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04/06/2020

COVID-19 info for small business lenders

The FDIC has created a page on its website with Coronavirus (COVID-19) Information for Small Business Lenders.

The FDIC is working with the SBA to help ensure that FDIC-supervised banks have the information they need to become SBA-certified lenders and start making loans to small businesses through the SBA’s recently launched Paycheck Protection Program (PPP).

One of the resources listing on the page is an FAQ on the SBA's Paycheck Protection Program, which was most recently updated on April 5, 2020. Lenders should return to the FAQ for updates, because Treasury and the SBA continue to fine-tune aspects of the program.

04/06/2020

Fed posts FAQ on elimination of reserve requirements

Federal Reserve Bank Services has posted an FAQ explaining the March 15 elimination of reserve requirements by the Federal Reserve Board as part of its response to the COVID-19 pandemic. Banks can refer to questions 7 through 16 in particular to get information on how the elimination of reserve requirements may impact a bank's compliance program for limiting depositors' transfers and payments from savings and money market deposit accounts.

04/06/2020

Fed delays Payment System Risk policy changes

The Federal Reserve Board has published a notification of delay [85 FR 19077] of the implementation date of changes to part II of the Federal Reserve Policy on Payment System Risk (“PSR policy”) related to procedures for determining the net debit cap and maximum daylight overdraft capacity of a U.S. branch or agency of a foreign banking organization. The original implementation date of April 1, 2020, has been changed to October 1, 2020.

04/06/2020

Temporary rule under FFCRA published

The Wage and Hour Division of the Department of Labor has published [85 FR 19326] temporary regulations to implement public health emergency leave under Title I of the Family and Medical Leave Act (FMLA), and emergency paid sick leave to assist working families facing public health emergencies arising out of Coronavirus Disease 2019 (COVID-19) global pandemic. The leave is created by a time-limited statutory authority established under the Families First Coronavirus Response Act, Public Law 116-127 (FFCRA), and is set to expire on December 31, 2020. The FFCRA and this temporary rule do not affect the FMLA after December 31, 2020. The rule is effective from April 2 through December 31, 2020, and became operational on April 1, 2020.

04/06/2020

HUD funding for Native American communities

HUD Secretary Carson announced on Friday $200 million in Indian Housing Block Grants to American Indian Tribes and Tribally Designated Housing Entities across the country to respond to COVID-19. This funding will be used to help Tribes and TDHEs carry out affordable housing activities to protect the safety and health of their tribal members and communities.

04/06/2020

Agencies encourage mortgage services to work with homeowners

The Federal Reserve Board, Conference of State Bank Supervisors, CFPB, FDIC, NCUA and OCC have issued a joint policy statement providing needed regulatory flexibility to enable mortgage servicers to work with struggling consumers affected by the Coronavirus Disease (COVID-19) emergency. The actions announced Friday by the agencies inform servicers of the agencies' flexible supervisory and enforcement approach during the COVID-19 pandemic regarding certain communications to consumers required by the mortgage servicing rules. The policy statement and guidance issued Friday will facilitate mortgage servicers' ability to place consumers in short-term payment forbearance programs such as the one established by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

  • Under the CARES Act, borrowers in a federally backed mortgage loan experiencing a financial hardship due, directly or indirectly, to the COVID-19 pandemic, may request forbearance by making a request to their mortgage servicer and affirming that they are experiencing a financial hardship during the COVID–19 pandemic. In response, servicers must provide a CARES Act forbearance, that allows borrowers to defer their mortgage payments for up to 180-days and possibly longer.
  • The policy statement clarifies that the agencies do not intend to take supervisory or enforcement action against mortgage servicers for delays in sending certain early intervention and loss mitigation notices and taking certain actions relating to loss mitigation set out in the mortgage servicing rules, provided that servicers are making good faith efforts to provide these notices and take these actions within a reasonable time.
  • To further enable short-term payment forbearance programs or short-term repayment plans, mortgage servicers offering these programs or plans will not have to provide an acknowledgement notice within 5 days of receipt of an incomplete application, provided the servicer sends the acknowledgment notice before the end of the forbearance or repayment period.
  • The guidance also reminds servicers that there is existing flexibility in the rules with respect to the content of certain notices.
  • Finally, to assist servicers experiencing high call volumes from consumers seeking help, the policy statement also confirms that the agencies do not intend to take supervisory or enforcement action against mortgage servicers for delays in sending annual escrow statements, provided that servicers are making good faith efforts to provide these statements within a reasonable time.

