Federal regulators on Thursday gave California savings and loan firms expanded latitude and flexibility in helping customers whose homes were damaged in the recent earthquake and its aftershocks that caused at least $137 million in damage in Los Angeles and Orange counties.
The key provision of a regulatory bulletin issued by the Federal Home Loan Bank of San Francisco allows savings and loan customers to avoid penalties for early withdrawal of savings from term accounts if they need the money to repair their homes. The penalty waivers will normally be permitted for six months.
Another provision encourages lenders to restructure interest rate terms on a mortgage if the borrower is having trouble making payments on a home damaged by the tremors. This would be particularly helpful if homeowners have been forced to abandon their homes because of the damage, regulatory officials said.
Lenders Not Penalized
The bulletin was sparked by an order Wednesday from President Reagan that declared Orange and Los Angeles counties disaster areas. Reagan's directive also allows the Small Business Administration to make low-interest loans for repairs on properties damaged by the quakes.