Tens of thousands of workers affected by the government shutdown have applied for emergency loans and requested delays in mortgage payments, as many of them on Friday missed their first paycheck.
Financial institutions—including banks, credit unions, mortgage companies and online lenders—are taking steps to help some 800,000 workers affected by the partial government closure, which entered its fourth week Friday.
Some businesses are offering no-interest loans with no credit checks and are allowing customers to skip or delay loan payments without penalty. Others are waiving fees for account overdrafts and early withdrawals from certificates of deposit.
Alpine Bank, with 40 branches in Colorado, has set aside $5 million to cover an emergency loan program in which affected government employees can take out a no-interest loan with no repayment requirements for 60 days, said chief retail officer Glen Davis.
Federal and state financial regulators, in a Friday joint statement, encouraged financial institutions to work with affected customers, who may face “temporary hardship in making payments on debts such as mortgages, student loans, car loans, business loans or credit cards.”
The statement was signed by the Federal Reserve, Consumer Financial Protection Bureau and other agencies.
Credit unions that have a large number of government-employed customers have seen a significant response to their loan offers.
Navy Federal Credit Union on Friday said it has enrolled 11,000 members in a program to provide no-interest loans for up to $6,000, and deposited payments in accounts for more than 1,000 people who missed their paychecks Friday.
The credit union, which focuses on the military and has more than 100,000 members affected by the shutdown, is expected to make such payments to an additional 9,500 customers on Monday, when the employees of the Coast Guard face their payday with no payments, said Mike Rudin, a spokesman.
Among the people receiving such a payment is Karysa Warren, whose husband, James, is a Coast Guard employee. “While we do have small savings, we would be in a very dire situation if not for their support,” said the Bremerton, Wash., resident. “As long as this shutdown threatens to last, and with two young children, having them cover a portion of my husband’s paycheck when the government won’t is beyond appreciated.”
Funding for about a quarter of the federal government ended on Dec. 21, shutting down agencies such as the departments of Treasury, State, Housing and Urban Development, and Homeland Security, which includes the Coast Guard.
Bank and credit union executives said customers have requested payment delays or permission to skip a bill for mortgages and other loans.
“I hate to say it, but mortgage is a bigger problem with this particular shutdown,” said Martha Wye, chief executive for InFirst Federal Credit Union, which also has offered emergency programs during past government shutdowns. “This furlough has created more concerns about what’s going to happen if this continued for months.”
InFirst, based in Alexandria, Va., has 12,000 members, many of whom are current government employees at agencies such as the Federal Communications Commission and the Securities and Exchange Commission.
The credit union has reached out to all members with a government email address, and has made “skip-a-pay” arrangements with roughly 100 mortgage borrowers. It expects to provide emergency loans to many of the roughly 2,000 customers affected by the shutdown, Wye said.
In addition to dozens of credit unions offering generous relief packages, large and small banks are offering programs for affected customers.
Sandy Spring Bank, a Maryland-based community bank with 55 branches in the Washington area, started offering programs on Wednesday to allow customers to delay or skip repayments of mortgage and home equity loans.
It is also offering personal loans at the prime lending rate of 5.5%, below the typical rate of 14% to 15%, and allowing customers to withdraw from certificates of deposit without penalties.
So far, the bank has made loan-repayments adjustments for dozens of customers, said Jay O’Brien, executive vice president at the bank. “If this lasts longer after today, we are anticipating quite a demand.”
Large banks such as Wells Fargo & Co. -- the largest operating in Colorado -- are also offering hardship programs for affected workers, including waiving of overdraft and monthly service fees, and adjustments to loan repayment schedules.
And lenders such as Freedom Mortgage Corp. and Goldman Sachs Group Inc.’s online banking arm, Marcus, are also offering loan modifications to existing customers.