04/06/2020

Comment period for revisions to Brokered Deposit Rules extended

The FDIC is extending the public comment period for its Notice of Proposed Rulemaking for brokered deposits by 60 days (from April 10 to June 9, 2020) to provide bankers and other interested parties additional time in light of challenges associated with COVID-19.

04/06/2020

West Virginia bank fails

The FDIC has announced that The First State Bank, Barboursville, West Virginia, was closed on April 3, 2020, by the West Virginia Division of Financial Institutions. The FDIC was named Receiver. MVB Bank, Inc., of Fairmont, West Virginia, acquired all deposit accounts.

The First State Bank had experienced longstanding capital and asset quality issues, operating with financial difficulties since 2015. The bank's December 31, 2019 financial reports indicated capital levels were too low to allow continued operations under federal and state law.

04/03/2020

$3B for COVID-19 relief from HUD

HUD is making available $3.064 billion through its Community Development Block Grant, Emergency Solutions Grant, and Housing Opportunities for Persons With AIDS programs. After the President signed the CARES Act, Secretary Ben Carson directed HUD to immediately begin allocating $3.064 billion to help America’s low-income families and most vulnerable citizens. These funds will be awarded quickly by using existing grant formulas; they will also be accompanied by new guidance that cuts red tape so grantees can quickly help their communities.

04/03/2020

Agencies extend comment period on Volcker Rule modifications

The OCC has announced that the Fed, CFTC, FDIC, OCC, and SEC have extended the comment period on their proposal to modify the Volcker Rule's general prohibition on banking entities investing in or sponsoring hedge funds or private equity funds ("covered funds") from April 1 to May 1, 2020.

04/03/2020

SBA programs for small business relief

The OCC has issued Bulletin 2020-31 encouraging banks to consider providing loans under available SBA relief programs to small businesses.

  • The Paycheck Protection Program (PPP), an expansion of the SBA’s 7(a) loan program, allows borrowers to obtain loans that are fully guaranteed by the SBA and that may be fully or partially forgiven if certain conditions are satisfied. The PPP is available beginning April 3, 2020.
  • The Economic Injury Disaster Loan and Loan Advance Program expands the SBA’s existing disaster assistance loan program and waives certain requirements. Economic Injury Disaster Loans can provide a small business with a working capital loan of up to $2 million. In addition, small businesses may request a loan advance from the SBA of up to $10,000, which does not have to be repaid.
  • The Debt Relief Program will pay the principal, interest, and fees for six months on existing 7(a) loans and new 7(a) loans originated before September 27, 2020.

04/03/2020

IRS warning of COVID-19 related scams

The Internal Revenue Service yesterday urged taxpayers to be on the lookout for a surge of calls and email phishing attempts about the Coronavirus, or COVID-19. These contacts can lead to tax-related fraud and identity theft. "We urge people to take extra care during this period. The IRS isn't going to call you asking to verify or provide your financial information so you can get an economic impact payment or your refund faster," said IRS Commissioner Chuck Rettig. "That also applies to surprise emails that appear to be coming from the IRS. Remember, don't open them or click on attachments or links. Go to IRS.gov for the most up-to-date information." Taxpayers should watch not only for emails but also for text messages, websites and social media attempts that request money or personal information.

04/03/2020

SBA releases interim final rule on Paycheck Protection Program

The U.S. Small Business Administration has released an interim final rule to implement sections 1102 and 1106 of the CARES Act, which temporarily adds a new product, the "Paycheck Protection Program," to the SBA's 7(a) Loan Program. It will be effective on publication, and SBA-approved lenders can start accepting applications under the program April 3, 2020.

