COVID-19: Loan Deferments / Skip-A-Payment
The Iowa Consumer Credit Code generally allows for deferral of payments for consumer credit transactions. A credit union must “ensure it either anticipates these programs in the loan agreement or is prepared to properly modify contractual agreements under state law. See a blog post from National Association of Federally-Insured Credit Unions.
Iowa Code Section 537.2503 sets forth authorizations for deferral of payments. A maximum fee of thirty dollars may be charged for each deferred payment. Iowa Code § 537.2502. This fee, if charged correctly at the time of deferral, does not constitute a finance charge when calculating the applicable interest rate.
Changes to policies must also be approved by the Board of Directors and well documented. Credit Unions must inform the Board of Directors of changes to implementation and necessary changes to procedures.
Iowa code does not include a maximum number of times skip-a-pay or loan deferment programs may be used in the life of the loan; however, credit unions must operate such programs with an emphasis on safety and soundness. The Iowa Division of Credit Unions will evaluate such programs to ensure safety and soundness of the credit union is not compromised.
Credit unions should review the IDCU COVID-19 Updates/ Important Information document to obtain more detailed information regarding specific loan types.