Compliance

Although the program is administered by FAME, credit unions seeking to participate must:

• Be in good standing
• Be insured by the National Credit Union Administration (NCUA)
• Apply to and receive approval from the Maine Bureau of Financial Institutions (BFI) before issuing loans under the program

Once approved by BFI, a credit union may begin issuing loans during an eligible government shutdown period.

An eligible affected employee is an individual who:

• Is a Maine resident
• Is employed by a federal or state agency
• Is furloughed without pay or required to work without pay due to a government shutdown

Required Documentation

Participating credit unions must obtain:

• Proof of employment
• Proof of income
• Proof of Maine residency
• A sworn borrower affidavit confirming eligibility and compliance with program requirements

Prohibited Eligibility Criteria

Eligibility under the program may not be conditioned on:

• Applying for unemployment compensation
• A credit check or assessment of creditworthiness
• Existing credit union membership or prior customer relationship
• The ability to appear in person, provided the employee can otherwise verify eligibility and Maine residency

Creditworthiness may not be used as a factor in determining borrower eligibility.

Loan Amount

Loans may not exceed the lesser of:

• $6,000, or
• The borrower’s most recent monthly after tax pay

The loan amount must be reduced by four times the borrower’s weekly unemployment benefits, using the greater of:

• The amount received, or
• The amount the borrower was eligible to receive

Interest and Fees

• No interest may be charged:
  • During the grace period; or
  • For 180 days following the end of the grace period
• A loan agreement may include an origination fee not to exceed the lesser of $60 or 1% of the loan amount
  • If charged, the origination fee must be added to the loan balance

Prepayment penalties and other fees are prohibited.

Each loan includes a grace period that begins upon disbursement and ends on the later of:

• 90 days after disbursement, or
• The end of the government shutdown during which the loan was issued

During the grace period:

• No repayment may be required

After the grace period:

• Borrowers must repay the loan within 180 days
• Repayment must be made in three to six equal installments
• No interest may accrue during the grace period or during the 180 day repayment period, and interest may accrue only after the repayment period has expired, in accordance with the credit union’s loan agreement and policies.

• Borrowers may receive up to three loans per shutdown
• One initial loan may be issued when the shutdown first qualifies
• One additional loan may be issued for each subsequent 30 day period

Updated documentation is required for each loan.

Loan applications and approvals must occur during the shutdown period. Loans may not be issued after a shutdown ends.

Participating credit unions must:

• Notify FAME within five business days after each loan disbursement, using FAME’s required reporting process
• Provide borrowers with written disclosures, including:
  • Interest deferral provisions
  • Potential federal tax consequences
  • Disclosure that loan information will be shared with FAME
• Demonstrate good faith collection efforts consistent with institutional policy consistent with institutional policy

If a loan remains unpaid:

• A participating credit union that has made good faith collection efforts may file a guarantee claim with FAME no earlier than 180 days and no later than 300 days after the grace period ends after the grace period ends
• Claims may be submitted for the outstanding principal only

Approved claims are submitted to the Treasurer of State for payment. Once payment is received:

• FAME pays the approved claim amount, subject to statutory limits and available funds
• The credit union must assign the defaulted loan to FAME for further collection

The program is supported by the Government Shutdown Loan Guarantee Program Fund, which currently has a funded allocation of $500,000.

Statutory Caps and Notifications

• Total guarantee payments are limited by statute
• If guarantee payments reach or exceed 50% of the total amount of all loans issued statewide, FAME must:
  • Immediately cease approving claims
  • Notify all participating credit unions and the Treasurer of State
• If total guarantee payments reach or exceed $200,000, FAME must notify:
  • The Treasurer of State
  • The Legislature’s Appropriations and Financial Affairs Committee
  • The Health Coverage, Insurance, and Financial Services Committee

These notifications are intended to allow policymakers to evaluate future program funding needs.

• Deferred or uncharged interest under the program is exempt from Maine state taxation
• Credit unions must disclose any potential federal tax consequences to borrowers