04/02/2020

CFPB COVID-19 credit reporting guidance

The Consumer Financial Protection Bureau yesterday released a policy statement outlining the responsibility of credit reporting companies and furnishers during the COVID-19 pandemic. In response to the pandemic, many lenders are being flexible when it comes to consumers’ making payments. The Bureau’s statement underscores that consumers benefit if lenders report accurate information about these arrangements to credit bureaus so that the credit reports of consumers are accurate.

In addition, in response to staffing and resources constraints on lenders and credit bureaus due to the pandemic, the Bureau’s statement also provides flexibility for lenders and credit bureaus in the time they take to investigate disputes. The Bureau specifically states that it does not intend to cite in an examination or bring an enforcement action against firms who exceed the deadlines to investigate such disputes as long as they make good faith efforts during the pandemic to do so as quickly as possible.

04/02/2020

CFPB settles with short-term lender

The CFPB has announced a settlement with Cottonwood Financial, Ltd., which does business under the name Cash Store. Cash Store is based in Irving, Texas, and owns and operates roughly 340 retail lending outlets in Idaho, Illinois, Michigan, New Mexico, Texas, Utah, and Wisconsin. The Bureau found that in the course of marketing, servicing, and collecting on high-interest payday, auto-title, and unsecured consumer-installment loans Cash Store violated the Consumer Financial Protection, Fair Credit Reporting, and Truth in Lending Acts. The consent order requires Cash Store to pay over $1.3 million in redress and penalties.

04/02/2020

NCUA bans three from industry

The National Credit Union Administration has reported it issued one prohibition notice and two prohibition orders in March. The orders prohibit these individuals from participating in the affairs of any federally insured financial institution.

  • Stephanie Joyce-Benne Beauford, a former employee of Michigan First Credit Union in Lathrup Village, Michigan
  • Jennifer N. Zanassi and Melissa M. Mosher, former institution-affiliated parties of Western Heritage Federal Credit Union in Alliance, Nebraska

04/02/2020

OCC CRA evaluations released

The OCC has released a list of Community Reinvestment Act performance evaluations that were made public in March.. Of the 28 evaluations made public this month, 22 were rated satisfactory and the following six were rated outstanding (links are to the evaluation reports):

04/02/2020

Temporary change to Fed's supplementary leverage ratio rule

To ease strains in the Treasury market resulting from the coronavirus and increase banking organizations' ability to provide credit to households and businesses, the Federal Reserve Board announced yesterday a temporary change to its supplementary leverage ratio rule. The change would exclude U.S. Treasury securities and deposits at Federal Reserve Banks from the calculation of the rule for holding companies, and will be in effect until March 31, 2021.

The supplementary leverage ratio generally applies to financial institutions with more than $250 billion in total consolidated assets. It requires them to hold a minimum ratio of 3 percent, measured against their total leverage exposure, with more stringent requirements for the largest and most systemic financial institutions. The change would temporarily decrease tier 1 capital requirements of holding companies by approximately 2 percent in aggregate.

The change will be effective immediately and the public comment period will be 45 days.

04/02/2020

OCC publishes March proposal to amend licensing rules

The OCC has published at 85 FR 18728 its March 2020 proposal (see our Top Story) to amend its rules relating to policies and procedures for corporate activities and transactions involving national banks and Federal savings associations to update and clarify the policies and procedures, eliminate unnecessary requirements consistent with safety and soundness, and make other technical and conforming changes. Comments will be accepted through May 4, 2020.

04/01/2020

Fed Board delays revised control framework

The Federal Reserve Board has announced it will delay by six months the effective date for its revised control framework, to reduce operational burden and allow institutions to focus on current economic conditions.

In January, the Board finalized a revised framework (see our 1/31/2020 Top Story) that simplifies and increases the transparency of its rules for determining when one company controls another company for purposes of the Bank Holding Company Act and Home Owners' Loan Act. If a company has control over a banking organization, the company generally becomes subject to the Board's rules and regulations. The six-month delay will move the effective date to September 30, from the original date of April 1. No changes were made to the framework itself.

UPDATE: Notice published in the Federal Register for April 2, 2020.

