Strategies credit unions can use to work with borrowers who experience financial hardship because of the coronavirus crisis are outlined by the federal credit union regulator in a letter to its supervised institutions released Thursday.
The National Credit Union Administration (NCUA), in its Letter to Credit Unions (LTCU 20-CU-13), said the strategies range from offering additional funding to making temporary or permanent loan modifications. The letter also describes how credit unions should monitor and report the loan modifications, the agency said.
“The financial hardships experienced by borrowers during the COVID 19 pandemic will vary,” the agency stated. “When evaluating available strategies to work with borrowers, credit unions should use a strategy appropriate for a borrower’s needs and the degree of hardship. Borrowers may benefit from new funds, temporary loan modifications, or permanent loan modifications. However, a credit union’s strategies for working with borrowers should also take into account the financial effects these actions will have on the credit union and its ability to serve all members.”
The letter outlines more than a dozen strategies addressing new funds to borrowers, temporary loan modifications and permanent loan modifications. The letter also outlines policies for monitoring and reporting loan modifications.