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Another PPP procedural notice from SBA

The Small Business Administration has issued Procedural Notice 5000-20092, "Revised SBA Paycheck Protection Platform Procedures for Addressing Hold Codes on First Draw PPP Loans and Compliance Check Error Messages on First Draw PPP Loans and Second Draw PPP Loans." The new notice revises guidance provided in Procedural Notice 5000-20083, "SBA Procedures for Addressing Unresolved Issues on Borrower First Draw PPP Loans."

Specifically, the procedures address second-draw PPP loan guaranty applications with a hold code on the borrower’s first-draw PPP Loan, and first-draw and second-draw PPP loan guaranty applications with compliance check error messages. The PPP portal will be updated today to reflect the updated procedural guidance.


Four settle FTC credit card laundering charges

The Federal Trade Commission on Wednesday announced the Commission had reached settlements with four defendants charged with helping to launder millions of dollars in credit card charges through fraudulent merchant accounts. The settlement orders permanently ban Jay Wigdore, Electronic Payment Solutions of America, and Electronic Payment Services from payment processing and telemarketing. A previously-entered stipulated order against Michael Peterson bans him from payment processing or acting as an independent sales organization or sales agent in the payment processing industry.

According to the FTC, the defendants assisted a deceptive operation known as Money Now Funding to obtain and maintain merchant accounts that allowed the operation to process almost $6 million through the credit card networks. The FTC charged Wigdore, Electronic Payment Solutions of America, and Electronic Payment Services, and Peterson with violating the Federal Trade Commission Act and the Telemarketing Sales Rule.

Monetary judgments of $462,925 against Wigdore, $4.6 million against Electronic Payment Solutions of America, and Electronic Payment Services, and $5.7 million against Peterson have been suspended due to the defendants’ inability to pay.


Enterprises extend loan origination flexibilities

The Federal Housing Finance Agency announced Wednesday that Fannie Mae and Freddie Mac will extend several loan origination flexibilities another month, through March 31, 2021. The extended flexibilities include:

  • Alternative appraisals on purchase and rate term refinance loans;
  • Alternative methods for documenting income and verifying employment before loan closing; and
  • Expanding the use of power of attorney to assist with loan closings.


Fed extends PPP exception under Reg O

The Federal Reserve Board has announced the second extension of a rule to bolster the effectiveness of the SBA's Paycheck Protection Program. Like the earlier extensions, this one will temporarily modify the Board's rules so that certain bank directors and shareholders can apply to their banks for PPP loans for their small businesses. To prevent favoritism, the Board's Regulation O limits the types and quantity of loans that bank directors, shareholders, officers, and businesses owned by these persons can receive from their affiliated banks. However, these limits have prevented some small business owners from accessing PPP loans—especially in rural areas. The SBA clarified last year that PPP lenders can make PPP loans to businesses owned by their directors and certain shareholders, subject to certain limits, and without favoritism. The Board's rule extension will allow those individuals to apply for PPP loans, consistent with SBA's rules and restrictions.

The interim final rule making the extension only applies to PPP loans made during the period beginning February 15, 2020, and ending on March 31, 2021. Comments on the rule will be accepted for 45 days following its publication in the Federal Register.

  • Publication and comment period update: Published at 86 FR 9837 on 2/17/2021, with a comment period ending on 4/5/2021,


FHFA extends foreclosure and REO eviction moratoriums

The Federal Housing Finance Agency announced yesterday that Fannie Mae and Freddie Mac are extending the moratoriums on single-family foreclosures and real estate owned (REO) evictions until March 31, 2021. The foreclosure moratorium applies to Enterprise-backed, single-family mortgages only. The REO eviction moratorium applies to properties that have been acquired by an Enterprise through foreclosure or deed-in-lieu of foreclosure transactions. The current moratoriums were set to expire on February 28, 2021.

The FHFA also announced that borrowers with a mortgage backed by Fannie Mae or Freddie Mac may be eligible for an additional forbearance extension of up to three months. Eligibility for the extension is limited to borrowers who are on a COVID-19 forbearance plan as of February 28, 2021, and other limits may apply. Further, COVID-19 Payment Deferral for borrowers with an Enterprise-backed mortgage can now cover up to 15 months of missed payments. COVID-19 Payment Deferral allows those borrowers to repay their missed payments at the time the home is sold, refinanced, or at mortgage maturity.


Procedural guidance on lender PPP processing fees

Yesterday evening, the SBA issued Procedural Notice 5000-20091 [click on the DOWNLOAD.PDF link], "Second Updated Paycheck Protection Program Lender Processing Fee Payment and 1502 Reporting Process," an update to Procedural Notice 5000-20036, which informs PPP lenders of the reporting process through which they will report on PPP loans and collect the processing fee on fully disbursed loans that they are eligible to receive. The update addresses changes made by the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (P.L. 116-260), including new First Draw PPP Loans and Second Draw PPP Loans.


Fed issues four Outstanding CRA ratings

Our review of the Federal Reserve Board's records of CRA evaluation ratings made public in January found that these four institutions received ratings of Outstanding:

Twelve banks received Satisfactory ratings in January.


December 2020 consumer credit data

The Federal Reserve Board's Consumer Credit G.19 statistical release indicates that, in 2020, revolving credit decreased 11.2 percent and nonrevolving credit increased 3.9 percent, leaving total consumer credit little changed. Consumer credit increased at a seasonally adjusted annual rate of 2.7 percent in the fourth quarter and at a rate of 2.8 percent in December 2020.


Fate of QM and debt collections rules uncertain

In a recent letter to the CFPB's Division of Research, Markets, and Regulations (RMR), Acting CFPB Director David Uejio directed the Division to "explore options for preserving the status quo with respect to QM and debt collection rules." Whether that direction may result in reconsideration of these recent Bureau rules is not clear.

Uejio also asked RMR to analyze data on housing insecurity, including foreclosures, mobile home repossessions and tenant evictions and on the most pressing consumer finance barriers to racial equity, and to resume HMDA quarterly reporting and CARD Act data collection, and efforts on section 1071 and PACE data collection.

The acting director also expressed concern over a potential foreclosure crisis when the COVID-19 forbearances end in March and April.


FDIC announces CRA ratings

Yesterday, the FDIC released a list of 66 banks recently examined for compliance with the Community Reinvestment Act. We congratulate three banks whose CRA evaluations received Outstanding ratings:

A bank in Weir, Kansas, received a "Needs to Improve" rating. The remaining 62 banks were graded Satisfactory.


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