How Coronavirus Is Focusing Major Attention on Home Lending and Housing
A mixed picture for mortgage lending and rental housing is seen in a review from the Joint Center for Housing Studies of Harvard University. For example, the federal mortgage forbearance program is a wild card. Some homeowners have applied for forbearance only weeks after their mortgage loan closed, putting those loans into a twilight zone. Secondary market buyers are reluctant to buy “pre-distressed” loans. Further, the forbearance program codified by the CARES Act operates on the honor system — highly unusual. And little has been done for America’s renters.
PPP Updates: Shake Shack’s Money Giveback Deep Fries Its Reputation
As major lenders took criticism for favoring bigger firms for Paycheck Protection Program processing, the Shake Shack chain and affiliate operations announced on LinkedIn that they were going to return $10 million in PPP loans. Alternate private capital had been raised instead. The post drew some praise in LinkedIn comments but also brought down scorn charging cynical reputation damage control.
Subsequently Forbes reported that returning the money is moot because — unless Congress authorizes funds to be recycled — current rules don’t permit that. Meanwhile, at a White House coronavirus briefing President Trump praised Shake Shack’s move. He called on other very large recipients of PPP funds to return the money for the use of smaller firms.
The Senate has okayed a package dubbed “Phase 3.5” that authorizes $310 billion in additional PPP aid. The House was expected to pass it as early as April 23. At the COVID-19 briefing Treasury Secretary Steve Mnuchin said he expected the new funds to be the end of PPP appropriations, though he was open to reconsidering that stance.
Update: Subsequent to initial publication of this item, other public restaurant companies announced that they would return funds. This includes Ruth’s Chris Steak House, Sweetgreen and Kura Shushi. A Treasury spokesperson told the Wall Street Journal that the funds would be recycled to other applicants. Treasury also issued a revised PPP FQ that addresses use of the program by publicly traded companies. (See question 31)
Three Community Institutions’ Pandemic-Busting Efforts
• In an effort to lift people’s spirits, Roanoke, Va.-based Blue Eagle Credit Union has been generating some fun by awarding a $20 prize twice a day at random to users of its Eagle Vision interactive tellers. It then lets the member select a charity for a matching donation.
• Banging pots and blowing whistles in support of healthcare workers is a great morale booster, but the workers need to eat, so Georgia United Credit Union (Duluth, Ga.) launched Hospital Heroes to provide care packages of meals, snacks and supplies for front-line workers in seven area medical facilities.
• Restaurants have been decimated by stay-at-home orders. Chrome Federal Credit Union, Washington, Pa., decided it wanted to help keep local eateries afloat and created its “Chrome goes to lunch” program. Even though branch staff is limited, they still get hungry so the institution buys them take-out lunch every day from different local restaurants. The employees suggest where to order from and Chrome posts pictures of each day’s lunch on Facebook.
Should Financial Institutions Ramp Up Small Consumer COVID-19 Recovery Loans?
Federal banking regulators urged banks and credit unions to make small-dollar loans to consumers and small businesses to help them deal with the coronavirus crisis. The Pew Charitable Trusts has researched this issue extensively in recent years and in an article says only one of the top ten banks offers such loans. Five steps for safeguarding borrowers are reviewed.
Branches Post COVID-19: Adaptation or Abandonment?
There’s a lot of cogitating going on right now about how many of the 100,000 bank and credit union branches in the U.S. will end up as expensive white elephants. A 12-page analysis by LaMacchia Group of post-COVID branch relevance looks at recent branch data and the impact of other “black swan” events. The report offers tips drawn from behavioral science and highlights three branch-related opportunities as well as three pitfalls.
Helping Depositors Cope with COVID-19 Anxiety
A recent blog by Raddon frames retail bankers’ challenge in marketing deposits in this period:
“With this pandemic hitting the financial system so suddenly, it has landed one-two punches on both ends of the age and income spectrums. Many people who were already living paycheck-to-paycheck are facing layoffs or uncertainty in job security. People planning to retire are seeing that horizon stretched as their portfolios shrink. Retirees are worried about the security of their nest eggs as they struggle with experiencing yet another financial downturn in their lifetime.”
The blog offers suggestions to help allay such worries.
Tips and Strategies for Financial Institution Pandemic Ad Planning
Hunkering down makes sense for health reasons, but not for advertising, advises Lightstream. The agency offers six tips to guide financial marketers as they navigate a very uncertain market. If social media will be part of the mix, B2C shares six strategies for running Facebook and Instagram ads during the coronavirus pandemic.