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Serving Banking Customers Affected by Flooding - Guidance Letter

July 3, 2006


RE: Serving Customers Affected by Flooding

The New York State Banking Department (Department) strongly supports the efforts of New York State-chartered and licensed financial institutions to work with consumer and commercial borrowers temporarily affected by the recent flooding in certain counties of New York State. The affected counties are Broome, Chenango, Cortland, Delaware, Herkimer, Montgomery, Oneida, Orange, Otsego, Schoharie, Sullivan, Tioga, and Ulster. The Department’s position is that such efforts, if conducted in a prudent manner, are consistent with the principles of safety and soundness and the public interest. It is the Department’s policy to encourage our supervised institutions under these circumstances to make reasonable efforts to alter or adjust payment terms, to waive fees under extraordinary circumstances, or to grant new loans to borrowers affected by disasters.

The Department encourages State-chartered and licensed financial institutions to:

  • Work with depositors or borrowers who have been affected by the disaster.
  • Consider temporarily waiving late payment charges as well as penalties for checks returned because of insufficient funds where it appears that such late payments and NSF conditions resulted from delays beyond the customer’s control.
  • Consider waiving penalties for early withdrawal of savings in circumstances where the customer has a demonstrable need for the funds resulting from the recent flooding in the affected counties.
  • Reassess the current credit needs of the community or communities and help meet those needs by making or participating in sound loans.
  • Consider a prudent restructuring of an affected borrower’s debt obligations, by altering or adjusting payment terms.

It is not the Department’s policy to criticize prudent efforts to alter or adjust payment terms, or extend new loans to borrowers affected by disasters, provided such efforts are made within the constraints of safety and soundness and statutory requirements.

Financial institutions seeking additional guidance for assisting customers affected by the recent flooding are urged to contact Barbara Kent at 212-709-3503.

Very truly yours,

Diana L. Taylor
Superintendent of Banks


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