Fed to lenders: Give customers a break
By Holden Lewis • Bankrate.com

Lenders of all kinds should give customers a break right now, the feds say.

According to the Federal Reserve and government-backed mortgage providers, banks and lenders should take into account that:

• Bills and payments will be delayed because the U.S. Postal Service can't ship mail by air;
• Thousands of customers are dead;
• Thousands of customers are dealing with deaths in the family;
• Thousands more have lost their offices and maybe their jobs and income for a while.

The Federal Reserve urges banks in a Sept. 14 statement "to work with customers who directly or indirectly have been affected by the events of Sept. 11," and says lenders "may consider providing additional time or grace periods before assessing late fees or initiating default or penalty pricing, particularly on consumer loans."

A call for help for consumers
Translated into English, that means the Fed is asking lenders to get off your back if it takes a week for your check to get to its destination.

Fannie Mae and Freddie Mac, the government-chartered companies that help keep mortgage markets running, have asked mortgage servicers to treat the terrorist attacks as they would natural disasters. That means "suspending or reducing mortgage payments for a time, or, in some circumstances, creating longer loan payback plans, resulting in a lower monthly payment," Fannie Mae says in a statement. Loan servicers are to give borrowers the benefit of the doubt.

"We understand that borrowers who have lost family members or otherwise been affected by this attack may find it difficult to resume the normal pattern of their lives for some time," says Fannie Mae Chairman Franklin D. Raines.

Freddie Mac on Friday announced a policy it called its "Peace of Mind Plan" to prevent homeowners with mortgages owned by Freddie Mac from losing their homes.

"We will work with our lenders and we will find a way to ensure that the borrowers who have lost their loved ones or their jobs will not lose their homes because of these horrific acts," says Freddie Mac Chairman Leland C. Brendsel.

Freddie Mac called on the lenders servicing its mortgages to extend every option available to help borrowers directly or indirectly affected by the terrorist attacks. Further, Freddie Mac announced that it is:

• Suspending all foreclosures until Sept. 25, and until Oct. 1 in the East Coast and California, where most of the affected families live.
• Requesting that lenders not report delinquencies of affected borrowers to credit bureaus.

In other words, mortgage servicers are urged to cut a break to widows and others who have trouble making mortgage payments because of the terrorist acts.

Late-payment leniency
Wells Fargo Home Mortgage, which along with Washington Mutual is one of the top two mortgage servicers in the country, automatically instituted a two-day suspension of late fees nationwide, spokesman Dan Frahm says.

And the servicer tapped a team to handle calls from homeowners whose families were directly affected by the disasters: "We'll work with them on a case-by-case basis so they can deal with the crisis in their family situations instead of having to worry about the payment of their loans," Frahm says.

The company will work case by case with customers who have been affected indirectly.

Washington Mutual's mortgage payments typically are due on the 15th, and there's a three-day grace period before the company assesses late fees.

"We've extended the grace period 10 business days. That will take it out to the 28th," says Kevin Horn, vice president for public relations for the home loans group. WaMu will extend the grace period even more if such an action becomes necessary.

For people who are directly affected -- such as customers who have had a death in the family or who aren't paid on time as a result of the disaster-- WaMu has a phone number: (800) 496-9633.

GMAC Mortgage, one of the country's largest mortgage servicers, is extending the late payment period until later in the month, spokesman Rick Gillespie says. There is no hard-and-fast policy on when payments due on the 15th will be considered late, but GMAC Mortgage intends to use common sense and will be flexible, he says.

"Also, as customers contact us with concerns or to let us know that they're having a problem, we're honoring those requests as they come in individually," Gillespie says.

"Not only has the nation suffered an unbelievable tragedy, the nation's air system and transportation systems have been crippled, which makes it difficult for people to get payments in on time," he adds.

It's a two-way street. The company has a recording telling telephone callers that they might receive their monthly statements late, too.

"From a company perspective, not only have people have experienced this tragedy with all the appropriate emotions, but it's also been a unifying experience in terms of setting the right priorities."

Credit card lenders have also said they will work with customers whose checks are delayed. See related story.