Compliance Blog

Written by Bernadette Clair, Regulatory Compliance Counsel

Federal regulators, including the NCUA, have issued supplemental guidance on supervisory practices regarding financial institutions and borrowers affected by Hurricane Sandy.  The guidance is intended to encourage institutions to consider all reasonable and prudent steps to assist those affected by recent storms.

The guidance indicates that examiners will consider the unusual circumstances institutions are facing in the affected areas when conducting exams and other supervisory activities.  Institutions that implement prudent efforts to meet customers’ cash and financial needs will generally not be subject to examiner criticism, and those that implement 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.

Examples of prudent relief efforts to meet customers’ cash and financial needs can include the following, when consistent with safe and sound banking and credit union practices:

• 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

The guidance also covers prudent loan modifications, evaluating restructured loans to determine whether a particular loan should be reported as a troubled debt restructuring (TDR), and guidance regarding Bank Secrecy Act compliance with Customer Identification Program (CIP) requirements.  See the guidance for complete details.

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Additional Resources.  Here are links to additional helpful resources.

• NCUA’s Website.  This page on NCUA’s website lists numerous resources regarding hurricane preparedness and recovery for credit unions and credit union members.
• Freddie Mac and Fannie Mae.  Both Freddie Mac and Fannie Mae issued statements regarding relief options available to borrowers affected by the hurricane.
• Scam Warnings.  The IRS issued a warning about possible scams targeting consumers in the wake of Hurricane Sandy. FinCEN Advisory FIN-2006-A001 also provides guidance to financial institutions about potential fraudulent schemes during natural disasters.