Fintechs, digital banks reach out to workers impacted by government shutdown

With hundreds of thousands of government workers and contractors either working without pay, put on furlough or forced to quit in order to find work, a number of fintech companies are stepping up to help them bridge their personal finances.

Better Mortgage, a digital mortgage lender, launched an emergency refinance program that allows government workers to tap their home equity for expenses. The program will be offered for at least 30 days after the shutdown ends, according to company officials.

"I was speaking to a lawyer we recently hired from the Southern District of New York and she shared that many of her friends are working with no pay and struggling with child care, mortgage payments and day to day expenses as the furlough nears the one month mark," said Better CEO Vishal Garg, in a statement through a spokesman. "It made me think about how many government employees have depleted critical savings or leveraging high interest credit to cover household expenses, including mortgage payments."

He said the company decided to do something to help the people hurt by the shutdown after hearing that story.

Customers must have a FICO score of at least 620, at least 5 percent equity in their home and a maximum debt-to-income ratio of 50 percent.

Better Mortgage said the program is available in locations where the company currently has operations, including 27 states and  Washington, D.C., according to the release.

Margaret Brown, an active duty Coast Guard member, used OfferUp to sell personal items to help offset the lack of income due to the shutdown, according to a spokesperson for the company.

"Because of the uncertainty of when I will be paid next, I've cutback significantly on our normal purchases and expenses and have been selling old items on OfferUp in order to make some extra money," she said, according to a spokesperson for OfferUp.

Ally Financial is extending its assistance program, which provides waivers, refunds and deferrals — normally in cases of natural disasters and economic crisis situations — to customers impacted by the shutdown, according to a company announcement.

"Our hearts go out to any individual experiencing financial challenges, and given the extended duration of the partial shutdown, we want to assist our customers who are burdened by this as best we can," said Diane Morais, president of consumer and commercial banking products at Ally Bank.

The company, which provides digital financial services, is making several offers based on individual circumstances, including payment extensions, forgiveness of late fees, refunds of fees for insufficient funds and ATM transactions, and fee waivers for checks, wire transfers and early CD withdrawals.

Earnin provides the option for customers to receive advance loans against a paycheck, however the service has a couple of signup requirements. For instance, the user must have a checking account, as savings or prepaid bank accounts will block the service from debiting the account on payday, according to a company spokesperson.

Additionally, the employee must be paid by direct deposit, and pay must be on a specified time cycle, e.g., weekly, biweekly, semi-monthly or monthly. The employer also must have an electronic timekeeping system or fixed company location.  

Cover photo: iStock