Skip to content

How to gain more from operational risk management practices.
Modern risk management technology solutions improve efficiency and provide greater visibility into risks. Today’s tools provide real-time visibility, action plans, enhanced reporting and business intelligence, and proactive notifications for operational risk. Real-time data empowers banks and financial services organizations to proactively manage risks and instantly detect and mitigate emerging issues. Click here to learn more.

Top Story Lending Related


Fed broadens Main Street Lending Program

The Federal Reserve Board has announced it is expanding the scope and eligibility for the Main Street Lending Program. As part of its broad effort to support the economy, the Federal Reserve developed the Main Street Lending Program to help credit flow to small and medium-sized businesses that were in sound financial condition before the pandemic. The changes include:

  • Creating a third loan option, with increased risk sharing by lenders for borrowers with greater leverage;
  • Lowering the minimum loan size for certain loans from $1,000,000 to $500,000; and
  • Expanding the pool of businesses eligible to borrow. Businesses with up to 15,000 employees or up to $5 billion in annual revenue are now eligible, compared to the initial program terms, which were for companies with up to 10,000 employees and $2.5 billion in revenue.

Under the new loan option, lenders would retain a 15 percent share on loans that when added to existing debt do not exceed six times a borrower's income, adjusted for interest payments, taxes, and depreciation and other appropriate adjustments. This compares to the existing loan options where lenders retain a 5 percent share on loans, but have different features. Under all of the loan options, lenders will be able to apply their industry-specific expertise and underwriting standards to best measure a borrower's income. In total, three loan options—termed new, priority, and expanded—will be available for businesses.


FEMA to suspend communities in MO and NE tomorrow

FEMA is publishing in today's Federal Register a final rule identifying communities in Missouri and Nebraska that are scheduled to be suspended on May 1, 2020, from the National Flood Insurance Program for noncompliance with the floodplain management requirements of the program. The affected communities are—

  • the City of Nevada, Vernon County, Missouri
  • the Village of Beaver Crossing, City of Seward, and unincorporated areas of Seward County, Nebraska


Treasury adds option for max PPP loan amount

The Treasury Department is publishing in today's Federal Register an interim final rule authorizing all lenders eligible to originate loans under the Paycheck Protection Program to use an alternative criterion for calculating the maximum loan amount for PPP loans to seasonal employers.

Rather than calculating their maximum loan amount by using their monthly average payments for payroll during "the 12-week period beginning February 15, 2019, or at the election of the eligible [borrower[, March 1, 2019, and ending June 30, 2019" as required in the CARES Act, seasonal employers will have the option of using any consecutive 12-week period between May 1, 2019, and September 15, 2019.


CFPB interprets rescission and appraisal waiver rules

The CFPB has announced an interpretive rule clarifying that consumers financially impacted by the COVID-19 pandemic can exercise their rights to modify or waive certain required waiting periods under the TILA-RESPA Integrated Disclosure Rule and Regulation Z rescission rules. The interpretive rule also states that the COVID-19 pandemic is an "example of an extraordinary event beyond the control of any interested party, and thus is a changed circumstance" that may permit the use of revised estimates of affected closing costs.

The Bureau also issued an FAQ that explains that consumers affected by the COVID-19 pandemic may use the waiver of the requirement for delivery of an appraisal at least three days before closing to expedite access to credit.


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.


Training View All

Penalties View All

Search Top Stories