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Financial Services Law Insights and Observations

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  • DOJ reminds landlords of servicemember rights during Covid-19 crisis

    Federal Issues

    On March 30, the DOJ’s Civil Rights Division released a statement encouraging landlords and property managers to provide flexibility for servicemembers who have had to quickly change housing plans and employment responsibilities. The Division explained that due to the Covid-19 outbreak, a March 13 Stop Movement Order halted domestic travel by military personnel. As a result, many servicemembers who had signed leases for housing in anticipation of a move to a new duty station will not be able to move until May 11, at the earliest. The statement continues that “[c]onsistent with federal and state law” property managers are urged “to afford the men and women of our armed forces maximum flexibility to adjust their residential lease obligations as needed to comply with military orders during this uncertain time.” The statement reminds property managers and landlords of “the responsibilities they have with respect to members of the National Guard and Reserve under USERRA, the SCRA and similar state laws,” adding that the Division “will act swiftly to bring violators to justice.”

    Servicemembers with concerns regarding their civil rights should contact the DOJ or their nearest Armed Forces Assistance Program Office.

    Federal Issues DOJ Servicemembers SCRA USERRA Covid-19 Consumer Protection

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  • NCUA issues off-site exam and supervision letter

    Federal Issues

    In March, the NCUA issued a release expanding its March 16 off-site policy by extending off-site examinations through May 1. In the release, the NCUA outlined its top three priorities during the Covid-19 pandemic, which include: (i) “credit unions experiencing significant financial or operational problems”; (ii) outreach by examiners to all credit unions regarding “the institution’s operational and financial status” during the pandemic; and (iii) the continuation of off-site examinations. The NCUA added that “[i]f credit unions are occupied with addressing the impact of the COVID-19 pandemic on their operations, employees, and members, they should not be required to address an offsite examination request unless it is a serious or time-sensitive matter.”

    Federal Issues NCUA Examination Supervision Credit Union Covid-19

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  • Special Alert: Treasury and SBA release initial details on Paycheck Protection Program

    Federal Issues

    On Tuesday, March 31, the Department of the Treasury and the Small Business Administration released initial details regarding the nearly $350 billion Paycheck Protection Program established by the Coronavirus Aid, Relief, and Economic Security Act. Under the program, private lenders will offer SBA-guaranteed loans to small businesses that require capital to meet payroll and other expenses.

    The SBA published a COVID-19-specific webpage with additional information about programs and resources, and Treasury posted four documents outlining key features of the program, as well as information for borrowers and lenders:

    • The PPP Overview describes the program’s scope, eligibility requirements, and application process. It notes that no-fee loans used to meet payroll and to pay mortgage interest, rent, or utilities may be forgiven, with payments deferred for up to six months. Businesses in all industries with up to 500 employees are eligible, and larger businesses in certain industries may also be eligible. Applications will be accepted starting April 3, 2020.
    • The PPP Lender Information Fact Sheet provides details regarding lenders that are eligible to make the SBA-guaranteed loans. Importantly, all existing SBA-certified lenders are granted “delegated authority” to originate loans eligible for the SBA guarantee (subject to eligibility and other requirements). Federally insured depository institutions and credit unions, as well as Farm Credit System institutions, may also make SBA-guaranteed loans under the program. Lenders that currently do not hold SBA certification may submit applications to participate to the address noted in the Lender Fact Sheet. We expect additional detail regarding the application process in the near future.
    • The PPP Borrower Fact Sheet sets forth information for potential small-business borrowers. One important condition of obtaining a loan under the program: Employee and compensation levels must be maintained.  However payroll costs are capped at $100,000 on an annualized basis for each employee, so any amounts above $100,000 paid to a single employee will not be calculated in the loan amount nor towards meeting a potential threshold for loan forgiveness (e.g., SBA indicates non-payroll costs may be limited to not more than 25% of the forgiven amount). Additional details regarding an exact percentage of the loan that must be used for payroll are forthcoming.
    • The PPP Application Form is now available online. Small businesses will need to provide basic information and respond to disclosure questions, including whether the business is delinquent on any federal debt. The application form requires that the borrower respond to seven certification statements that relate to the intended use of funds, the necessity of the loan to support ongoing obligations of the business, the total number of employees, and that the information in the application is correct. It appears that lenders will calculate loan amounts by referencing the businesses’ prior-year tax returns. Due to the federal extension on filing taxes, most businesses will likely submit 2018 tax returns for review.

    Please see Buckley’s March 30 Special Alert for additional information on the program. We will continue to provide timely updates regarding any guidance published on this topic on our dedicated SBA page, which includes additional SBA resources you may find helpful. If you have any questions regarding the matters discussed in this alert, please contact a Buckley attorney with whom you have worked in the past.

    Federal Issues Special Alerts Federal Legislation CARES Act Department of Treasury SBA Consumer Finance Covid-19

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  • Rhode Island regulator delays reporting deadlines

    State Issues

    In light of widespread interruptions created by the Covid-19 emergency, the Rhode Island Division of Banking extended the due date for debt collectors, small loan lenders, and debt management companies to submit 2020 Rhode Island Annual Reports to April 30, 2020.  Extensions beyond that date will be considered on a case-by-case basis.

