WASHINGTON — The federal bank, thrift and credit union regulatory agencies are encouraging financial institutions to work with homeowners who are unable to make mortgage payments. Prudent workout arrangements that are consistent with safe and sound lending practices are generally in the long-term best interest of both the financial institution and the borrower. Institutions will not face regulatory penalties if they pursue reasonable workout arrangements with borrowers.
Borrowers who are unable to
make their mortgage payments should contact their lender or servicer
as soon as possible to discuss available options. Examples of
constructive workout arrangements include modifying loan terms,
and/or moving borrowers from variable-rate loans to fixed-rate
loans. Bank and thrift programs that transition low- or
moderate-income homeowners from higher-cost loans to lower-cost
loans may also receive favorable consideration under the Community
Reinvestment Act (CRA), provided the loans are made in a safe and
sound manner. Federal credit unions are exempt from CRA
requirements.
The agencies want to remind
their institutions that existing regulatory guidance and accounting
standards do not require immediate foreclosure on homes when
borrowers fall behind on payments. In addition, under the
Homeownership Counseling Act, institutions are required to inform
delinquent borrowers about the availability of homeownership
counseling. Institutions should also consider working with reputable
consumer-based organizations to help financially stressed borrowers
avoid predatory foreclosure rescue scams.
The agencies’ statement is
attached.
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Media Contacts:
Federal Reserve |
Deborah Lagomarsino |
(202) 452-2955 |
FDIC |
David Barr |
(202) 898-6992 |
HUD |
Lemar Wooley |
(202) 708-0685 |
NCUA |
Cherie Umbel |
(703) 518-6337 |
OCC |
Kevin Mukri |
(202) 874-5770 |
OTS |
Kevin Petrasic |
(202)
906-6677 |