Banks in areas affected by the volcano eruptions on Hawaii are encouraged to “work constructively with borrowers” who have difficulties beyond their control because of the damage from the eruptions and associated earthquakes, the federal deposit insurer said Tuesday.
In a Financial Institution Letter (FIL 33-2018), the Federal Deposit Insurance Corp. (FDIC) offered guidance to insured institutions to facilitate recovery in areas of Hawaii affected by the eruption of Kilauea Volcano, which began on May 3 and continues. The FIL notes that a federal disaster for selected areas in Hawaii was declared on May 11, and amended on June 14, to make federal assistance available to eligible individuals. Additional designations may be made after damage assessments are completed in the affected areas, the FDIC noted.
“Extending repayment terms, restructuring existing loans, or easing terms for new loans, if done in a manner consistent with sound banking practices, can contribute to the health of the local community and serve the long-term interests of the lending institution,” the FDIC stated in the letter.
The agency also noted that banks may receive favorable Community Reinvestment Act (CRA) consideration for community development loans, investments, and services in support of disaster recovery.
Regulatory relief from certain filing and publishing requirements will also be considered, the agency said.