The Federal Reserve and other government regulators have encouraged financial institutions to offer relief to consumers impacted by the partial U.S. government shutdown, Bloomberg News reported. “Affected borrowers may face a temporary hardship in making payments on debts such as mortgages, student loans, car loans, business loans or credit cards,” the agencies said on Friday. “As they have in prior shutdowns, the agencies encourage financial institutions to consider prudent efforts to modify terms on existing loans or extend new credit to help affected borrowers.” The statement comes a day after House Financial Services Chair Maxine Waters (D) wrote a letter to federal regulators calling on them to take steps to help protect workers hit by the shutdown. “It is in no one’s interest to punish affected consumers who may be enduring this temporary period of financial stress,” she wrote. Read more.
In related news, the Trump administration last week revived a program that is key to home lending, after the mortgage industry said its closure during the partial government shutdown could have forced lenders to delay or scrap loan closings, the Wall Street Journal reported. The Mortgage Bankers Association and other industry groups had complained to the Treasury Department that the program’s closure as part of the shutdown could harm consumers seeking to obtain a loan. At issue is an Internal Revenue Service program for processing forms that lenders use to verify borrowers’ incomes. Fannie Mae and Freddie Mac, which guarantee roughly half of the mortgage market, generally require the form to be submitted to the IRS by the lender before the loan is eligible for purchase by the government-mortgage giants. The program is also used for mortgages backed by the Federal Housing Administration, which insures an additional 11 percent of all U.S. single-family residential mortgage debt. Read more. (Subscription required.)
