New Yorkers Need Prompt, Responsible Action from Banks

ANHD's Banking Policy Platform was updated on April 21, 2020 to reflect new developments and priorities in collaboration with our Equitable Reinvestment Coalition.

New Yorkers rely on banks in their daily lives for banking services, loans, mortgages, and a place to safely store their money. This applies to all sectors - individuals, businesses large and small, landlords, non-profits, and municipalities. Low-income people, Black and Brown New Yorkers, small businesses, and tenants have been struggling for years to access affordable banking and services. These struggles are greatly exacerbated during this crisis.

The Covid-19 pandemic is forcing New York State to implement a “pause” which closes businesses and restricts person-to-person contact. While necessary, the pandemic response is rippling through New York’s economy and is already having impacts on residents and businesses. Shuttered storefronts mean a loss of revenue for small business owners. Workers are already seeing a decrease in income as they face layoffs or cut hours. The economic damage caused by this loss of revenue and income will compound as people struggle to afford bare necessities.

In light of the Covid-19 pandemic response, banks must take proactive steps to mitigate the resulting economic fallout. Banks already have an obligation under the Community Reinvestment Act and as responsible corporate actors to respond appropriately to protect the most vulnerable.

The Association for Neighborhood Housing and Development (ANHD) calls on banks and policy makers to implement measures related to:

• Support for affected small businesses and their employees
• Protection for tenants in multifamily buildings
• Access to basic banking services
• Support for low-income homeowners
• Support for nonprofit affordable housing providers and other nonprofit community development organizations
• Actions taken through the Community Reinvestment Act (CRA)

Support for Affected Small Businesses & Their Employees

Small businesses are suffering because of COVID-19.  Many small businesses, especially those led by people of color and immigrants, have long struggled to stay open in light of rising costs and lack of access to financing. Many small businesses and their employees are now hit hard as they have had to reduce employees or shut down entirely.  In order to weather the storm, they need financial support, including action from banks:

• Suspend loan payments and commercial mortgage payments for at least 90 days for businesses that are suffering a slowdown or closure due to COVID-19.  Waive fees and interest accrued and extend the loan to reflect the amount due.
• Waive monthly maintenance fees on business accounts as well as any fees for online banking: ACH transactions, transfers, remote bill pay, etc. 
• Suspend outstanding overdrafts and any overdraft fees moving forward
• Allow business owners to use out-of-network ATMs without additional fees to avoid unnecessary trips to the bank. Likewise suspend fees for customers of other banks.
• Ensure all outreach materials and customer services are in multiple languages
• Provide grants to Community Development Financial Institutions (CDFIs) that serve small businesses. Provide them additional capital to serve small businesses as needed with grants and zero-interest loans
• Banks should continue and expand grants for nonprofits serving small business owners and employees affected by COVID-19, particularly those working with low-income and immigrant small business owners. They should provide grants to entities that are providing grants directly to small businesses.  Businesses may also need support to operate remotely, including but not limited to technical support and equipment to work remotely, support to conduct banking online, and assistance creating an online presence

Protection for Tenants in Multifamily Buildings

Low-income tenants have long been vulnerable to displacement by landlords looking to bring in higher-paying tenants.  During this extreme financial duress, that pressure is sure to increase.  The state’s recent eviction moratorium is a positive step, but will require additional response by banks:

• Ensure all borrowers know about and follow the eviction moratorium.
• Monitor vacancies that take place during the COVID-19 crisis and report to the Department of Financial Services (DFS) if a landlord is evicting tenants
• New York State DFS must ensure banks continue to follow their responsible multifamily lending and CRA guidelines and update the guidance to include a mandate that their borrowers respect the eviction moratorium.
• Fund organizations that are working with tenants to respond to the crisis.
• Banks that offer mortgage forbearance on rent-stabilized and unregulated buildings should add conditions to support tenants, including full support of eviction moratorium, rent relief, commitment to maintain building and respond promptly to tenant needs, and referrals to city agencies and nonprofits who can support tenants during this crisis.

Access to Basic Banking Services

Banks make tens of billions each year in monthly maintenance, overdraft, and ATM fees. During normal times, this is a hardship for low-income clients, and now it’s even harder for people to make ends meet. Banks should respond swiftly.

• Waive all monthly maintenance fees.  Provide free money orders and remittances. Waive outstanding overdrafts and any overdraft fees moving forward
• DFS should suspend the fees check cashers can charge to cash checks - and limit other fees - during this period, particularly for the stimulus checks. Unbanked people shouldn’t have to pay to get this much-needed money
• Refuse to garnish wages or freeze bank accounts for any reason - people need access to any cash they have on hand.
• Ensure access to bank branches and that they have sufficient cash for people to withdraw in person or by ATM. Ensure basic safety procedures at branches for staff and customers, including hand sanitizer and frequent cleaning of machines and doors
• Waive all ATM fees at non-bank ATMs to allow people to bank closer to home. Likewise suspend fees for customers of other banks.
• Provide free check-cashing services to clients and non-clients, consistent with safe and sound banking.
• Accept alternate forms of ID, including the IDNYC, for all transactions.
• Waive late fees and interest payments on credit cards for anyone who can’t pay all or some due to COVID-19. For longer-term loans like auto or personal loans, implement loan forbearance, which means to extend the loan, suspend payment and interest due, and add the outstanding loan amount to the end of the loan. 
• Don’t report late payments to credit bureaus, cease repossessions and collections
• Ensure all outreach materials and customer services are in multiple languages
• Banks should continue and expand grants to, and refer customers to, nonprofits serving consumers affected by COVID-19, particularly those working with low-income, immigrant, and limited English proficient populations. Financial counselors can help people transition to online banking, help them navigate the system to resolve banking issues. They may also be able to provide or connect to additional financial supports.

