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Top Story Lending Related

01/11/2021

PPP reopens today

The SBA and Treasury have announced that the Paycheck Protection Program (PPP) will re-open the week of January 11 for new borrowers and certain existing PPP borrowers. To promote access to capital, initially only community financial institutions will be able to make First Draw PPP Loans on Monday, January 11, and Second Draw PPP Loans on Wednesday, January 13. The PPP will open to all participating lenders shortly thereafter. Updated PPP guidance outlining Program changes to enhance its effectiveness and accessibility was released on January 6 in accordance with the Economic Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act. Updates include:

  • PPP borrowers can set their PPP loan’s covered period to be any length between 8 and 24 weeks to best meet their business needs;
  • PPP loans will cover additional expenses, including operations expenditures, property damage costs, supplier costs, and worker protection expenditures;
  • The Program’s eligibility is expanded to include 501(c)(6)s, housing cooperatives, destination marketing organizations, among other types of organizations;
  • The PPP provides greater flexibility for seasonal employees;
  • Certain existing PPP borrowers can request to modify their First Draw PPP Loan amount; and
  • Certain existing PPP borrowers are now eligible to apply for a Second Draw PPP Loan.

A borrower is generally eligible for a Second Draw PPP Loan if the borrower:

  • Previously received a First Draw PPP Loan and will or has used the full amount only for authorized uses;
  • Has no more than 300 employees; and
  • Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.

01/11/2021

Federal Reserve December CRA evaluations

As we've previously noted, the Federal Reserve Board does not publicly announce its release of Community Reinvestment Act evaluation ratings. But in our review of the Fed's archives, we found that 16 evaluations were made public in December, 2020. Fourteen of those were rated "Satisfactory." We congratulate these two banks whose evaluations were rated "Outstanding":

01/08/2021

OCC releases CRA evaluations

The OCC has released a list of Community Reinvestment Act (CRA) performance evaluations that became public during the month of December. Of the 23 evaluations listed, 16 are rated satisfactory, and the evaluations of the following seven banks are rated outstanding:

01/08/2021

Fed bars former Kentucky banker

The Federal Reserve Board announced yesterday it had issued a consent order of prohibition to a former CEO and chairman of Community Financial Services Bank, Benton, Kentucky, for unsafe and unsound lending and customer information practices. The order states that the former banker approved a loan of over $90,000 to a family member, and accessed the bank's customer information of at least two bank customers without authorization and in violation of the bank's written policies and procedures.

01/08/2021

DoD reschedules MLA systems upgrade

The Department of Defense has posted a notice on its Military Lending Act (MLA) website that the planned systems upgrade originally scheduled for January 19, 2021, is now scheduled for Thursday, January 14, 2021. As previously mentioned, the MLA v 5.7 release will include enhanced security features and measures. The security measures will include additional input restrictions on answers to the Challenge Questions and User's Information fields in the Account Creation process. Please refer to the MLA 5.6 User Guide for the restriction guidelines.

MLA v 5.7 will also remove the limit on the amount of files users can upload per day. Previously the maximum number of files users could upload per day was 50, now users can upload files without a maximum limit. Users should not experience any interruptions in service during this release.

01/07/2021

SBA issues guidance and rules for new PPP

The Small Business Administration has issued Guidance on Accessing Capital for Minority, Undeserved, Veteran and Women-Owned Business Concerns under the second round of the Paycheck Protection Program. The Guidance indicates that the SBA will accept PPP loan applications only from community financial institutions for at least the first two days when the PPP portal reopens (the reopening date was not provided).

The SBA also issued its first two interim final rules for the second round of PPP loans. The first of the interim final rules amends the existing PPP rules to reflect changes made by Congress, including on fees, borrower eligibility, loan amounts, eligible expenses, reliance on borrower certifications and loan increases, as well as a new registration requirement for all lenders. However, “most of this document restates existing regulatory provisions to provide lenders and new PPP borrowers a single regulation to consult on borrower eligibility, lender eligibility and loan application and origination requirements, as well as general rules on increases and loan forgiveness for PPP loans,” SBA said.

The second interim rule addresses the second-draw loans now available for borrowers with 300 or fewer employees, that saw a 25% or greater revenue drop in 2020 compared to 2019 and that have used the full amount of their first-draw PPP loan.

01/07/2021

HMDA filing platform open for 2020 data

The CFPB opened the filing period for HMDA data collected in 2020 on January 1, 2021. The deadline for timely filing 2020 data is March 1, 2021. Financial institutions can access the HMDA Platform to begin the filing process for data collected in 2020 at https://ffiec.cfpb.gov/filing/.