04/01/2020

Fannie and Freddie expand loan accommodations

The Federal Housing Finance Agency has announced several loan processing flexibilities from Fannie Mae and Freddie Mac designed to help lenders process loans, including:

  • Allowing desktop appraisals on new construction loans;
  • Allowing flexibility on demonstrating construction has been completed (alternative to the Completion Report);
  • Allowing flexibility for borrowers to provide documentation (rather than requiring an inspection) to allow renovation disbursements (draws); and
  • Expanding the use of power of attorney and remote online notarizations.

These accommodations only apply to loans being originated for sale to Fannie or Freddie.

04/01/2020

Treasury and SBA announce CARES PPP funds process

SBA Administrator Jovita Carranza and Treasury Secretary Steven T. Mnuchin yesterday announced that the SBA and Treasury Department have initiated a robust mobilization effort of banks and other lending institutions to provide small businesses with the capital they need. The CARES Act establishes a new $349 billion Paycheck Protection Program (PPP). The PPP will provide much-needed relief to millions of small businesses so they can sustain their businesses and keep their workers employed.

PPP loans can be applied for beginning April 3, at any SBA-approved lender. Lenders that are not already SBA-approved can apply for an expedited approval.

04/01/2020

Employee Retention Credit program launched

Treasury and the IRS have launched the Employee Retention Credit, designed to encourage businesses to keep employees on their payroll. The refundable tax credit is 50 percent of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by COVID-19.

Qualifying employers must fall into one of two categories:

  1. The employer’s business is fully or partially suspended by government order due to COVID-19 during the calendar quarter
  2. The employer’s gross receipts are below 50 percent of the comparable quarter in 2019. Once the employer’s gross receipts go above 80 percent of a comparable quarter in 2019 they no longer qualify after the end of that quarter.

These measures are calculated each calendar quarter.

Updates on the implementation of the credit, a fact sheet and other information can be found on the IRS Coronavirus Tax Relief page.

04/01/2020

More tax and reporting deadlines delayed

Treasury has announced it is delaying tax payment due dates for wine, beer, distilled spirits, tobacco products, firearms, and ammunition excise taxes, to provide flexibility for businesses that have been negatively affected by COVID-19. The postponement of due dates applies to any tax payment or operational report with an original due date falling on or after March 1, 2020, through July 1, 2020. Interest and penalties will not apply when payments are made within 90 days of the original due date. Treasury's Alcohol and Tobacco Tax and Trade Bureau (TTB) will re-evaluate the terms of this immediate relief as circumstances warrant.

04/01/2020

Comment period for sellers/servicers eligibility rules

A 30-day extension to the comment period for the proposed update to the minimum financial eligibility requirements for Fannie Mae and Freddie Mac Seller/Servicers has been announced by the Federal Housing Finance Agency (FHFA). Comments will now be accepted through April 30. 2020.

04/01/2020

Regulators clarify five year-transition rule and CECL Rule

FDIC FIL-32-2020, issued yesterday, delivered a joint statement by the Fed, FDIC, and OCC to clarify the interaction between the interim final rule that provides a five-year transition period for the impact of the current expected credit loss methodology (CECL) on regulatory capital and the temporary CECL relief provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

On March 27, 2020, the agencies issued an interim final rule that provides banking organizations that were required (as of January 1, 2020) to adopt CECL during the 2020 calendar year an option to delay an estimate of CECL's impact on regulatory capital. Also, on March 27, 2020, the CARES Act was signed into law. The CARES Act provides banking organizations optional temporary relief from complying with CECL. The joint statement clarifies the interaction between the CECL IFR and the CARES Act for purposes of regulatory capital requirements.

04/01/2020

Low income CUs eligible for NCUA loans and grants

The NCUA has announced federally insured, low-income-designated credit unions can request grants and loans from the NCUA to assist members, businesses, and communities experiencing economic hardships due to the COVID-19 pandemic.

The NCUA’s Office of Credit Union Resources and Expansion will award grants and loans to low-income credit unions to:

  • Provide assistance to schools with children in need, including providing breakfast and lunch;
  • Provide assistance to elderly members needing food and medication delivery services;
  • Offer rental, mortgage, and utility payment assistance to members such as entrepreneurs, small business owners, and hospitality and service industry employees;
  • Offer loan payment relief to affected members;
  • Develop a new product or service for affected members, such as offering preloaded cards; or
  • Cover costs associated with moving credit union operations to remote locations: laptops, software, and short-term rentals.

