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Fed to resume bank exams

The Federal Reserve Board announced Monday it will resume examination activities for all banks. The Board had announced in March a reduced focus on exam activity due to the COVID-19 pandemic. However, the Board said banks have had time to implement contingency operating plans and adapt their operations, and exam activity will therefore resume. It will continue to be conducted offsite "until conditions improve."


New PPP developments

Treasury and the SBA announced Friday evening new and revised guidance for the Paycheck Protection Program (PPP). This guidance, in the form of an interim final rule that changes the SBA's first interim final PPP rule, implements the Paycheck Protection Program Flexibility Act (PPPFA) and expands eligibility for businesses with owners who have past felony convictions.

The look-back period has been reduced from 5 years to 1 year to determine eligibility for applicants, or owners of applicants, who, for non-financial felonies, have (1) been convicted, (2) pleaded guilty, (3) pleaded nolo contendere, or (4) been placed on any form of parole or probation (including probation before judgment). The period remains 5 years for felonies involving fraud, bribery, embezzlement, or a false statement in a loan application or an application for federal financial assistance. The application also eliminates pretrial diversion status as a criterion affecting eligibility.

The SBA has posted a revised PPP Borrower Application Form and a revised Lender Application Form - PPP Loan Guaranty in connection with the revised guidance.


Tax relief for new markets tax credit transactions

Treasury and the IRS have announced tax relief for certain taxpayers affected by the COVID-19 pandemic who are involved in new markets tax credit transactions. The taxpayers receiving relief through the guidance are community development entities (CDEs) and qualified active low-income community businesses (QALICBs) investing and conducting businesses in low-income communities. Notice 2020-49 provides a CDE or QALICB with relief for certain specified time-sensitive acts that are due to be performed between April 1, 2020, and December 31, 2020, in order to meet requirements under section 45D of the Internal Revenue Code and its regulations. A CDE or QALICB may perform these acts by December 31, 2020. The additional time is provided for:

  • Making investments
  • Reinvestments
  • Expending amounts for construction of real property

The IRS has a webpage with a compilation of Coronavirus Tax Relief for Businesses and Tax-Exempt Entities.


FHFA extends COVID-related loan processing flexibility

The FHFA has announced it is extending several loan origination flexibilities currently offered by Fannie Mae and Freddie Mac designed to help borrowers during the COVID-19 national emergency. Flexibilities extended until at least July 31 include:

  • Alternative appraisals on purchase and rate term refinance loans;
  • Alternative methods for verifying employment before loan closing;
  • Expanding the use of powers of attorney and remote online notarizations to assist with loan closings; and
  • Authority to purchase mortgages in forbearance.


HUD works with Google on online housing ads

HUD has reported it has worked with Google to improve Google's online advertising policies to better align them with requirements of the Fair Housing Act, where applicable. The Fair Housing Act is administered by HUD and prohibits discrimination in the sale, rental and financing of most housing in the United States because of race, color, religion, sex, national origin, disability and familial status. Discriminatory advertising in connection with the sale, rental or financing of housing is also unlawful, and includes restricting who sees housing-related ads on these bases.

"Advertising practices may continue to evolve but our Nation's laws are unwavering," said HUD Secretary Ben Carson. "It is one of our key duties at HUD to enforce the Fair Housing Act and ensure that all Americans have housing choice. Improvements are underway in the online advertising space, and HUD encourages platforms, such as Google, to take these types of steps to eliminate unlawful discrimination in advertising and seek to ensure compliance with our Nation's Fair Housing laws."


First revisions to PPP rules issued

The SBA has posted a "Paycheck Protection Program Interim Final Rule on Revisions to First Interim Final Rule" with changes made by H.R. 7010, the Paycheck Protection Program Flexibility Act. The SBA also published updated, streamlined application forms for borrowers and lenders to use for loans made on or after June 5, 2020.

The rule:

  • Confirms that borrowers that use less than 60% of their PPP loan amount for payroll costs during the forgiveness covered period will still be eligible for partial loan forgiveness.
  • Extends the end date of the “covered period” for a PPP loan from June 30, 2020 to December 31, 2020.
  • Provides a five-year maturity for loans made on or after June 5, 2020, and provides that terms on loans made prior to that date may be extended from two years to five years at the mutual agreement of the borrower and lender.
  • Extends the loan forgiveness period from eight weeks to 24 weeks. (For loans made prior to June 5, 2020, borrowers may choose to keep the forgiveness period at eight weeks.)
  • Clarifies that if a borrower submits a forgiveness application within ten months of the end of the loan forgiveness period, the borrower will not have to make any payments on the loan before the date SBA pays the forgiven amount to the lender.
  • Reiterates that the last day a lender can obtain an SBA loan number for a program loan is June 30, 2020.


FTC files complaint against NY small business lenders

The Federal Trade Commission has reported it has filed a complaint against RCG Advances, LLC (formerly known as Richmond Capital Group, LLC) also doing business as Victory Capital Funding, and Ram Capital Funding, two New York-based companies engaged in small-business financing, along with several of their owners and officers, for allegedly using deception and threats to seize personal and business assets from small businesses, non-profits, religious organizations, and medical offices. The complaint alleges that, since at least 2015, the defendants have deceived small businesses and other organizations by misrepresenting the terms of merchant cash advances they provided, and then used unfair collection practices, including sometimes threatening physical violence, to compel consumers to pay. The Commission also has alleged that defendants have made unauthorized withdrawals from consumers’ accounts.


NCUA/EXIM partnership launched

A three-year collaborative effort was launched yesterday by the NCUA and the Export-Import Bank of the United States (EXIM). to bring small businesses and credit unions together and expand awareness about EXIM programs. The NCUA and EXIM signed a memorandum of understanding to undertake a series of initiatives that will help credit unions better understand and make use of EXIM guaranteed loans and resources. These joint initiatives may include webinars and training events.


Calabria testimony before Senate Banking Committee

Yesterday, FHFA Director Calabria responded to an invitation to appear before the Senate Committee on Banking, Housing, and Urban Affairs, and discussed the FHFA’s actions responding to COVID-19. In his presentation, Calabria discussed:

  • FHFA’s actions to protect the agency's workforce and maintain mission focus
  • The state of the markets before and during the crisis
  • The FHFA’s policy response to support borrowers and renters
  • Ensuring the proper function of the mortgage market
  • The state of the mortgage market today
  • The urgent need to build capital at the Enterprises and advance housing finance reform


CFPB issues TRID Fact Sheet and FAQs

The CFPB has published a Factsheet on TRID Title Insurance Disclosures Compliance Aid and four new FAQs on—

  • disclosing seller-paid loan costs on a separate closing disclosure for the consumers/borrowers;
  • lender credits,
  • the total of payments (yes, you subtract any negative prepaid interest), and
  • using the optional signature line on the closing disclosure (are you providing a copy for the consumer to retain?)

These two documents can be found on the CFPB's TILA-RESPA integrated disclosures (TRID) resources page.


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