The Beta Testing Platform, found at https://ffiec.beta.cfpb.gov/filing/, will remain available on an ongoing basis for filers wishing to test their submissions. The Beta Testing Platform is for testing purposes only, and data entered on the Beta Testing Platform will not be considered a HMDA submission for compliance with HMDA data reporting requirements.

01/06/2021

CFPB releases Taskforce report

The CFPB has announced that its Taskforce on Federal Consumer Financial Law has released a report in two volumes [Volume I; Volume II] with recommendations on how to improve consumer protection in the financial marketplace. The Taskforce Report uses five interrelated principles that serve as the foundation for proposed systematic changes to the current legal and regulatory framework: consumer protection, information and education, competition and innovation, regulatory modernization and flexibility, and inclusion and access.

In its report, the Taskforce makes approximately 100 recommendations to the Bureau, Congress, and state and federal regulators to strengthen consumer protection. Among the Taskforce recommendations are:

  • Authorize the Bureau to issue licenses to non-depository institutions that provide lending, money transmission, and payments services;
  • Expand access to the payment system by unbanked and underbanked consumers and ensure consistent treatment by applying the same rules to similar financial products;
  • Identify competitive barriers and make appropriate recommendations to policymakers and regulators for expanding access to the payments systems by non-bank providers;
  • Research and develop policies tailored to the unique challenges of formerly incarcerated people, and work with state and federal authorities to improve protection of this population;
  • Research and develop policies to address problems of financial inclusion in rural communities;
  • Facilitate creditor access to immigrants’ credit information prior to their arrival in the United States in order to use that information in credit decisions;
  • Research consumer reporting issues that arise in connection with a consumer’s bankruptcy;
  • Consider the benefits and costs of preempting state law where conflicts can impede the provision of valuable products and services, such as the regulation of FinTech companies engaged in money transmission;
  • Identify opportunities to coordinate regulatory efforts. For example, the Bureau and prudential regulators should eliminate overlapping examination subject areas and reconcile inconsistent examination standards that unnecessarily expend multiple resources and can cause confusion;
  • Continue to increase dialogue with state regulators to bridge knowledge gaps and streamline regulation;
  • Work with other agencies to create a unified regulatory regime for new and innovative technologies providing services similar to banks;
  • Establish independent review of the Bureau’s regulatory cost-benefit analyses by staffing an office of cost-benefit analysis at the Bureau and or by submitting its analyses to OIRA for review;
  • Evaluate any positive or negative effect on inclusion as part of the Bureau’s cost-benefit analyses as appropriate;
  • Exercise caution (a recommendation for the Bureau, Congress, and other federal and state regulators) in restricting the use of nonfinancial alternative data, which can be very useful indicators of creditworthiness.
  • Clarify the obligations of CRAs and furnishers with respect to disputes under the FCRA;
  • Assess periodically the accuracy and completeness of consumer credit reports.

01/06/2021

FHFA announces "Duty to Serve" Enterprise plans

The Federal Housing Finance Agency has announced the 2021 Underserved Markets Plans for Fannie Mae and Freddie Mac (the Enterprises) under the Duty to Serve (DTS) program. The Plans became effective January 1, 2021. FHFA issued a final rule in 2016 that implemented the DTS provisions as mandated by the Housing and Economic Recovery Act of 2008. The statute requires the Enterprises to serve three specified underserved markets—manufactured housing, affordable housing preservation, and rural housing—by increasing the liquidity of mortgage financing for very low-, low-, and moderate-income families.

Under ordinary circumstances, each Enterprise would have submitted a three-year Plan for 2021-2023 in accordance with the DTS mandate. Due to potential market disruption and uncertainty as a result of the COVID-19 pandemic, FHFA instructed the Enterprises to submit Plans for one year (2021) only, as an extension of their 2018-2020 Plans. The activities outlined by the Enterprises to achieve Plan objectives will remain subject to FHFA review and approval to ensure compliance with the Enterprises' Charter Acts, safety and soundness measures, and other conservatorship and regulatory requirements.

01/05/2021

FDIC releases CRA ratings

The FDIC has released a list of banks examined for compliance with the Community Reinvestment Act whose evaluation ratings were assigned in October, 2020. Of the 66 banks listed, these eight banks received evaluation ratings of "Outstanding":

The remaining 58 banks on the list received evaluation ratings of "Satisfactory."

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