SPECIAL REPORT: Guidance on the COVID-19 Pandemic from the Illinois Department of Financial and Professional Regulation
The Illinois Department of Financial and Professional Regulation (“IDFPR”) has announced a series of actions and guidance to protect Illinois consumers and professionals struggling as a result of the COVID-19 crisis. The intent of these actions and guidance is to protect consumers with respect to consumer borrowing, servicing, and collection. Further guidance was issued to banks, credit unions, and other regulated financial entities pertaining to lending, servicing, and collecting on loans.
Renters and Homeowners
As previously reported, Governor Pritzker issued an Executive Order on March 20, 2020 staying all evictions from homes and rental units. As such, the IDFPR is encouraging all mortgage servicers to defer mortgage payments for ninety (90) days for individuals suffering from COVID-19 related hardship.
Fannie Mae and Freddie Mac have suspended foreclosure sales and evictions for loans financed through them. Additionally, certain measures such as forbearance or mortgage payment reduction for up to twelve (12) months, suspension of late charges and penalties, and suspension of reporting to credit bureaus for past due payment may also be available to borrowers. Fannie Mae and Freddie Mac are also allowing forbearance on multifamily homes loans if the borrower agrees to suspend all evictions for renters struggling to pay rent as a result of COVID-19.
Foreclosures and evictions for FHA single family home loans and reverse mortgages for seniors are also being suspended for sixty (60) days. The foreclosure suspension applies to current and new foreclosures.
The VA has also issued guidance to mortgage servicers. The guidance is intended to encourage mortgage servicers to ensure that borrowers unable to make payments on the VA loans are evaluated for VA Loss Mitigation options, wave late fees, and suspend reporting to credit bureaus.
A list of banks offering modification programs can be found at https://www.aba.com/about-us/press-room/industry-response-coronavirus. A list of credit unions offering modification programs can be found at https://www.icul.com/covid-19-best-practices-2/. Otherwise, contact your bank or credit union directly for more assistance.
The IDFPR recommends borrowers to take the following actions if they are in need of relief.
Contact your landlord and mortgage servicer
Contract your mortgage servicer or lender to find out current mortgage relief programs being offered
Contact HUD (www.HUD.com)
For renters, contact www.carpls.org/client-services for renters’ rights assistance
For veterans, contact the St. Paul VA Regional Office at 877-827-3702
Contact the IDFPR at 888-473-4858
State Banks and Credit Unions
The IDFPR has strongly encouraged banks and credit unions to assist borrowers affected by the COVID-19 crisis. Some banks and credits unions have already begun to provide modifications, forbearances, and new loans to individuals and businesses, and the IDFPR is encouraging all remaining banks to follow suit.
The IDFPR is encouraging all banks and credit unions to offer payment accommodations such as deferring payments at no extra cost or extending payment due dates, provide new loans on favor terms, waive certain fees such as ATM usage, overdraft, and late payments, increase ATM daily cash withdrawal limits, easing restrictions on depositing certain checks, increasing credit limits for creditworthy consumers, alerting customers to scams and price gouging, asking consumers to contact financial institutions before entering into any unsolicited programs, and ensuring that consumers and businesses do not experience a disruption of services.
The IDFPR is also encouraging banks and credit unions to contact their customers to explain any assistance being offered. It is recommended that you contact your bank or credit union should you have any questions or require assistance to see what your bank or credit union can provide you.
Loan Guidance
The IDFPR is encouraging all lenders to work with borrowers throughout the duration of the COVID-19 crises. The IDFPR is encouraging lenders to offer forbearance on payments without interest and late fees and to use the new disaster code when report to credit bureaus to avoid reports of negative credit.
Student Loans
Individuals struggling to make student loan payments should take note of actions taken by Congress for federal student loans through the U.S. Department of Education and the IDFPR’s guidance as to private and federal loans.
The CARES Act passed by Congress has reduced interest rates on federal student loans to 0% and suspended repayment on federal student loans through September 30, 2020. Additionally, involuntary collection activities on federal student loans will also be suspended through September 30, 2020. The U.S. Department of Education will refund $1.8 billion to borrowers in money that was previously subject to offset. Reporting to credit bureaus will the same as if borrowers were making timely payments.
The IDFPR encourages borrowers to contact their student loan servicers for assistance if they are having trouble making payments. The IDFPR has reminded student loan servicers of their obligation to present all available options to borrowers, including income-based repayment, deferment, forbearance, and relieving borrows of interest. The IDFPR also encourages private student loan servicers to employ the disaster code when reporting to credit bureaus. Borrowers having trouble with their student loan servicers may contact the IDFPR at 217-785-2900, the Attorney General at 800-455-2456, the Department of Education’s National Student Loan Date System at nslds.ed.gov, or the Department of Education’s Federal Student Aid Information Center at 800-433-3243 or 800-730-8913.
Office Closures
The IDFPR issued guidance to all licensees licensed under the Consumer Installment Loan Act, Payday Loan Reform Act, or Sales Finance Agency Act that are closing offices as a result of the COVID-19 crisis. Licensees may close their offices without notice and approval of the IDFPR is they meet certain requirements. The licensee must:
Provide notice to the IDFPR no later than 24 hours after closure
Provide reasonable methods for consumer to make payments during closure
Provide reasonable methods for receiving and responding to consumer inquiries during closure
For payments due during closure, all payments must be considered, for all purposes including the computation of interest or charges, as having been received, whether through the mail or otherwise, at any time before the close of business on the 30th calendar day following the last closed day
Provide notice to the IDFPR at least one business day prior to reopening
Debt Collection
Debt collection is not considered an essential business service under Governor Pritzker’s March 20, 2020 Executive Order. Notwithstanding, debt collectors are able to continue to operate remotely. The IDFPR is encouraging debt collectors to suspend collection activity for at least sixty (60) days. Debt collectors must continue abiding by creditor’s rights. Debt collectors may not call you and known places at times that are inconvenient. Debt collectors must be truthful about the amount of debt, and cannot use deceptive practices in their collection efforts. Debt collectors that are failing to observe creditor’s rights may be reported to the IDFPR or Illinois Attorney General’s office.
Credit History
As previously indicated, the IDFPR is encouraging lenders to avoid actions that will lower borrower’s credit scores during the COVID-19 crisis. The IDFPR strongly encourages using the disaster code that will not adversely impact credit scores. Borrowers that are having trouble making their payments should contact their lenders directly, and are urged to frequently review their credit history for any errors.
Vehicle Repossessions
Governor Pritzker has issued an Executive Order suspending repossession of vehicles for the duration of the Gubernatorial Disaster Proclamation. Borrowers are not relieved of their obligation to make payments under their loan in connection with this Executive Order.
Professional Licenses
Professional licenses issued by the IDFPR with renewal dates between March 1, 2020 through and including July 31, 2020 are granted an automatic extension to renew to September 30, 2020. All current licensees under the IDFPR’s jurisdiction whose license renewal deadlines fall within the period beginning March 1, 2020 through and including July 31, 2020 shall have up to, and including, September 30, 2020 to complete their continuing education coursework. The IDFPR is allowing licensees to complete their continuing education coursework without requiring live attendance and permit for interactive webinar and online distance education courses in addition to currently permitted methods. All IDFPR licensees must continue to comply with all pertinent provisions of their respective licensing Acts.