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1 1 (December 07, 2020)

handle is hein.crs/govddai0001 and id is 1 raw text is: SConr essional Research Servik COVID-19: Consumer Debt Relief During the Pandemic December 7, 2020 The Coronavirus Disease 2019 (COVID-19) pandemic has had a large and persistent economic impact across the United States. Fear of infection, social distancing, and stay-at-home orders prompted business closures and a severe decline in demand for restaurants and travel, among other industries. Consequently, many Americans have lost income and faced financial hardship. Survey results suggest that since March 2020, about half of all U.S. adults live in households that have lost some employment income. This Insight focuses on legislative and regulatory responses related to the financial services industry for consumers who may have trouble paying their bills. It also discusses recent developments and the future outlook in consumer credit markets. Consumer Loan Forbearance Many consumers having trouble paying their bills during the COVID-19 pandemic have received loan forbearance. Loan forbearance plans are agreements between borrowers and lenders that allow borrowers to reduce or suspend payments for a short period of time. Forbearance plans do not forgive unpaid loan payments; rather, they extend the time to repay debts owed. As such, they can prevent a consumer from becoming delinquent and potentially experiencing adverse consequences, such as credit score declines, debt collection, or foreclosure. The Coronavirus Aid, Relief and Economic Security Act (CARES Act; P.L. 116-136) enacted on March 27, 2020, establishes consumer rights to be granted forbearance for federally backed mortgages for up to a year (Section 4022) and federal student loans (Section 3513), administratively extended through the end of January 2021. The CARES Act also protects the credit histories of consumers with forbearance agreements (Section 4021). It does not grant consumers these rights for other loans owed to private creditors, such as auto loans, credit cards, private student loans, and non-federally backed mortgages. In these cases, financial institutions have discretion about when and how to offer relief options. In addition to this legislative response, financial regulatory agencies have responded to the COVID-19 pandemic using existing statutory authorities to issue new guidance to encourage loan forbearance and other relief options for affected consumers. Regulatory guidance does not force financial institutions to take any particular action for consumers (such as offering loan forbearance), but it can encourage them to Congressional Research Service https://crsreports.congress. gov IN11550 CRS INS GHT Prepared for Members and Cornmttees oi Conqres3------------------------------------------------------------------------------------

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