Help borrowers hit by shutdown, regulators urge

by Ryan Smith10 Oct 2013

Federal regulatory agencies are encouraging lenders to give some slack to borrowers affected by the government shutdown.

In a joint statement released Wednesday, the Federal Reserve, the Consumer Financial Protection Bureau, the FDIC, the National Credit Union Administration and the Office of the Comptroller of the Currency all urged financial institutions to work with customers who’ve found themselves furloughed as a result of the shutdown.

“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 statement said. “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.”

Other agencies are also encouraging lenders to work with furloughed borrowers. Freddie Mac issued a bulletin Monday that included guidance on processing mortgages for furloughed employees. For instance, lenders can send mortgages to Freddie even when the borrower isn’t receiving a paycheck as a result of the shutdown, “provided the loan meets Freddie Mac's other requirements and the lender expects the borrower to return to work when the government reopens.”

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