04/01/2020

SEC to hold COVID-19 video conference

The Securities and Exchange Commission Small Business Capital Formation Advisory Committee will host a meeting via video conference on April 2, 2020, in response to the challenges small businesses are facing in coping with COVID-19. The meeting will take place from noon to 1:30 p.m. ET. Members of the public may watch the live webcast of the meeting on the Committee’s website.

04/01/2020

FATF reports on U.S. progress in tackling ML

The Financial Action Task Force has issued a report on the United States' progress in strengthening measures to tackle money laundering and terrorist financing.

The United States has been in an enhanced follow-up process following the adoption of its mutual evaluation in 2016. In line with the FATF Procedures for mutual evaluations, the country has reported back to the FATF on the actions it has taken since then. To reflect the United States' progress, the FATF has changed its rating of the country on Recommendation 10 (Customer Due Diligence) from Partially Compliant to Largely Compliant

The report also looks at whether the United States' measures meet the requirements of FATF Recommendations that have changed since the 2016 mutual evaluation. The FATF agreed to maintain the rating of Compliant for Recommendation 2 (National cooperation and coordination), Recommendation 5 (Terrorist financing offense) and Recommendation 21 (Tipping-off and confidentiality). The FATF also maintained the rating of Largely Compliant for Recommendation 7 (Targeted financial sanctions related to proliferation), Recommendation 8 (Non-profit organizations) Recommendation 15 (New technologies) and Recommendation 18 (Internal controls and foreign branches and subsidiaries).

The United States is now compliant on 9 of the 40 Recommendations and largely compliant on 22 of them. It remains partially compliant on 5 of the 40 Recommendations and not compliant on 4 of them. The United States remains in enhanced follow-up and will report back to the FATF on progress to strengthen its implementation of Anti-Money Laundering / Countering the Financing of Terrorism measures.

04/01/2020

CFPB Guide to coronavirus mortgage relief options

04/01/2020

FEMA to suspend communities in CT, MD, NJ and RI

FEMA has published a notice at 85 FR 18129 in today's Federal Register listing communities in Connecticut, Maryland, New Jersey and Rhode Island that are scheduled for suspension on April 3, 2020, from the National Flood Insurance Program due to noncompliance with the floodplain management requirements of the program. The affected communities are:

  • CT: North Stonington, Stonington, and Voluntown
  • MD: Barton, Cumberland, Frostburg, Lonaconing, Midland, and Westernport
  • NJ: Belleville, Bloomfield, Caldwell, Cedar Grove, East Orange, Essex Fells, Glen Ridge, Newark, North Caldwell, Nutley, Orange Township, Roseland, and Verona
  • RI: Charlestown, Coventry, Exeter, Hopkinton, Narragansett, Narragansett Indian Tribe, North Kingstown, Richmond, South Kingstown, West Greenwich, and Westerly

If FEMA receives documentation that a listed community has adopted the required floodplain management measures before April 3, the community won't be suspended. Information on the current participation status of a community can be found in FEMA's Community Status Book.

04/01/2020

Fed sets up temp FIMA Repo Facility

The Federal Reserve Board announced on Tuesday it is establishing a temporary repurchase agreement facility for foreign and international monetary authorities (FIMA Repo Facility) to help support the smooth functioning of financial markets, including the U.S. Treasury market, and thus maintain the supply of credit to U.S. households and businesses. The FIMA Repo Facility will allow FIMA account holders, which consist of central banks and other international monetary authorities with accounts at the Federal Reserve Bank of New York, to enter into repurchase agreements with the Federal Reserve. In these transactions, FIMA account holders temporarily exchange their U.S. Treasury securities held with the Federal Reserve for U.S. dollars, which can then be made available to institutions in their jurisdictions.

This facility should help support the smooth functioning of the U.S. Treasury market by providing an alternative temporary source of U.S. dollars other than sales of securities in the open market. It should also serve, along with the U.S. dollar liquidity swap lines the Federal Reserve has established with other central banks, to help ease strains in global U.S. dollar funding markets.

The Facility will be available from April 6 for at least six months.

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