Support for Low-Income Homeowners

In order to prevent displacement and further financial hardship for low-income, Black, and Brown homeowners during this economic crisis, banks should be doing everything possible to ensure homeowners and tenants can remain in their homes, without fear of eviction or further financial hardship

• As a starting point, all lenders should follow New York State’s mortgage servicing guidance and the new interagency guidance for all mortgage servicers.  Homeowners in 1-4 family homes who can’t pay their mortgages due to their own loss of job, hours, or business and/or those of tenants should be allowed to defer the payment and have any late fees and interest payments waived with no negative credit reporting.  Servicers should not require a lump sum payment soon after the crisis abates. At the end of the deferment, servicers should instead extend loan terms to allow missed payments to be made up at the end of the loan term, and for homeowners whose incomes do not fully recover from the crisis, payment amounts should be permanently modified to make them affordable.  This should apply to all home loans: purchase, refinance, and home repair loans, regardless of which investor owns the loan. Foreclosures should not be started, continued, or completed and foreclosure sales should both be put on hold during this period.
  • The process must be simple and swift for any homeowner who requests it
  • Outreach and materials must be in multiple languages and promote widely through various mechanisms (radio/newspaper, internet, phone calls, texts, mail, on window, etc.)
  • Current mortgage payment forbearance guidelines should be extended to allow borrowers up to a year or more, as needed. People out of work for several months will not be able to resume payment so quickly
  • Banks should provide a single point of contact to navigate the system and regulators should have a hotline for people to get assistance if banks are not cooperative. All should be available in multiple languages
  • Refer borrowers to HUD-approved housing counselors
• Homebuyers in the middle of the process whose financial conditions have changed should be allowed a way to delay or cancel the purchase without consequences. 
• Banks should continue and expand grants for nonprofits serving homeowners affected by COVID-19, particularly HUD-approved counselors and service providers and those working with low-income and limited English proficient homeowners. Housing counselors are critical to helping borrowers navigate the new programs being put in place by lenders and government agencies as well as regulations around foreclosures and evictions.

Support for Non-Profit Affordable Housing Providers & Other Nonprofit Community Development Organizations

Nonprofits are always on the front lines, serving the most vulnerable populations. ANHD members both serve and are led by low-income people of color who are the hardest hit by this financial crisis.  These organizations are now simultaneously having to attend to internal work and staff needs, while also continuing to serve the same populations with housing, loans, services, and supports. 

Nonprofit developers do not have the same cushion as for-profit developers, as they put more of the money they receive back into their buildings in maintenance and services.  As April 1st nears, with many tenants out of work and unable to pay the rent, they will be left with a huge cash flow crisis, with few resources remaining to maintain the buildings while also meeting their debt obligations.

It is critical that banks provide additional supports for nonprofit developers

• Provide loan forbearance / forgiveness for nonprofit developers impacted by the COVID-19 - this may be for projects in progress that are now halted, multifamily buildings they manage, buildings they occupy, or loans, lines of credit, and investments used to serve their clients and members. 
• Provide grants that are flexible and can be used for general operating support or operating subsidy.
• Waive grant requirements that couldn’t be met due to COVID-19.

Actions Taken Through the Community Reinvestment Act (CRA)

ANHD applauds the CRA regulators – including the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) – for putting out this guidance encouraging banks to respond to the COVID-19 crisis. But OCC and FDIC must suspend the CRA "modernization" process until the crisis is over, and, as ANHD has long advocated, throw it out entirely and start over. The attention of all stakeholders has correctly shifted to responding to this crisis – regulation with as large an impact as the CRA cannot be moved forward during this time of crisis. Our additional recommendations to the CRA Guidance include:

• Maintain grant levels for grantees and waive obligations that can’t be met now - allow for organizations to pivot and respond to the current crisis as needed, including both internal (operations and staff) and external (clients and members) supports
• Loan forgiveness for nonprofit developers who can’t make mortgage payments due to tenants lost income (commercial and residential tenants)
• Responsible multifamily lending guidance to ensure borrowers are respecting anti-eviction ordinances and supporting tenants who cannot pay.
• Grants and zero-interest loans to nonprofits and small businesses to weather the crisis and pay staff - loans should be forgivable or paid back post-crisis

The OCC and FDIC must suspend the CRA regulatory process until the crisis is over.  The attention of all stakeholders has correctly shifted to responding to this crisis - regulation with as large an impact as this cannot be moved forward during this time of crisis.   It’s also worth mentioning that the interagency guidance from all three agencies includes access to banks and banking that are eliminated from the proposal and would not be allowed under that new proposed regime.

Prompt, responsible action by banks will make a difference in the lives of millions of low-income New Yorkers who are impacted by the COVID-19 pandemic.