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SBA limited PPP processing yesterday

Treasury Secretary Mnuchin and SBA Administrator Carranza announced yesterday that, “In order to ensure special access to the PPP loan program for the smallest lenders and their small business customers, the SBA is only accepting loans from lending institutions with asset sizes less than $1 billion from 4:00 p.m. EDT until 11:59 p.m. EDT on April 29, 2020. SBA is working to ensure that all eligible small businesses have access to this funding to sustain their businesses and keep their employees on payroll. All lending institutions, regardless of size, will still be able to submit PPP loans outside of this timeframe. This reserved processing time currently only applies to April 29, 2020."


FDIC guidance on relief following Tennessee storms

The FDIC has issued FIL-51-2020 to announce steps intended to provide regulatory relief to financial institutions and facilitate recovery in areas of Tennessee affected by severe storms, tornadoes, straight-line winds and flooding on April 12 and 13, 2020.


More SBA fine-tuning of PPP

The SBA has issued yet another interim final rule adjusting its implementation of the Paycheck Protection Program. This rule requires a one-time full disbursement of PPP loan funds within ten calendar days of the loan being approved (assigned an SBA loan number). If the tenth day falls on a weekend or federal holiday, the disbursement deadline is the next business day. For loans approved but not fully disbursed before the issuance of this rule, the 10-day period began yesterday, April 28.

Lenders are not responsible for disbursement delays caused by a borrower's failure to timely provide required loan documentation, including a signed promissory note. If borrowers don't provide required documentation within 20 days of loan approval, the loan will be canceled.

The rule also includes requirements for lenders to receive their processing fee for a PPP loan.

Lender frustration continues
Lenders continue to press Treasury and the SBA to correct the apparent logjam in PPP processing through the SBA's E-Tran portal. At minimum, lenders and trade associations have said, the SBA must be transparent concerning its problems in handling thousands of pending loan applications, if only to help manage the public's expectations.


OCC clarifies and rescinds Bulletin on PPP and CRA

Bulletin 2020-45 has been issued by the OCC to clarify its statement in OCC Bulletin 2020-44, which the OCC has now rescinded. Loans made by national banks, federal savings associations, and federal branches of foreign banking organization under the SBA's Paycheck Protection Program (PPP) are an important part of the federal COVID-19 response program for small business and may qualify for credit under the Community Reinvestment Act.

While not requiring banks to obtain or maintain information beyond what exists in the ordinary course of business, the OCC is encouraging banks providing loans under the SBA PPP to prudently document their implementation and lending decisions. Additionally, banks are encouraged to identify and track the PPP loans made to small business borrowers that have annual revenues of $1 million or less and are located in low- to moderate-income (LMI) areas.


Fed expands Municipal Liquidity Facility

The Federal Reserve Board has announced an expansion of the scope and duration of the Municipal Liquidity Facility (MLF). The facility, which was announced on April 9 as part of an initiative to provide up to $2.3 trillion in loans to support U.S. households, businesses, and communities, will offer up to $500 billion in lending to states and municipalities to help manage cash flow stresses caused by the coronavirus pandemic.

The facility, as revised, will purchase up to $500 billion of short-term notes issued by U.S. states (including the District of Columbia), U.S. counties with a population of at least 500,000 residents, and U.S. cities with a population of at least 250,000 residents. To be eligible for the facility, notes must mature no later than 36 months from the date of issuance—an increase from the previously announced 24-month maximum term. In addition, among other rating requirements, eligible issuers must have had an investment grade rating as of April 8, 2020, from at least two major nationally recognized statistical rating organizations. The termination date for the facility has been extended to December 31, 2020 in order to provide eligible issuers more time and flexibility.


FHFA rules out lump sum repayment of deferred payments

In an effort to combat misinformation, the Federal Housing Finance Agency (FHFA) has reiterated that borrowers in forbearance with a Fannie Mae or Freddie Mac (the Enterprises)-backed mortgage are not required to repay the missed payments in one lump sum. “During this national health emergency, no one should be worried about losing their home," said Director Mark Calabria. “No lump sum is required at the end of a borrower's forbearance plan for Enterprise-backed mortgages. To help homeowners navigate the forbearance process, FHFA partnered with CFPB on the Borrower Protection Program to provide homeowners accurate information about forbearance and address concerns noted in some consumer complaints. While today's statement only covers Fannie Mae and Freddie Mac mortgages, I encourage all mortgage lenders to adopt a similar approach.


NMLS Policy Guidebook updated

The NMLS has posted an updated version and summary of its Policy Guidebook.


SBA re-opens PPP and updates information

The Small Business Administration has posted guidance for lenders participating in the second round of its Paycheck Protection Program to announce that the SBA's E-Tran portal will open at 10:30 EDT this morning. Lenders that have a large number of SBA-ready PPP loan applications may make a one-time bulk submission of XML files to E-Tran. Those applications won't be prooessed until the 10:30 opening time.

The SBA also indicated it is Instituting a maximum dollar amount at 10% of PPP funding authority that any lending institution will be able to originate, exclusive of the additional $60 billion preserved for lenders with assets under $50 billion (i.e.a $60 billion cap).

The SBA's FAQ for PPP lenders and borrowers was updated on Sunday, April 26, adding four questions. The newly added FAQs clarify that housing allowances count toward payroll costs; that lenders may use IRS regulations to determine whether an employee's principal place of residence is in the U.S.; and that farmers, ranchers, other agricultural producers and ag and other forms of cooperatives are eligible for PPP loans, provided they meet the other eligibility requirements.

On Friday, the SBA updated the PPP guidance on How to Calculate Maximum Loan Amounts - By Business Type.


CFPB posts COVID-19 mortgage-related information

The Bureau has added information to its "Guide to coronavirus mortgage relief options" article, including updated mortgage relief forbearance options.

The CFPB also outlined practices in Bulletin 2020-02 to provide mortgage servicers clarity, facilitate compliance, and prevent harm to consumers during the transfer of residential mortgages. The Bureau stated that, because consumers do not have a choice with respect to the transfer of servicing, compliance with regulatory requirements is especially important in risk mitigation and preventing consumer harm. Examples of practices that servicers may consider as contributing to compliance include:

  • Developing a servicing transfer plan that includes a communications plan, testing plan (for system conversion), a timeline with key milestones and an escalation plan for potential problems;
  • Engaging in quality control work after a transfer of preliminary data to validate that the data on the transferee's system matches the data submitted by the transferor;
  • Determining servicing responsibilities for legacy accounts including tax reporting, credit bureau reporting and other questions that may arise;
  • Conducting a post-transfer review or de-brief to determine effectiveness of the transfer plan and whether any gaps have arisen that require resolution; and
  • Monitoring consumer complaints and loss mitigation performance metrics. The CFPB emphasizes the importance of post-transfer monitoring to ensure that transferred data is complete, accurate and functional for the transferee.
  • Identifying any loans in default, active foreclosure and bankruptcy or any forbearance agreements entered in with the borrower. Where applicable include loss mitigation activity for each loan, including status and notes pertaining to the loss mitigation action.



The FDIC has posted a series of FAQs concerning the SBA's Paycheck Protection Program.


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