    State Issues Rhode Island State Regulators Covid-19 Consumer Finance

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  • Oregon publishes website with Covid-19 insurance and financial services information for consumers

    State Issues

    Oregon published a website that includes FAQs addressing Covid-19 insurance and financial services information for consumers.  The website addresses questions regarding, among other things, making mortgage payments and addressing concerns about keeping money in checking or savings accounts during the Covid-19 outbreak. In addition, the responses to the FAQs indicate that the Division of Financial Regulation is encouraging its regulated lenders and financial service providers to take active measures to provide help to people and businesses affected by the pandemic, including offering loan forbearance plans, fee waivers, and other deferred payment options to their customers.

    State Issues Covid-19 Oregon Mortgages Consumer Finance

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  • Oklahoma State Banking Department issued FAQs from financial institutions affected by Covid-19

    State Issues

    The Commissioner of the Oklahoma State Banking Department issued FAQs as a supplement to FAQs issued earlier by the FDIC. The FAQs address: (i) working with borrowers, and appropriately documenting the credit file; (ii) closing a lobby but maintaining drive through service; (iii) access to safe deposit boxes; (iv) conducting board meetings remotely, and (v) bank examinations.

    State Issues Covid-19 Oklahoma FDIC Consumer Finance

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  • Special Alert: CARES Act places significant burdens on servicers of consumer debt but provides some relief to depositories

    Federal Issues

    President Trump late last week signed the Coronavirus Aid, Relief, and Economic Security Act that attempts to soften the negative economic effects of the Covid-19 pandemic on consumers, including by suspending payments for certain student loan borrowers and enabling mortgage loan borrowers to easily obtain temporary forbearances. The act also provides certain limited regulated relief for banks and credit unions.  

    This Special Alert summarizes the provisions providing relief to borrowers with federal student loans and the provisions of Title IV that dictate the manner in which servicers and collectors report borrowers to consumer reporting bureaus; provide forbearance, foreclosure, and eviction relief throughout the housing market; and provide limited regulatory relief to depository institutions. 

    Buckley issued a separate Special Alert  on the Small Business Administration-related provisions contained in Title I of the act and will be covering separately the new Special Inspector General’s office created by the act, False Claims Act considerations, and other liability risks that we expect to arise.  

    Federal Issues Special Alerts Covid-19 CARES Act Federal Legislation Consumer Finance Student Lending Mortgages Financial Institutions

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  • Illinois Department of Financial and Professional Regulation issues guidance to debt collection agencies and debt buyers

    State Issues

    On March 30, the Illinois Department of Financial and Professional Regulation (Department) issued guidance to Illinois-licensed debt collection agencies and debt buyers regarding Covid-19. The guidance reminds debt collection agencies that the Illinois Collection Agency Act does not contemplate collectors’ ability to conduct business at any place other than the address of record with the Department. Debt collection agencies seeking to work at a location other than their address of record, including remotely, are directed to provide notice to the Department within 14 days of any address changes. Debt collection agencies and debt buyers are encouraged to work with consumers to modify payment schedules or suspend all collection activity for a period of no less than 60 days. The Department also notes that it will closely monitor adherence to the prohibitions on communications at times and places that should be known to be inconvenient to the debtor under the Federal Debt Collection Practices Act and the Illinois Collection Agency Act.

    State Issues Illinois Covid-19 Debt Buyer Debt Collection FDCPA

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  • Illinois Department of Financial and Professional Regulation issues notice to consumer credit licensees

    State Issues

    On March 30, the Illinois Department of Financial and Professional Regulation (Department) issued a notice to consumer credit licensees stating that it appreciates advance notice of any changes to the licensee’s usual business practices. Licensees are expected to “act responsively and proactively to address any consumer harm that may arise,” including through waiving defaults where a consumer is unable to make a payment as a result of the licensee’s business practices. New credit transactions originated during Covid-19 will be evaluated as part of the next examination cycle.

    State Issues Illinois State Regulator Consumer Finance Licensing Covid-19

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  • Illinois Department of Financial and Professional Regulation issues guidance to Consumer Installment Loan Act, Payday Loan Reform Act, and Sales Finance Agency Act licensees on office closures

    State Issues

    On March 30, the Illinois Department of Financial and Professional Regulation (Department) issued guidance to licensees under the Consumer Installment Loan Act, Payday Loan Reform Act, and Sales Finance Agency Act regarding office closures due to Covid-19. A licensee may close its offices without notice and approval of the Department as otherwise required under applicable law if certain conditions are met. For example, the licensee must provide notice to the Department no later than 24 hours after the closure and one business day prior to reopening, and the licensee must provide reasonable methods for consumers to make payments while its offices are closed. Additionally, if any payments are due on any obligations to a licensee on any closed day, then the payment must be considered received on the closed day for all purposes, including the computation of interest or charges, if received at any time before the close of business on the 30th calendar day following the last closed day.

    State Issues Illinois Covid-19 Licensing Installment Loans Payday Lending

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