On May 13, 2020, the Consumer Financial Protection Bureau (“CFPB”) issued two FAQs providing guidance to depository and non-depository financial institutions (“institution”) on the ability to take expedited action to assist customers who experience hardship due to the COVID-19 emergency. The guidance is provided in connection with deposit accounts (checking, savings or prepaid accounts), preauthorized payments and on open-end credit that is not secured by consumer’s home.
Importantly, a general theme in the guidance is that taking action that is helpful to customers impacted by COVID-19, such as waiving fees and account charges or temporarily reducing interest, can be taken immediately without advance notice. However, temporary modification to terms, even if helpful, should be followed by written notice to the customer that explains the action taken by the institution and informs the customer when forbearance period ends and resumption of regular prior terms resumes.
The CFPB’s two FAQs are provided below.
Takeaways
Many institutions have commendably put together programs to assist customers affected by the COVID-19 emergency. Institution should ensure that programs providing temporary relief do not result in unintended consequences, are properly communicated to customers, provides the institution flexibility to provide continued relief as required, and include clearly defined exit processes that allows the institution and its customers to return to normalcy at the end of the COVID-19 emergency.
If you have any question regarding the CFPB FAQs or on COVID-19 temporary relief programs, please contact Solomon Maman.
Author
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Solomon has nearly two decades of experience representing financial institutions, real estate investors and privately owned business entities. Solomon concentrates his practice in the areas of banking, consumer financial services, real estate, business law and related litigation and appellate practice.
