Key Consumer Finance Issues in the COVID-19 Crisis
March 24, 2020
As the number of diagnosed cases of the COVID-19 virus increases in the United States, and the restrictions on commerce increase in their severity, the crisis is expected to hit working-class Americans who rely on regular paychecks to meet their monthly expenses particularly hard.
In a recent study, nearly 20% of respondents reported that someone in their household had either been laid off or had their work hours reduced as a result of COVID-19 containment measures. For many of those families, that is likely to result in either increased reliance on consumer financing, or defaults on existing obligations.
The federal and state governments have now begun taking action to protect consumers facing economic hardship as a result of COVID-19 and the travel and commerce restrictions imposed to combat it. Many of these measures may also be relevant to companies and institutions that engage in consumer finance lending, servicing or collection. Here we examine measures related to:
- Industry efforts to accommodate consumer financial hardship.
- Regulatory and legislative restrictions on consumer debt collection.
- Efforts to prevent a wave of residential mortgage defaults.
- Enforcement risks related to consumer debt collection arising from COVID-19-related defaults.
Please click here for several of the key consumer-finance related proposals and measures taken to date.