By the Division of Banks

June 14, 2011

To the CEO of the Institution Addressed:

RE: Regulatory Guidance to Assist Institutions Impacted by the June 1, 2011 Tornadoes and Severe Weather

This letter serves as an important reminder for all Massachusetts state-chartered banks and credit unions that were affected by the devastation brought on by the tornadoes and severe storms that struck on June 1, 2011 in Hampden, Hampshire, and Worcester counties. The Division of Banks (Division) recognizes the serious impact of the recent tornadoes and severe storms on customers and operations of financial institutions in the affected counties and provides the following guidance to assist in the rebuilding and recovery efforts.

The Governor declared a State of Emergency as result of the damage caused by the tornadoes and severe storms and a partial State of Emergency remains in effect for those counties that were severely impacted by the natural disasters. Additionally, disaster assessment teams have toured the affected areas and are currently determining if the Commonwealth qualifies for federal aid.

You are encouraged to work constructively with your consumer and commercial borrowers who were impacted by the tornadoes and severe storms. The Division realizes that the effects of natural disasters on individuals and businesses are in most cases temporary; nevertheless, efforts to adjust or revise terms on existing loans in affected areas may be appropriate and therefore should not be subject to regulatory scrutiny by the Division. Additionally, municipal securities and loans should be reviewed and assessed to determine the impact, if any, on the municipality's ability to meet its obligations. In such cases, it may also be appropriate to adjust or revise contractual terms governing such obligations.

A financial institution should ensure that staff is knowledgeable and procedures are in place in the event a borrower requests a waiver or modification of his or her Right to Rescind in a mortgage loan transaction. Massachusetts General Laws chapter 140D and the Division's regulation 209 CMR 32.00 et seq. provide consumers with the option to waive or modify the three-day rescission period in the event of a "bona fide personal financial emergency." The financial institution must obtain, from the consumer, a description of the emergency and retain this document in the loan file. Loan mitigation and modification activities to accommodate borrowers affected by this hardship are also encouraged. In further assistance to your customers, financial institutions should advise consumers to review the Office of Consumer Affairs pamphlet on hiring a home improvement contractor which can be assessed at pdf format of Advisory: 5 Tips for Home Improvement

Additionally, activities that stabilize or revitalize designated disaster areas may be considered in the institution's CRA evaluations as community development. The Division will consider such documented community development activities in its overall evaluation of the institution. Further, the Division has the flexibility to consider community development activities outside of an institution's designated assessment areas in certain cases.

These multiple, severe natural disasters may also necessitate unique efforts to facilitate the recovery efforts of these impacted communities and municipalities. State chartered banks may consider additional authorities they have to be involved in such recovery efforts under paragraphs 8 and 29 of section 2 of chapter 167F of the General Laws. State chartered credit unions can look to such additional authority in paragraph (t) of section 67 of Chapter 171 of the General Laws.

In situations where a facility used to transact business was closed as a result of the tornadoes, please refer to the attached Division Regulatory Bulletin 2.1-105 entitled Emergency Temporary Closing of Banking Offices. Additionally, to assist your customers in seeking assistance or information on such matters as how to file a disaster claim, and other resources, please refer to the following website for additional details:

Should you have any questions relating to this matter, please contact Deputy Commissioner Paul A. Gibson at (617) 956-1536, or at



David J. Cotney

Commissioner of Banks