Feds Issue Katrina Forbearance Reminder

Federal banking regulators are reminding financial institutions to continue to exercise forbearance for hurricane victims along the Gulf Coast who are still waiting for insurance payments and other financial assistance."Given the extent of the devastation caused by Hurricane Katrina, many uncertainties remain," and "some customers may need additional time to resolve financial uncertainties related to the effects of the hurricane," the regulators say in a letter to examiners and bankers in Alabama, Louisiana, and Mississippi. The letter stresses that previously issued Katrina guidance remains in effect. "Effective loan workout and recovery programs may involve protracted resolutions, but should be ultimately targeted toward loan repayment," the reminder says. The regulators are issuing the reminder in response to a request by House Financial Services Committee members.