On March 19, 2020, the New York Department of Financial Services (“NYDFS”) issued guidance urging all state-regulated financial institutions during the outbreak of the coronavirus to reduce its adverse impact by working with consumers and small businesses that can demonstrate financial hardship caused by COVID-19. Specifically, NYDFS authorized financial institutions to take “reasonable and prudent actions” to support impacted New York citizens through the following actions:
- Waiving overdraft fees;
- Providing new loans on favorable terms;
- Waiving late fees for credit card and other loan balances;
- Waiving automated teller machine (ATM) fees;
- Increasing ATM daily cash withdrawal limits;
- Waiving early withdrawal penalties on time deposits;
- Increasing credit card limits for creditworthy customers;
- Offering payment accommodations, such as allowing loan customers to defer payments at no cost, extending the payment due dates or otherwise adjusting or altering terms of existing loans, which would avoid delinquencies, triggering events of default or similar adverse consequences, and negative credit agency reporting caused by COVID-19 related disruptions;
- Ensuring that consumers and small businesses do not experience a disruption of service if financial institutions close their offices, including making available other avenues for consumers and businesses to continue to manage their accounts and to make inquiries;
- Alerting customers to the heightened risk of scams and price gouging during the COVID-19 disruptions, and reminding customers to contact their financial institutions before entering into unsolicited financial assistance programs; and
- Proactively reaching out to customers via app announcements, text, email or otherwise to explain the above-listed assistance being offered to customers.
NYDFS also urged creditors to work with and provide accommodations to borrowers “to the extent reasonable and prudent,” including refraining from exercising rights and remedies based on potential technical defaults under material adverse change and other contractual provisions that might be triggered by the COVID-19 pandemic.
NYDFS noted that these types of efforts by financial institutions to assist consumers and businesses under the current unusual and extreme circumstances are consistent with safe and sound banking practices and the public interest and thus will not be subject to examiner criticism.
Financial institutions with questions concerning the guidance are directed to contact their regular point of contact at NYDFS.