The oil gusher has scrambled the economy along the Gulf Coast, cutting incomes of everyone from fishermen to hotel maids. Regulators are asking banks if they will treat those customers, including mortgage borrowers, fairly. Please? Pretty please?
The title of the interagency statement tells you a lot: "Financial Institutions Affected by the Deepwater Horizon Oil Spill." I wish they'd added "With Customers" after "Institutions."
In the statement, the regulators "encourage financial institutions to work with their customers and consider measures to assist borrowers affected by this situation and its subsequent impact on local communities." Encourage and consider. It's a start.
Specifically, the five federal regulators, plus the Conference of State Banking Supervisors, ask banks to help customers who can prove they were financially harmed by the oil disaster. Suggestions include waiving late fees, making lending decisions quickly, granting flexibility on loan repayments for businesses and customers who expect to get checks from BP, and even easing credit terms.
"These measures could help customers recover financially and be better positioned to honor their obligations," the statement says. "In the affected areas, these efforts can contribute to the health of the local community and the long-term interests of the institution and its customers."
It's rather sad that the banks need to be instructed to treat people fairly.
Fannie Mae and Freddie Mac already have given mortgage servicers permission to ease up on borrowers affected by the disaster.