead article today to cataloguing the difficulties consumers are having working with financial institutions after falling behind on credit card payments. The fact that they published the article the day after the CFPB issued this statement underscores that you need to make sure you are providing flexibility to members impacted by COVID-19.

In addition to the press release the CFPB issued guidance on working with deposit accounts, home equity lines of credit and making good faith efforts to comply with timing requirements, such as the timeframe for conducting error resolution investigations.

Much of the information is consistent with steps that I know credit unions have already taken. For instance, one question that our compliance department has frequently received is how quickly can a credit union change the terms of deposit accounts? In a Q&A provided yesterday, the bureau reminds financial institutions that changes favorable to consumers can be implemented without advance notice.

Finally, while Federal regulators are simply pressuring lenders to work with consumers, those of us lucky enough to live in New York should remember that one of the first things the state did was issue emergency regulations mandating that financial institutions waive ATM, account overdraft and credit card late fees for consumers impacted by COVID-19.

Entry filed under: Compliance, COVID-19, Economy, New York State. Tags: , , , .

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Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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