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On July 17, the Federal Reserve Board announced that the Main Street Lending Program will support tax-exempt, nonprofit organizations. In June, the Board proposed expanding the program to certain nonprofits (covered by InfoBytes here), and in response to public feedback on the proposal, the Board (i) set the minimum employment threshold for nonprofits to 10 employees from the proposed 50; (ii) eased the donation-based funding limit; and (iii) adjusted several financial eligibility criteria to accommodate a wider range of nonprofit operating models.
The Main Street nonprofit loans have similar terms as the Main Street for-profit business loans, including the “interest rate, principal and interest payment deferral, five-year term, and minimum and maximum loan sizes.” The Board’s announcement also contains a chart covering the detailed changes and term sheets for the program’s Nonprofit Organization Expanded Loan Facility and Nonprofit Organization New Loan Facility.
On June 30, the Alternative Reference Rates Committee (ARRC) released updated recommended fallback language for U.S. dollar LIBOR denominated syndicated loans and new variable rate private student loans. ARRC noted that the private student loan language is intended to minimize risk and market disruption in the event of LIBOR’s anticipated cessation at the end of 2021. ARRC also released conventions for how market participants can voluntarily use the Secured Overnight Financing Rate (SOFR) in new student loan products. With respect to syndicated loans, ARRC noted that the updated fallback language recommends “the use of simple daily SOFR in arrears,” which, among other things, includes “a more permissive early opt-in trigger” to “allow parties involved in the loan to switch over to an alternative rate like SOFR before LIBOR is officially discontinued or determined to be unrepresentative.” Additionally, ARRC announced new details regarding its recommendation of spread adjustments for cash products that reference LIBOR. Market participants may voluntarily use ARRC’s recommended methodology to produce spread adjustments “where a spread-adjusted [SOFR] can be selected as a fallback.”
On June 23, the Illinois Department of Financial and Professional Regulation announced that recordings of webinars offered to lenders and businesses on June 18 concerning the federal Paycheck Protection Program Loan Forgiveness Application are available online.
On June 12, the Texas Office of the Consumer Credit Commissioner issued updated guidance for regulated lenders navigating the Covid-19 crisis. The guidance: (1) addresses the June 1 due date for filing annual reports; (2) encourages lenders to work with consumers, including by working out modifications to assist with payments, waiving fees and charges, suspending charged-off accounts, and suspending repossessions of collateral or foreclosure of real property, among other things; (3) reminds lenders of legal requirements for using electronic signatures; and (4) permits lenders to conduct regulated lending activity from unlicensed locations, subject to certain conditions. The guidance is in effect through July 31, 2020, unless withdrawn or revised
On June 5, the Louisiana Office of Financial Institutions updated its non-depository 2020 Covid-19 emergency declarations to extend earlier guidance regarding closure of licensed locations and temporary location changes for residential mortgage lenders, brokers and originators, check cashers, lenders or brokers licensed pursuant to the Louisiana Consumer Credit Law and the Louisiana Deferred Presentment and Small Loan Act, pawnbrokers, and repossession agents and bond for deed escrow agents. The original emergency declarations were previously covered here, here, here, here, here, here, and here. The declarations extend the guidance until June 26, 2020, unless terminated sooner.
On May 15, the Texas Office of Consumer Credit Commissioner revised an advisory bulletin extending the deadline for regulated lenders to file 2019 annual reports from May 1, 2020 to June 1, 2020 (previously covered here). The regulator also urged regulated lenders to work with borrowers negatively impacted by the Covid-19 pandemic.
Small Business Administration requires lenders to review loans in CAFS for accuracy and completeness
On May 14, the Small Business Administration announced that it had launched a new search functionality within the E-Tran Servicing section of the Capital Access Financial System (CAFS) to assist Paycheck Protection Program lenders with reviewing loans in their portfolios. Lenders are required to review all fields in these files for accuracy and completeness by no later than 5:00pm EDT on May 15, 2020. The SBA also provided updated instructions on how to access CAFS and update records in “Research” status.
On May 13, the Texas Office of Consumer Credit Commissioner revised an advisory bulletin (previously discussed here) for property tax lenders, which sets forth guidance regarding annual report deadlines, electronic signatures, activity from unlicensed locations, and working with borrowers, including by increasing communications, working out modifications, waving late charges, and suspending foreclosures, among other things.
Federal Reserve publishes revised terms, other information regarding lending and liquidity facilities
On May 12, the Federal Reserve Board issued additional information regarding the Term Asset-Backed Securities Loan Facility (TALF) and the Payment Protection Program Liquidity Facility (PPPLF). It issued a revised term sheet for TALF, indicating that eligible borrowers include businesses that (i) are created or organized in, or under the law of the United States; (ii) have significant operations in and a majority of their employees based in the United States; and (iii) maintain an account relationship with a primary dealer. The board also announced that, on a monthly basis, it will publicly disclose the name of each participant in the TALF and the PPPLF, as well as amounts borrowed and interest rate charged. In addition, the board issued FAQs regarding the TALF.
On May 5, FHFA announced that it extended several loan processing flexibilities offered by Fannie Mae and Freddie Mac to assist borrowers during the Covid-19 emergency. The flexibilities include permitting alternative appraisals for certain loans, alternative methods for verifying employment before loan closing, flexibilities for providing documentation related to renovation draws, and expanding the use of power of attorney and remote online notarization. The flexibilities are extended until at least June 30.